I cannot let the media statement put out by the “Coordinating Chairman of the PAP Town Councils” regarding the sale of the town council management software system to a ex-PAP MP-owned company be left alone without it being shredded apart. The media statement appeared on January 2, 2013 on the PAP website [updated 28 Oct 2018: those links are no longer valid but the contents of which is in the paragraph below].
I have italicised and indented the paragraphs from the media statement and my response follows each italicised segment.
Statement by Teo Ho Pin on AIM Transaction
On 28 December 2012, I issued a press release in response to Ms Sylvia Lim’s statement on the website of the Aljunied-Hougang Town Council. Ms Lim had made various assertions in her statement. However, her statement was made without citing the relevant facts. I now make this further statement to set out fully the relevant facts.
I am the co-ordinating Chairman of all the PAP-run Town Councils (“the TCs”). The PAP TCs meet regularly and work closely with one another. This allows the TCs to derive economies of scale and to share best practices among themselves. This improves the overall efficiency of the TCs, and ensures that all the PAP TCs can serve their residents better.
In 2003, the TCs wanted to harmonise their computer systems. Hence, in 2003, all the TCs jointly called an open tender for a vendor to provide a computer system based on a common platform. NCS was chosen to provide this system. The term of the NCS contract (“NCS contract”) was from 1 August 2003 to 31 October 2010. There was an option to further extend the contract for one year, until 31 October 2011.
In 2010, the NCS contract was going to expire. The TCs got together and jointly appointed Deloitte and Touche Enterprise Risk Services Pte Ltd (“D&T”) to advise on the review of the computer system for all the TCs. Several meetings were held with D&T.
After a comprehensive review, D&T identified various deficiencies and gaps in the system. The main issue, however, was that the system was becoming obsolete and unmaintainable. It had been built in 2003, on Microsoft Windows XP and Oracle Financial 11 platforms. By 2010, Windows XP had been superseded by Windows Vista as well as Windows 7, and Oracle would soon phase out and discontinue support to its Financial 11 platform.
From what is mentioned above, D&T noted deficiencies and gaps in the system, which it seems was only about parts of the application infrastructure becoming obsolete and unmaintainable. It would be good to know what other gaps and deficiencies were reported.
It is now clear that the application that was developed ran on the system from Oracle Corporation, called “Oracle Financials 11”. It also is clear that, possibly both the server and client OS was Microsoft Windows XP. I do wonder how that original application was spec’ed out?
We have here a classic case of all of the component systems needed to run an application reaching end of life or becoming unsupported even as the application could still be used.
That, in itself, is not a big deal. Forced obsolescence is the norm in the IT industry. It is not the best state of affairs, but it is what it is.
The TCs were aware of and concerned about the serious risks of system obsolescence identified by D&T, and wanted to pre-empt the problem. In addition, as the NCS Contract was about to expire, they sought a solution which would provide the best redevelopment option to the TCs, and in the interim would allow them to continue enjoying the prevailing maintenance and other services.
Fair enough.
As Coordinating Chairman of the TCs, I had to oversee the redevelopment of the existing computer system for all TCs. It was clear to me that the existing computer software was already dated. The NCS contract would end by 31 October 2011 (if the one year extension option was exercised). However, assessing new software and actually developing a replacement system that would meet our new requirements would take time, maybe 18-24 months or even longer. We thus needed to ensure that we could get a further extension (beyond October 2011) from NCS, while working on redevelopment options.
Not sure why the preceding was needed, for it is a restatement of the first discussion.
D&T also raised with the TCs the option of having a third party own the computer system, including the software, instead, with the TCs paying a service fee for regular maintenance. This structure was not uncommon.
By stating that D&T saying that it is a common method for “third party own the computer system”, it is not clear how that would help with a rapidly aging computer system. Sounds incredulous for D&T to suggest that.
We decided to seriously consider this option. Having each of the 14 individual TCs hold the Intellectual Property (IP) rights to the software was cumbersome and inefficient. The vendor would have to deal with all 14 TCs when reviewing or revising the system. It would be better for the 14 TCs to consolidate their software rights in a single party which would manage them on behalf of all the TCs, and also source vendors to improve the system and address the deficiencies.
This paragraph contains the biggest amount of doublespeak and warped sense of value if there ever was one. What does it mean that each of the TCs holds the “Intellectual Property”?
