WHY LTA AWARD SMRT CONTRACT FOR NEW TEL MRT LINE DESPITE ITS POOR RECORD?

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On Friday, the Land Transport Authority (LTA) announced that it has awarded SMRT Trains, a subsidiary of SMRT Corporation, the contract to run the new Thomson-East Coast rail line, which will open in stages from 2019. It is expected to be fully operational by 2024.

The contract will run for 9 years, with a possibility of a further 2 year extension.

“The 43 km long TEL has 31 stations with seven interchange stations linking it to all five existing MRT lines,” the Business Times reported. “It will enhance connectivity between the north, central and eastern parts of Singapore, as well as strengthen the resilience of the rail network by providing alternative travel routes for commuters on other lines.”

The entire line is fully underground and costs about $24 billion to build, and is expected to serve half a million commuters daily in the initial years and up to a million commuters in the longer term, the LTA said in announcing the building of the line in 2014.

“The 13-kilometre East Coast stretch of the TEL will connect commuters living in the eastern parts of Singapore and who are not directly served by the rail network currently, such as those in Tanjong Rhu, Siglap, Marine Parade, Upper East Coast and Bedok South, to the heart of the city,” the LTA said in 2016. “As part of the 43-kilometre long TEL, the East Coast stretch will also connect commuters to the Thomson stretch of the TEL, which serves the north-south corridor. The East Coast stretch will have nine stations, including a station which interchanges with the Downtown Line at Sungei Bedok.”

It is a heavy undertaking, which raises the question of why the contract was awarded to SMRT which, as all commuters (and the government) know, has been heavily criticised for not meeting service standards and for the numerous massive disruptions and breakdowns on its lines the last 7 to 8 years.

An earlier government inquiry found that the operator had been lacking in its maintenance regime.

In addition, the problems plaguing the SMRT train system have not been resolved completely. In fact, the company is still in the midst of doing so which has also resulted in even further disruptions and breakdowns.

The problems are so insidious that Transport Minister Khaw Boon Wan said in July that SMRT will take a few more years to meet top service standards – which is expected “before the next elections”, which is due by 2021.

The Straits Times reported last Friday that the SMRT’s “8-year-old Circle Line chalked up one delay per 518,000 train-km in the first six months, while SBS Transit’s 14-year-old North East Line clocked one per 978,000 train-km.”

Responding to questions on how SMRT managed to land the contract despite its poorer track record, its chairman Seah Moon Ming said:

“I think we have learnt good lessons from all the problems and challenges that we faced so far. This is a 30-year-old system and is in the process of renewal and all the problems and challenges we faced we take it as a good lesson learnt and that is very useful for us especially for the new line.”

The LTA, on its part, explained that under its two-envelope tender process (“where quality was first evaluated before the price envelope was opened”), SMRT Trains had received “a higher quality score” compared to the other bidder, SBS Transit.

SMRT’s proposal also featured “a commitment to invest heavily in predictive and reliability-centred maintenance to enhance reliability.”

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“SMRT Trains’ proposal also included a strong staff development plan, including customer-oriented training, and tailored community engagement initiatives,” the LTA said. “SMRT Trains also undertook a set of contractual guarantees in the form of service fee deductions should key obligations not be met.”

The LTA said SMRT Trains also “offered a more competitive price, as the total service fee over 9 years ($1.7 billion) quoted by SMRT Trains was about 30% lower than that quoted by SBS Transit. Overall, SMRT Trains’ proposal demonstrated more value-for-money.”

But should SMRT’s bid be given so much weight, given its poor track record?

A comparison could perhaps be made to how the Housing and Development Board (HDB) handled the poor performance of a lift operator in 2015.

In January this year, the HDB revealed that lift manufacturer Sigma has been barred from tendering for new HDB projects since October 2015 after it was “unable to fully adhere to the timeline of lift installations for certain projects.”

According to Channel Newsasia, “Sigma has made about 3,500 of the 24,000 lifts in HDB estates to date. It is one of approximately 20 different brands of lifts in public housing estates.”

CNA reported:

“In response to media queries, HDB said its decision to bar Sigma from bidding for future contracts is part of a procedure to “restrict poor performing contractors from tendering for new HDB projects,” so that Sigma can focus on completing the installation of lifts and improving the performance of the installed lifts under its current contract.”

“HDB noted that in the recent round of lifts installed by Sigma, which is owned by American conglomerate United Technology Corporation (UTC), “a higher than usual breakdown rate” was observed in their first year of operation.”

It would thus seem that the HDB demands and enforces higher standards than the LTA.

There are many questions over the LTA awarding the TEL contract to SMRT Trains, such as: Why were only two (local) companies allowed to bid for the contract?

The LTA explained that the TEL would be “Singapore’s most complex rail project to date.” It would include the TEL being an “interchange with the future Johor Bahru-Singapore Rapid Transit System Link on its northern end and feature a possible future connection to Changi Airport on its eastern end.”

Therefore, the LTA said, “given the complexities, only the existing local rail operators, SBS Transit and SMRT Trains, which are familiar with the local operating context, were invited to participate in the TEL operator tender.”

The LTA did not elaborate in its press release why a foreign company or operator would not be able to fulfill such a responsibility. What is this “local operating context” that is so complex that no one except our two local operators are capable of managing the line?

SMRT CEO Desmond Kuek said the operator remains “focused on improving SMRT’s overall train network, and are on track to do so.”

He also disclosed that SMRT will recruit 600 more staff before the first TEL stations open, with about 900 more by the time TEL is fully open in 2024.

All this, however, is cold comfort and commuters are justified in feeling wary of how SMRT can handle extra responsibility in running the TEL when it is already burdened with managing the existing lines under its charge.

The LTA needs to explain in more detail why it has awarded the TEL contract to SMRT Trains, despite the operator’s atrocious record these last 7 to 8 years.

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