Modernising Security Contracts – Speech by Mrs Josephine Teo, Minister for Manpower and Second Minister for Home Affairs

Distinguished Guests

Presidents from represented associations

Ladies and Gentlemen

A.     Introduction

1.     Good morning. I am very pleased to join you at the Security Industry Conference and Safety and Security Asia Exhibition 2018 [1] .

2.     The theme for this year’s conference is “The Future of Security: Fiction or Reality?”. This is a timely topic. The security industry is at a turning point. Demand for security services is increasing due to heightened security threats. As Singapore continues to develop, there are more buildings, more assets in need of security services.

3.     But security agencies face a number of challenges in meeting this demand. Their operating models are manpower intensive. They also face serious competition from other industries in terms of pay, work conditions and career advancement.

4.     There is an urgent need to re-imagine how security services are delivered to meet these challenges. Having more manpower alone is not the answer. Instead we need to deliver more intelligent solutions that use technology to augment manpower so that one person can do the job of many, more effectively and potentially, with better conditions and higher pay.

5.     This Future of Security is for us to create together. MHA, working collectively with our tripartite partners, is fully committed, to the Security Industry Transformation Map (ITM) that was launched in February this year, and the Industry Digital Plan that followed in July.

6.     Over the next two days at this conference, you will have the opportunity to hear and discuss how we can create this future. The speakers will touch on an array of topics such as integrated smart security solutions, risk assessments and outcome-based contracting; these are all key themes of the ITM. The exhibition showcases some of the latest security technologies, and is where you can see how new technologies can transform security services. I hope you will leave this conference with ideas on how to get your companies ready for the future.

B.     Envisioning the Future of Security through Security Contracts

7.     Today, I want to focus on how we can create the future of security by modernising contracting practices. This has been a very consistent theme, whenever I meet with the community of security agencies.

8.     Security contracting is not as exciting as security technologies – but they are an extremely important part of our transformation effort. All security services start with a contract between the client and the security agency. This contract sets expectations of how security services are to be delivered, which in turn shape what services providers can do. In other words, contracts define the boundaries of what the future of security can be. Just think about that. What the future of security will look like can sometimes be very dependent on just how the contract is done.

9.     Most security contracts today are output-based security contracts. More often than not, they only stipulate the headcount required. For example, a service buyer will ask for a certain number of security guards to be deployed at a particular location and a particular time. The service buyer will therefore naturally and usually choose the vendor with the lowest per headcount cost.

10.     This approach unfortunately has several shortcomings. It leaves little or no scope for security agencies to do more than just the provision of manpower. There is also little or no scope for agencies to differentiate their services using technology. So it is very hard to tell qualitatively what will be different. Consequently, there is low awareness of new technologies that can provide the same or even better security outcomes, sometimes at even lower overall costs. This becomes a vicious cycle and if we do not break this cycle, the industry’s ability to innovate will always be limited by rigid headcount requirements.

11.     We must modernise our security contracts by making them outcome-based, and break the assumption that more guards equal better security. What does that mean? There is a vivid example that many of us encounter on a regular basis. When we land at Changi Airport, whether as visitors or as Singapore citizens coming home, all we want to do is to get to our homes or hotels fast. We don’t really care if immigration deploys more manpower or installs more automated turnstiles for us to clear immigration. Our desired outcome as travellers is just to get through immigration quickly. How that is achieved without compromising security, we leave ICA to figure out. The same concept should apply to security services.

12.     When we start with outcomes, when we specify what is the result that we are looking for, security agencies can become free to innovate and compete on how best to achieve these outcomes, instead of being prescribed precisely how to do so with how many manpower, in which particular location, at what time. For example, to prevent unauthorised entry into the building, security agencies can propose a combination of automated visitor management systems and mobile surveillance systems that automatically identify intruders. The end result? Fewer security officers will be deployed but it nonetheless does not prevent them to meet the same security outcomes, with better career opportunities for those who are deployed, and potentially lower costs for the security agencies that are providing the services and even on the buyer-side. So it can be win-win-win for all three parties, but we must be willing to break out of the mould and consider different combinations of man and machine.

13.     A good example is how JTC recently tendered an outcome-based Security Master Contract for One-North. It’s a massive complex of buildings. Security companies were able to respond to JTC’s outcome statements by proposing integrated solutions that use technology such as facial recognition and video analytics. As a result, they could achieve manpower savings of between 15% to 45% in the different security functions. As compared to a standard manpower-based contract, this translates into substantial costs savings. These savings can in turn support the deployment of higher skilled and better paid staff to carry out larger job roles. JTC will share more on their experience at the conference tomorrow.

14.     How do we go about modernising security contracts? We need security agencies and service buyers to see the benefits of doing so, and the Government will help to lead and facilitate this effort in three ways:

a.     First, the public sector will take the lead in adopting outcome-based security contracts;

b.     Second, we will provide resources and training for private sector procurement and security officers; and

c.     Third, we will ensure a ready pipeline of new technologies that can be incorporated into outcome-based security contracts.

C.     Government to lead adoption of Outcome-Based Security Contracts

15.     Let me first start with the Government’s intention to take the lead in the adoption of outcome-based security contracts. I had mentioned this at the launch of the Security ITM in February 2018. The goal is that most government agencies should adopt outcome-based security contracts by 2020.