It was stated that the reason for creating the application was (from above) “(t)his allows the TCs to derive economies of scale and to share best practices among themselves. This improves the overall efficiency of the TCs, and ensures that all the PAP TCs can serve their residents better.” which puts to lie “(t)he vendor would have to deal with all 14 TCs when reviewing or revising the system”.
It would seem that whatever that was built, ended up being 14 versions of the application and not one. How does reviewing and revising the system become any more efficient by “consolidat(ing) their software rights in a single party”? Humbug.
If that indeed was a valid reason, all the TCs could have done was to agree to trust one TC to be the custodian and decision maker. How does each giving up their ownership to an external party be any better?
I suspect the Coordinating Chairman is pulling a fast one here.
The TCs thus decided to call a tender to meet the following requirements:
1. To purchase the software developed in 2003, and lease it back to the TCs for a monthly fee, until the software was changed;
2. To undertake to secure extensions of the NCS contract at no extra cost i.e. take on the obligation to get an extension on the existing rates, until the TCs obtained new or enhanced software. This was put in to protect the financial position of the TCs; and
3. To work with the TCs to understand their enhancement and redevelopment needs and look for a suitable vendor to provide these upgrades.
If you look at the actual tender notice, all it states is that they are selling a “developed application software” and that the tenderer should be “experienced and reputable company with relevant track record”.
The devil is in the details which is only available if you fork out $214.
So, the PAP TCs wanted to sell out to someone else who fits their criteria of an experienced and reputable company with RELEVANT track record. The tender advertisement sounds very thin and vague.
Under the tender, the TCs sold only the IP in the old software. The ownership of the physical computer systems remained with the individual TCs. We wanted to sell the IP rights in the old software because it had limited value and was depreciating quickly. Had we waited until the new system was in place, the IP to the superseded old software would have become completely valueless.
Ah huh! They wanted to monetize their “IP” as it were. Time was running out. Not sure who else on the planet would want their “IP”, but they must monetize it.
The TCs advertised the tender in the Straits Times on 30 June 2010. Five companies collected the tender documents. These were CSC Technologies Services Pte Ltd, Hutcabb Consulting Pte Ltd, NCS, NEC Asia Pte Ltd and Action Information Management Pte Ltd (“AIM”).
I am sure four of the companies listed above, after wasting the $214, are run by level-headed management who realized that this tender was a huge scam and wanted no part in it and so decided not to respond.
I am aware that NCS considered bidding but in the end, decided not to do so as it was of the view that the IP rights to software developed in 2003 on soon to be replaced platforms were not valuable at all.
Another company withdrew after it checked and confirmed that it was required to ensure renewal of the NCS contract without an increase in rates. The company did not want to take on that obligation. The others may also have decided not to bid for similar reasons.
In the end, only AIM submitted a bid on 20 July 2010.
Does the Coordinating Chairman really think that NCS would have fallen into the scam as well? They would have known that there really is nothing in the application that they could “salvage”, having built it in the first place, let alone helping their customer monetize it.
We evaluated AIM’s bid in detail. First, AIM’s proposal to buy over the software IP would achieve our objective of centralising the ownership of the software, consistent with the model suggested by D&T.
This is circular logic which needs no further response.
AIM was willing to purchase our existing software IP for S$140,000, and lease it back at S$785 per month from November 2010 to October 2011. The lease payments to AIM would end by October 2011, with the expiration of the original NCS contract. Thus after October 2011, the TCs would be allowed to use the existing software without any additional lease payments to AIM, until the new software was developed.
Let’s do the math:
| 14 PAP Town Councils | AIM | |
| Contract Award | $140,000 (perhaps each TC got $10K) | ($140,000) |
| Lease (Nov 2010 – Oct 2011) | ($785*14*12 => $131,880) | $131,880 |
| Nett | $8,120 |
This meant that the TCs expected to gain a modest amount (about S$8,000) from the disposal of IP in the existing software.
So, the so called “Intellectual Property” is really only worth $8,120.
Second, AIM was willing to undertake the risks of getting an extension of the NCS contract with no increase in rates. This was the most important consideration for us, as it protected the TCs from an increase in fees.
And AIM will have the needed clout to negotiate with NCS – because they own the software – but the 14 PAP Town Councils being the original customer of NCS could not garner? Is that really true, Mr Coordinating Chairman? You are saying that you cannot do better than AIM against NCS? Say it ain’t so, Mr Coodinating Chairman.
