PERSONAL AND CONFIDENTIAL
RAVE
ROOISTRYN 21 12:21/3
ماد
Foreign and Commonwealth Office
London S.W.1
1 March 1973
HKK21/4
HE Sir Murray MacLehose, KCMG, MBE, HONG KONG
SH
ཨཏྠཀ་
Hem PIA
Mr Goodfellow
As
Á 11
MASS TRANSIT RAILWAY
(54)
1.
Thank you for your letter of 16 February and for the copy of the ExCo paper, which has now arrived. We will of course treat these papers with due discretion, bearing in mind that they were sent to us as the administering power and not for British commercial advantage.
2.
We have, however, hoisted it in that a decision for or against a consortium approach has to be taken by the end of March, and that the British consortium may have to get close to a fixed price package if they are to keep abreast both of the other consortia and of the alternative multi-contract approach. We have passed on the message to the consortium that they would be wise to send their decision takers, rather than their number twos, to the remaining rounds of discussions.
3.
We have also noted your point that some of your experts do not go along with the preference for multi-contracts expressed in the ExCo paper. As an outsider's comment, however, I do slightly wonder whether the form which the paper has taken does not to some extent preempt subsequent discussion and make it difficult for an honest consortium bid to succeed. It seems that the onus is now on each of the consortia, first to establish a fixed price; second to show that it is less than 54% dearer than a hypothetical multi- contract price; third to outbid each other; and fourth to do so within four weeks for a large contract which will take years to complete and where the available information is still scanty.
4.
In this situation there is bound to be a temptation to quote a low figure in order to shut out the competition, knowing that once both sides are committed, the detailed discussions will have to begin. This would, however, as you know be contrary to British commercial practice, and thus could put the UK at a disadvantage.
PERSONAL AND CONFIDENTIAL
15.