MND: ALJUNIED GRC OVERPAID S$1.6 MILLION DOLLARS TO FMSS MANAGING AGENT

The fees paid by Aljunied Town Council to Managing Agent FM Solutions and Services (FMSS) in 2011 were 20 per cent higher than the fees paid the year before to CPG, the previous MA, Mr Khaw Boon Wan said on Thursday (Mar 5).

And the difference paid by Aljunied-Hougang-Punggol East Town Council (AHPETC) to FMSS compared to what other town councils pay their MAs has grown, to an estimated difference of S$1.6 million a year, he said.

The National Development Minister was responding to a question from Ms Sylvia Lim, Chairman of the Workers’ Party, in which she asked for the MAs for each town council from 2011 to 2013, as well as the rates charged per residential and commerical unit.

Mr Khaw noted that all MA contracts did not include a different rate for residential and commerical units – with the exception of FMSS’ 2011 contract with the AHPETC, which had “three separate cost components”.

Mr Khaw’s response, in full, reads as follows:

Not all Town Councils (TCs) appoint Managing Agents (MAs). If they do, the Town Councils Act requires the MAs to be selected via an open market tender. Before 2014, my Ministry had not required TCs to submit their MA contracts. As we did not have the pre-2014 MA contracts, MND wrote to all TCs on Feb 27, 2015 to request submission.

Based on the submissions received, we have tabulated the requested information below (see Tables 1-3). The information for 2014 is included for completeness. We should highlight that all MA contracts charge a clean MA rate for each property type, with the exception of the FMSS’ 2011 MA contract with AHPETC. Unlike other MA contracts, the FMSS MA fee comprises three separate cost components:

A MA rate of $6.37 for residential properties and $12.80 for commercial properties under the former Aljunied Town Council;

A separate MA fee to cover the annual staff cost of all existing staff of the former Hougang Town Council (HGTC) as per HGTC’s accounts as at 31 Mar 2011, which was $1,114,283.02 subject to adjustments, if any, based on the final audited accounts; and

An additional MA fee to cover the costs of new staff on a full reimbursement basis.

As AHPETC’s submission did not include the quantum of the three MA cost components, it does not allow MND to compute the effective MA rate for the whole TC for 2011 and 2012. However, based on the Auditor-General’s Office (AGO) report on the audit of AHPETC, FMSS’ 2011 MA contract had a contract value of $432,319.91 per month, or $5,187,838.90 for one year. This would give an effective MA rate of $7.87 per unit (without making a distinction between residential and commercial units).

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