Third, we were confident that AIM, backed by the PAP, would honour its commitments.
Wow, the PAP link. That’s the magic bullet. Cronyism at its best. “Backed by the PAP” because the three directors are former PAP MPs or because the company is funded by the PAP? Perhaps the other companies who picked up the tender document realized that they are not a PAP-{owned, funded} entity and would therefore not win.
That statement alone reeks of contempt of the free market, the principles of transparency, meritocracy and everything we hold dear in this country.
Are you, Mr Coordinating Chairman, also saying that AIM has deep pockets that they can withstand the possibility of NCS not agreeing? The directors of AIM have been reported not to be taking in director fees. That’s noble of them. It does look like the PAP Town Councils found their shining white knight in AIM.
Given the above considerations, AIM had met the requirements of the tender on its own merits. We assessed that the proposal by AIM was in the best interests of the TCs, and thus awarded the tender to AIM.
Of course! AIM has to be trustworthy and reputable given their PAP pedigree. Of course! D’oh!
Under the contract with AIM, the TCs could terminate the arrangements by giving one month’s notice if the TCs were not satisfied with AIM’s performance. Similarly, AIM could terminate by giving one month’s notice in the event of material changes to the membership of a TC, or to the scope and duties of a TC, like changes to its boundaries. This is reasonable as the contractor has agreed to provide services on the basis of the existing TC- and town-boundaries, and priced this assumption into the tender. Should this change materially, the contractor could end up providing services to a TC which comprises a much larger area and more residents, but at the same price.
What a lot of nonsense is this? It is unbelievable that the Coordinating Chairman can include a poison pill clause in the contract if the “boundaries of the Town Councils change”. I believe the boundaries of the West Coast Town Council changed after the May 2011 elections. I don’t see AIM doing anything about terminating the contract (correct me if I am wrong Mr Coordinating Chairman).
How does changes in the “larger area and more residents” materially change the way the software works? Is Mr Coordinating Chairman taking the tax payers and constituents of the PAP Town Councils to be daft? Wait a minute, a former PAP prime minister says we are (search for daft in that link)!
Since winning the tender, AIM has negotiated two extensions of the NCS contract until April 2013, at no increase in rates. The first extension was from November 2011 to October 2012, and the second from November 2012 to April 2013. The TCs received a substantial benefit in terms of getting the extensions from NCS beyond the original contract period, without any increase in prices.
Now, this is confusing. But I shall hold back for more juicy parts following.
What is not known now is the maintenance charges NCS charged as part of their original contract with the PAP Town Councils.
AIM has also been actively working with several vendors to explore new software options and enhancements for the TCs. AIM has identified software from a number of possible vendors, and has invited them to make presentations to the TCs in order for a suitable option to be chosen.
Are any of these open source solutions? Or is this going to be another closed, proprietary system that will face the same issues as the older one? Why are the Town Councils (via AIM) not looking at maximizing the tax dollars that goes into this by using open source solutions?
My offer to help build a fully open source solution remains.
Following the expiry of the initial lease arrangement for the software from AIM on 31 October 2011, no further lease payments for the software were made to AIM. During the period of its contract extension from November 2011 to April 2013, the management fee payable to AIM for the whole suite of services it provided was S$33,150, apart from what was payable to NCS for maintenance. In the end, inclusive of GST, each TC paid slightly more than $140 per month for AIM to ensure continuity of the existing system, secure the maintenance of this system at no increased costs, and identify options for a new system to which the TCs could migrate.
We entered into the transaction with AIM with the objective of benefitting the TCs. Over the last two years, the intended benefits have been realised. There is thus no basis to suggest that the AIM transaction did not serve the public interest, or was disadvantageous to residents in the TCs.
Bingo! The smoking gun perhaps?
So, AIM is not charitable and is asking the TCs to pay from November 2011 till April 2013. This is what the math looks like:
| 14 PAP Town Councils | AIM | |
| Contract Award | $140,000 (perhaps each TC got $10K) | ($140,000) |
| Lease (Nov 2010 – Oct 2011) | ($785*14*12 => $131,880) | $131,880 |
| Nett | $8,120 | |
| Nov 2011 – Apr 2013 | ($33,150) | $33,150 |
| Nett | ($25,030) |
So, contrary to the rationale of “monetizing the IP” (a load of crap), the 14 PAP Town Councils will incur a loss of $25,030 in this deal.