16.     To put this into action, MHA, with support from the Ministry of Finance, will require government agencies to adopt outcome-based security contracts, wherever it is feasible to do so. This will be done progressively from mid-2019, so we are bringing forward the start date, and this will begin with new contracts of larger contractual value. Some government agencies, such as JTC, SLA, MOE and HDB, are prepared to switch to outcome-based security contracts even earlier.

17.     This move is significant because in total, security contracts from government agencies amount to over $350 million every year, or about a fifth of annual industry demand. We hope this will create momentum and encourage private sector service buyers to also adopt outcome-based security contracts.

18.     For private sector service buyers, the government has also been working closely with NTUC U-Care on the Smart Sourcing Initiative to provide funding support for those seeking to adopt outcome-based contracting for security, cleaning and landscaping services. We are looking at expanding the Smart Sourcing Initiative and will share more details when ready.

D.     Resources and Training for Outcome-Based Security Contracts

19.     Let me turn now to training. Building up industry capabilities to implement outcome-based security contracts is just as important as strengthening the will to change. The government will ensure that resources and training are available for both procurement officers and the security industry.

20.     In July 2018, MHA launched the Guide on Outcome-Based Security Contracts. This guide provides guidelines and templates on how to adopt outcome-based contracts at every stage of the tender process, and is available on MHA’s website.

21.     We will also provide training for three groups of officers to support the adoption of outcome-based contracts. The first group are the procurement officers. They obviously need to know how to buy in smarter ways, because they are the ones who write out the contracts. MHA has worked with the Security Industry Institute under Temasek Polytechnic, supported by SkillsFuture Singapore (SSG), and NTUC U-Care to develop a new training course that will be based on the Guide on Outcome-Based Security Contracts that I mentioned earlier. This course will teach features of outcome-based contracting, how to draft the contracts and how to evaluate the tenders. The first run will commence in November 2018, and is open to both the private and public sector. We are pleased to announce that applications are now open and you can refer to the Security Industry Institute’s website for more information.

22.     The second group are our security consultants. Crafting a good outcome-based security contract requires a security risk assessment to be done first. Security consultants conduct this risk assessment and develop a security plan to mitigate the risks. This is not a new concept – there are already a number of security consultants who can do this type of work. But we need to grow this pool of security consultants to meet the new demand.

23.     Therefore, MHA’s Centre for Protective Security Studies has partnered with the Temasek Polytechnic’s Security Industry Institute, a Continuing Education and Training centre supported by SSG, to develop a new Specialist Diploma in Security Consultancy. This one-year part-time programme will cover risk assessment techniques, building security and relevant legislation that govern what you can and cannot do, security technologies, and project management. It will provide a pathway for security officers or mid-career entrants to the security industry to become a security consultant. The first intake is planned for April 2019 and applications will open later this month.

24.     The third group is also the largest. They are our security officers. They will need to learn new skills to harness technology, which is a key ingredient in all outcome-based security contracts. MHA is working with the Police Licensing and Regulatory Department and training providers to incorporate greater use of technology in existing courses within the Progressive Wage Model (PWM) framework. Beyond PWM, the Digital Training Roadmap under the Security Industry Digital Plan also provides a list of training programmes to prepare security officers for the digital economy. I would also strongly encourage officers to attend these courses to develop the digital literacy that will be useful in the future. As part of the SkillsFuture initiatives under SSG, the SkillsFuture Study Award recognises individuals who have taken ownership of their own training, and I am happy to be recognising this year’s five recipients at the opening ceremony.

E.     Technology Solutions to support outcome-based security contracts

25.     Let me turn now to technology solutions. Beyond training our workers, the government will also drive innovation to sustain a pipeline of innovative technology solutions which can support outcome-based security contracts. New technology solutions can make it easier for security agencies to meet their client’s security outcomes.

26.     We launched the IMDA-MHA Call for Innovative Solutions earlier this year. This call allows security agencies to partner with technology providers and service buyers to co-develop solutions that are not widely available on the market. We have set aside $2.5 million for this initiative. The call closed in May 2018, and after positive feedback from the industry, we have decided to award four pilot projects. These projects cover a wide range of technology innovation. For example, one of the projects will look at how Artificial Intelligence for CCTVs ‘on the edge’ can help to automate detection of abnormal events for CapitaLand’s malls. Another project will develop a cloud platform that integrates key security functions needed by security providers, officers and security buyers. This platform will even make it easier for service buyers to administer outcome-based security contracts, because it can generate measurable KPIs to track the agencies’ performance. You can find out more about these projects at IMDA’s booth at this conference.

27.     I would also like to congratulate the recipients of the Merlion Award today, which also recognises excellence in technology innovation.

Conclusion

28.     Let me conclude. The private security industry plays an important role in keeping Singapore safe and secure. This is why we must succeed in our efforts to transform and uplift the industry. Adopting outcome-based security contracts is a first step. It will help unlock the creativity of our industry to continually offer better security solutions, so that buyers and security officers can benefit. The government has committed to take the lead, and to provide support for training and innovation. The next step is for everyone to also play a part, to create the future of security together.

29.     I wish you all a fruitful and enriching conference ahead. Thank you.

[1] The Security Industry Conference is organised by Security Industry Institute under Temasek Polytechnic – supported by SkillsFuture Singapore, and the Conference & Events Management Services (CEMS). The conference is co-located with the Safety and Security Asia exhibition, which is organised by CEMS and hosted by the Security Systems Association Singapore.