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Sikh a permal jike Celler for in Drople refire wixt und u HK would,
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CONFIDENTIAL
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سعد
HONG KONG: MASS TRANSIT SYSTEM Rec, a letter?
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A.R
1. We have now received the Hong Kong Executive Council
Paper, which was taken in the Council on 13 February, together
with an explanatory letter of 16 February from the Governor.
2. The ExCo paper is clearly biased towards a multi-contract
solution. The crucial passage is from pages 14 19 of the
main paper (paras 22 31). This purports to set out the
advantages and disadvantages of a single-contract and multi-
contract approach. The argument is deficient in several
respects. For example it is argued that the employment of a
consortium would probably delay the start of work by up to 12
months by comparison with a multi-contract approach. In fact
the opposite is probably the case. Again the paper acknow-
ledges that multi-contracts would create a management and
co-ordination problem. But this problem is not quantified and
is apparently ignored in the balancing paragraph 25 where it is concluded that the "better" (not just the cheaper) approach
should be deduced by comparing price against credit terms.
3. Given this general approach and the valid comment in the
Governor's letter that a multi-contract price could not be
established without actually going out to tender, it is clear
that the onus of proof is now on each of the consortia to
establish, first a fixed price; second that this price is less
CONFIDENTIAL
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