This amount is on top of the cost of the D&T report and the “apart from what was payable to NCS for maintenance.”
It does seem that the PAP, having been in power for over 50 years, has found many creative means to “misdirect” tax monies.
I am saddened to have done this analysis.
Please, Mr Coordinating Chairman, please, come clean. You made a mistake. You thought you got a good deal. But that was not what it was. You have been drinking from the PAP water fountain for too long that you cannot see what is right and what is wrong. Your “media statement” is so full of holes that we can drive the Airbus A380 through it with room to spare.
Again, my offer to form a team of open source developers to build a solution that can benefit not only the town councils but anyone else remains.
Curious about the ownership of IP by the TCs. What is the IP owned here? The copyright to the software code or the business process? If the latter, did they file a patent on it? If not, how do they claim to “own” it?
Pure handwaving. Nothing other than copyrights
I am sure the Coordinating Chairman is spinning the fiasco.
The whole story about IP seems to be BS. The software used is from Oracle. So the only value add is the customisation of the screen input and output, plus a bit of configuration.
The Coordinating Chairman was obviously trying to spin the story and throwing in all the buzzwords and “IP” seems to be as good as any other BS.
[…] life one degree north, one-o-three degrees east: My Conscience Is Bugging Me – Majulah!: PAP Town Councils – AIM controversy. – Signs of Struggle: Dirty […]
What nonsense
“Similarly, AIM could terminate by giving one month’s notice in the event of material changes to the membership of a TC, or to the scope and duties of a TC, like changes to its boundaries. This is reasonable as the contractor has agreed to provide services on the basis of the existing TC- and town-boundaries, and priced this assumption into the tender. Should this change materially, the contractor could end up providing services to a TC which comprises a much larger area and more residents, but at the same price.”
Then why did AIM not terminate the contract for East Coast & Marine Parade, again both had well known material changes to their boundaries?
I am sure the Coordinating Chairman will say that since AIM is a PAP owned company, they closed one eye because those town councils were PAP controlled, never mind changes in the boundaries – what’s a little bit of gerrymandering within the familee?
Mr Chandra Das declined to give details of Aim’s track record and Business Dealing”
“We are confident that AIM, backed by PAP, would honour it’s comittement”
Based on the above statements from the ST, it seems AIM was awarded the contract purely based on its association with PAP and not track record, as it was never revealed. Does that not breach procurement rules. It’s like saying I know the $2 companny is owned by the Minister’s son and he has no track record but I will give him the job becuase he is backed by his father, who will honour his committement.In some countries this would be called corruption but I guess it’s perfectly legal in here, making me wonder how many such deals have been going on.As Harish said ” Cronyism at its best”
But the real giveaway was ” ST understands that it has served PAP town council before they contracted NCs to develop a common platform in 2003″ So can we take it that other contracts were awarded to AIM or perhaps other $2 companies because “they were backed by PAP”.
What crap!
Thanks for the comment. It is useful now to go check what else did AIM get involved in. There are interesting stories floating around about Horizon which might have been a PAP company as well.
I think we are all reluctantly acceptable to the fact that if Teo were to honestly say that they ‘d done it to fix the opposition. After all, there is the last in the Q in upgrading for opposition wards using public money.
PAP has been conducting such politics for years.
To spin a story like this is such a torture and treating citizens as idiots
No, not idiots, but daft citizens. Gotta give credit to a former PM.
It would be interesting to find out if AIM extended the use of this old software to the former opposition ward, Potong Pasir.
They probably did.
I am very interested to find out which other clients and projects AIM Pte Ltd has handled since we are told it has been in business for 20 over years. Clients Reference list gives potential clients a way to assess the resources and expertise of IT vendors and not the backing of a political party as what THP said. ( “we were confident that AIM, backed by the PAP, would honour its commitments.”). What lousy rationale from THP. Even if the rationale holds, let us not forget the fact that the party has, in a number of times, turned back on their own words eg. the promise to do away with ISA if Malaysia does that first. Look at us today. We still have the ISA. Did they honour their earlier commitments? This is the track record they have.
Having been in IT development and business experience for more than 15 years, I have never come across an IT business transaction as dubious as this. In the corporate world, centralising and decentralising business functions are common practices and it is also common practice for vendors to offer group or individualised agreement to their clients. Never have I heard a business advice as dumb as this – to dispose the IT system to a 3rd party in order to be leased back to them just because of blind faith in a political party. And dumber still, on the part of the person acting on behalf of the owners of the system to have ‘acted upon the advice.” Ridiculous arrangement which makes no business sense. Save that long story.
