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.
This meant that the TCs expected to gain a modest amount (about S$8,000) from the disposal of IP in the existing software.
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.
Third, we were confident that AIM, backed by the PAP, would honour its commitments.
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.
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.
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.
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.
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.
Dr Teo Ho Pin
14 PAP Town Councils