Recognising that the public sector could enhance its purchasing power and save cost through aggregating demand for quantity discount, the Ministry of Finance enlisted the help of DSTA to establish Demand Aggregation (DA) contracts for common goods and services.

DSTA is responsible for consolidating public sector demands, developing common sets of requirements, conducting procurement and performing contract management. Currently, DSTA is the lead agency for 18 DA contracts for the supply of common goods and services such as office equipment, printing and courier services.

For some of the DA tenders, DSTA employs Reverse Auction to obtain better pricing. This open online bidding process allows participating suppliers to compare their offers to outbid one another.

DSTA has also adopted an innovative procurement strategy by awarding DA contracts to multiple suppliers. As government agencies have the option to purchase from any one of the suppliers, these suppliers are allowed to lower their prices at any time during the term of the contract to ensure that they remain competitive. This mechanism thus enables the public sector to enjoy even greater cost savings. A multiple-supplier approach would also reduce the risk of stock shortages as there might be situations where a single supplier cannot cope with sudden surges in orders.

At the same time, DSTA enhanced the Government Electronic Business system to allow the suppliers to change prices and item descriptions easily. User guides were also made available online for government agencies’ reference.

As compared to market pricing of S$565 million, S$88 million in cost savings was achieved for nine DA contracts renewed for the public sector in 2013.

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