Thanks, Geok Choo for your comments. I’ve been in this industry since 1982 and while there are a lot of shenanigans around, this particular fiasco is just amazing. They are playing with tax dollars with clever schemes to move monies around and trying to label it as “monetizing IP” etc etc.
Boundaries of Holland-Bukit Timah and Tanjong Pagar also changed, and there were material changes in almost all of the management teams (MPs) of the 14 TCs. The termination was dirty politics at its worst.
The Coordinating Chairman is grabbing at straws and failing as his credibility dissolves.
If it smells like a fish, it is a fish.
This AIM-PAP Town Councils stink sure smells fishy. Whitewash ain’t gonna wash this time, I think.
The fact that AIM provides no real value-add, apart from being a coordinating agent involved with the management of an obsolete IP and negotiating with NCS for contract extension, should already raise eyebrows.
You raised good questions but I think you missed out one important business conduct/ethical issue. Here’s how I see it:
1) 14 TCs sold a sw to a “coordinating agent” and leased it back from the same agent at a price that more or less squares off with the sale over a given period of time.
2) The agent provided no demonstrable IT expertise either to maintain, develop or support the product they bought from and leased back to the TCs.
3) Sold at $140K, leased back at $785/mth over 1 year. The $8.12K “savings” as claimed seems designed to provide for about 1 month contingency lease (i.e. 8.12K / 14 TCs = $580).
4) So basically over a period of 12 months, the agent recorded about $140K revenue in their books for coordination work. This looks like passing revenue through another although the latter derive no profit from it.
5) In corporate accounting, recognizing “pass-through” revenue of such nature without demonstrable value is a business conduct issue. Imagine this, company A sells $1M product to B so A’s revenue increased by a million. Later on, B sells back the same product to A so B got a million boost in their books too but the product landed up where it started without even a strand of hair lost. Looks completely legal indeed, but such a transaction produces zero value although $2M were recorded in sales. There are many reasons why companies are hungry for top line more than bottom line but I shall not go into that.
Thanks Kenny for your comments.
I did not specifically mention the business ethics part for I know it will be raised, like you’ve done.
Town Councils are public sector entities and have to be held to the same (some would say higher) levels of accountability and transparency than private sector entities. I think it is very clear that the whole scheme is a scam and I am sure they are in damage control.
The Singapore MSM which has no investigative reporting credentials has just mouthed what the Coordinating Chairman’s statement said without any of the very simple analysis that I did. But that’s what you get when you have a castrated MSM.
How did a $2 Company raise $140,000 to buy the software.
Which Bank lent them the money and on what assurance,PAP backed,personal guarantees of the Directors,???
If raising such amount is a breeze let me move my MR$2 Company to Singapore.
A $2 company means that paid up capital is $2. For registration purposes, ACRA only needs a minimum of $2 to have a company setup in their records. You are confusing paid up capital and running capital. It is possible that a $2 company have a $100 million dollar business. It looks really silly, but that is entirely legal and possible.
But, like you say, banks won’t look favourably if your paid up does not in some way reflect a decent percentage of your revenue.
You hit the nail on its head. AIM, a $2 company does NOT even satisfy the criteria of a experienced and reputable company with a relevant track record. Why can’t they call a spade a spade?
The purpose of this exercise is to prevent opposition party from having it easy i.e. each different party will have to develop their own financial software from scratch if they win in the election.
Can you imagine how dirty papies are, using residents money to punish the residents if they vote opposition?
It’s a sad state of affairs in Singapore, miw is no longer pure, it has become more of mib.
” This looks like passing revenue through another although the latter derive no profit from it. ”
Isn’t this a form of money laundering?
Where is the evidence that AIM had in fact paid $140/- to the 14 TCs?
One cannot wait to hear what the CPIB’s take is on this?
As a minimum, this is infamous conduct.
I would not say that it is laundering, but redirecting monies into private hands under the pretext of a public service, pretext being the operative word here.
Dear Harish,
You have missed the point. The real money was to be made in the supply of the new system. Unfortunately, or fortunately, all the publicity has jinxed that.
Thanks Ah Heng. There are new systems etc but they were talking about the software. Yes, this is a muddled mess, a mess that can only come about when no one is there to check.
[…] His statement was posted on Facebook 2 January 2013 (link), and here. It’s been picked apart (I think by Molly Meek) line by line here. I agree with the comments there and there’s no need for me to repeat them. See also the commentary by Harish Pillay. […]
I was told that there are lies, lies and statistics. But I think it should be paraphrased to “There are lies, lies and politics.” The opposition tries their best to show that they are telling the truth by giving their side of the stories and of course the ruling party will give theirs. Just quietly run your ward your way. Don’t waste energy trying to prove this and that. It probably does not do the populace any good. Service your ward, make the people happy. Hopefully they are grateful to you and don’t think it is their God-given right or their entitlement. Sigh! Have nice day!
Thanks for your comment. My future and that of my family, friends and country is too important to be left to politicians. Especially those that been in office for too long. It is precisely the attitude you suggest that enables rot to take place.
They did take care of their ward quietly, and in their own way.(AHTC)
But they were rated by a system created and assessed by Ministry of National Development and received a rating in the ‘amber’ band. Should they have just remained quiet and accept the score?
They earned the ‘amber’ score due to late submission of the audited accounts. All they wanted to do was to explain to their constituents and the wider singapore public how they could not meet the deadline. Should they remain silent? What would you think of AHTC if they remained silent?
AHTC explained the sequence of events leading to their failure to meet deadlines and it is clear that they tried their best, yet could not due to some unfavourable clause in a contract for service that was agreed upon by the previous town council.
There was hindrance, created by the outgoing town council, knowingly or not. We, the public would like to understand the rationale behind this clause. The reason is that our funds was used and that it leaves our homes and estate vulnerable to disruptions in everything from waste disposal to collection of fees.
As it unfolds, we are not just curious but alarmed by the casual, shoddy standards in procurement, maintenance and management of public funds. There are serious implications. Its my hard earned money struggling as a 55 year old, having my 2 sons running around the jungles and desserts of foreign lands to defend a country that has no ethics. It affects the views and impressions of the business community and the world at large, what Singapore and Singaporeans are.
Are we very tolerant and forgiving of such behaviours and standards?
If we are, we will be trampled upon and used as nothing more than pieces of tissue.
I will not allow this.
I don’t think Harish is trying to prove ‘this and that’. All we are asking for is transparency and accountability in this transaction, and if the parties are able to justify their actions to the public and come clean, the subject would close itself in due course. As it stands now, there is too much double talk and tongue biting.
How much is THP paid as Coordinating Chairman of the 14 TCs? And his support team?
I don’t think he gets any more than the single MP allowance. But, I could be horribly wrong about it.
yawningbread 4 January 2013 at 09:52
“I don’t know if he is paid for his Coordinating Chairman role, but from Page 29 of the Financial Report (year ended 31 March 2012) of Holland-Bukit Timah Town Council, of which he is chair and one of 5 town councillors (all PAP MPs), we can see that in that year, town councillors were paid allowances totalling $173,700. It works out to an average of $34,740 per MP. This would be in addition to his MP’s allowance.
In FY ending 31 March 2011, the town councillors’ total allowances were higher, at $230,942, but at the time (prior to GE 2011 in May 2011), the town council consisted of six MPs, one more than the current five.”
Quoted from yawnbread
http://yawningbread.wordpress.com/2013/01/03/pap-mis-aimed-faces-blowback-part-4/#comment-23363
Thanks for the detail. Could it be payment to the CEO and paid staff of the town councils and not to the MPs?
So, in effect, no real work is done and all these are just done on paper.
Very questionable indeed when you expect transparency in how we Singaporean like to pride ourselves in. The justification doesn’t make sense at all. Trying to twist in margins here and there may mislead the layman on the streets.
But do they think ALL Singaporeans are THAT daft???!!
A certain former prime minister thinks Singaporeans are all daft!
hi hi Mr Harish,
do you mind if I link this article from my blog?
http://wiseoftheday.blogspot.sg
Think it is a good article that deserves to be shared!
Thanks, Cedric for the note and request.
Yes, you are most welcome to link to the blog. This is the Internet and linking and deep linking is how things get discovered and used.
[…] I cannot let the media statement put out by the “Coordinating Chairman of the PAP Town Councils” regarding the sale of the town council management software system to a ex-PAP MP-owned company be le.. Third, we were confident that AIM, backed by the PAP, would honour its commitments.Wow, the PAP link. That’s the magic bullet. Cronyism at its best. “Backed by the PAP” because the three directors are former PAP MPs or because the company is funded by the PAP? Perhaps the other companies who picked up the tender document realized that they are not a PAP-{owned, funded} entity and would therefore not win.That statement alone reeks of contempt of the free market, the principles of transparency, meritocracy and everything we hold dear in this country.Are you, Mr Coordinating Chairman, also saying that AIM has deep pockets that they can withstand the possibility of NCS not agreeing? The directors of AIM have been reported not to be taking in director fees. That’s noble of them. It does look like the PAP Town Councils found their shining white knight in AIM.Given the above considerations, AIM had met the requirements of the tender on its own merits. We assessed that the proposal by AIM was in the best interests of the TCs, and thus awarded the tender to AIM.Of course! AIM has to be trustworthy and reputable given their PAP pedigree. Of course! D’oh!Under the contract with AIM, the TCs could terminate the arrangements by giving one month’s notice if the TCs were not satisfied with AIM’s performance. Similarly, AIM could terminate by giving one month’s notice in the event of material changes to the membership of a TC, or to the scope and duties of a TC, like changes to its boundaries. This is reasonable as the contractor has agreed to provide services on the basis of the existing TC- and town-boundaries, and priced this assumption into the tender. Should this change materially, the contractor could end up providing services to a TC which comprises a much larger area and more residents, but at the same price.What a lot of nonsense is this? It is unbelievable that the Coordinating Chairman can include a poison pill clause in the contract if the “boundaries of the Town Councils change”. I believe the boundaries of the West Coast Town Council changed after the May 2011 elections. I don’t see AIM doing anything about terminating the contract (correct me if I am wrong Mr Coordinating Chairman).How does changes in the “larger area and more residents” materially change the way the software works? Is Mr Coordinating Chairman taking the tax payers and constituents of the PAP Town Councils to be daft? Wait a minute, a former PAP prime minister says we are (search for daft in that link)!Since winning the tender, AIM has negotiated two extensions of the NCS contract until April 2013, at no increase in rates. The first extension was from November 2011 to October 2012, and the second from November 2012 to April 2013. The TCs received a substantial benefit in terms of getting the extensions from NCS beyond the original contract period, without any increase in prices.Now, this is confusing. But I shall hold back for more juicy parts following.What is not known now is the maintenance charges NCS charged as part of their original contract with the PAP Town Councils.AIM has also been actively working with several vendors to explore new software options and enhancements for the TCs. AIM has identified software from a number of possible vendors, and has invited them to make presentations to the TCs in order for a suitable option to be chosen.Are any of these open source solutions? Or is this going to be another closed, proprietary system that will face the same issues as the older one? Why are the Town Councils (via AIM) not looking at maximizing the tax dollars that goes into this by using open source solutions? . […]
[…] His statement was posted on Facebook 2 January 2013 (link), and here. It’s been picked apart (I think by Molly Meek) line by line here. I agree with the comments there and there’s no need for me to repeat them. See also the commentary by Harish Pillay. […]
i could almost see the old man shake his head….
do you have anything worthwhile to contribute other than a remark like that?
Thank you for your article.
Another point i would like to raise is about the timing of the notice of service termination from AIM.
The reason given for the termination was about the change of boundary to the Aljunied GRC. This notice was served at least two months after PAP lost at the GE 2011.
Correct me if i am wrong, but wasn’t the boundaries changed effective BEFORE GE 2011? If so, why did AIM NOT serve termination notice to George Yeo and his team if indeed that was the real reason before the inevitable termination? Why wait till AFTER WP had taken over? The material change had taken effect before first rally was even held.
Strange isn’t it??
While we can nit pick about timing of boundary change etc etc etc, the mere fact that in selling the copyrights (cleverly masquerading as “intellectual property”) to the software, the PAP Town Councils was clever enough to add in a poison pill clause.
Here’s an outline for a RTS/SBC/TCS/MediaCrap comedy staring VR Man and Cockroach Crusher, Leticia and Team Epsilon:
a) I hire a developer to build a house for me.
b) I pay her for building it
c) I continue to engage her for maintaining and managing the house which she agrees for a period of seven years.
d) As the years go by, it dawns on me that the house, while still OK, might need to be updated/replaced.
e) I engage a paid external expert to advise me on what to do.
f) My paid external expert tells me I have a laundry list of issues with the house but also suggests that I should sell the house to a third party to monetize what remains of value of the house.
g) Fantastic idea, external paid expert, I will jump on this and get it done.
h) I look around for someone to do this and find five people, including my original developer. All but one agrees to buy it from me.
i) I will now write up the sale terms that will include:
1. a one time payment to me for taking over the ownership of the house
2. agreeing to pay the buyer for the next 12 months a monthly rental for continuing to live in the house.
3. should I ever change my pants, renovate the house, acquire the neighbour’s garden etc, I will bite into a poison pill and stop living in this house. Am I clever or what?
j) I got a hair cut and a change of clothes, but since the buyer is a close family friend, clause 3 is not invoked. Phew, that was a close call. But awesome!
k) But, I just found out that my other friend who was also using the house had decided to not only change his clothes, but also move out and is now living with others.
l) Traitor! I will unfriend him and crush him like a cockroach!
m) Buyer now tells my traitor friend that he has to bite into the poison pill. I think it is only fair. It is in the sale contract terms after all (good thing I am considered family of the buyer or else I get pwned as well).
n) life goes on.
Thanks Harish, for the good work.
I have been in banking for 30 years or more and I have seen countless shabby deals in my time. I don’t need elaborate sleuthing and word by word analysis to know with absolute confidence that something is very wrong with this transaction. It’s the $2 company! It’s always the $2 company. This is the give away. When you see a $2 company in a deal, 99.999% of the time, there’s a fishy tale out there.
Thanks, David. Indeed you are right. If a company claims to have been in business since 1991, I am sure they could have increased the paid up over the time period.
Harish, great stuff! Are you ok if we publish this article and some of the comments on TRE? (will of course credit it back to your site)… 🙂
Richard
Yes, you may. It is on CC NC ND license.
Thx! will probably repub next 1-2 days… 🙂
just published:
http://www.tremeritus.com/2013/01/07/aim-pap-saga-my-conscience-is-bugging-me/
🙂
Hi Harish,
“apart from what was payable to NCS for maintenance.”
this makes it seem that the TCs were STILL paying NCS for maintenance despite ownership of the software being transferred to AIM. At least this is how I’m reading it.
In any case, I’m sure your figures would benefit more if we can get a comparison between the 25k cost incurred by the TCs in this deal vs the projected cost if they had renegotiated with NCS, we can make a clearer judgement over whether this was incompetence or cronyism. You should also take into account (assuming what I interpret above as wrong) the costs incurred by AIM in subcontracting maintenance to NCS.
Yes, it goes against what Dr Teo mentions as “monetizing our IP” which was a stupid reason from the beginning. However, any time a “business” makes a decision it is ultimately deciding on the minimal cost outcome.
Sign me up if you’re heading up any open-source efforts.
Regards,
Daryl
Thanks, Daryl for your comment.
The Coordinating Chairman has been very sparse in his note. I don’t want to project anything into it beyond what he has choosen to reveal. He is probably regretting very much that he even put out that much detail in his media statement to begin with. It is also amazing that PAP’s legal did not even review the media statement to look at possible booby traps, which it is full of.
I would like to find a positive way to kick start “Open Source For Singapore” project and not have this episode be the only trigger.
[…] take is to familiarize yourself with and be aware of the issues at hand: Yawningbread 2, 3, 4, 5, Harish Pillay’s post, Bertha Harian’s (Bertha Henson’s) early blog post on it, etc. There are more articles […]
THP could have won a Nobel Prize for literature as FICTIONAL WRITER for children’s books and gain better fame than Enid Blyton !! He must have believed that Singapoeans intellect are below kindergarten level as he did not substantiate RELEVANT FACTS other than a few known facts that he was the co-ordinating chairman etc !
His press statement is a DIRECT INSULT OF SINGAPOREANS’ INTELLIGENCE and has the audacity to give such incredible disguised spin story to defend an indefensible position.
A. Ngiam
Maybe he could do the screenplay for the movie as well. That’ll be a fun thing to watch. Perhaps Penn & Teller could do one :-).
[…] Chairman” of the PAP town councils made statements that were totally wrong. In my post in 2013, I addressed his comments and you can read it […]
[…] an election victory to stop using software and systems that the PAP run town councils had. This resulted in the AHTC having to recreate the entire system from scratch with an enormous waste of public funds. Read this […]