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than 5.25% more expensive than a hypothetical multi-contract
price; and third that it is lower than that offered by the
other consortia.
Finally all this must be achieved by the
beginning of April if the option of going out to tender is to
be abandoned and the deadline of starting construction by
1 January 1974 is to be met.
4.
It is clear from the Governor's letter that the initial
preference for a multi-contract approach is not shared by the
whole of ExCo. Nevertheless the way that the debate is
developing does pose severe problems for the British consortium.
The Governor emphasised earlier that these papers were
being sent to us as the administering power, and that we should
not make commercial use of them. I have, however, discussed
the general situation with Mr Glaves-Smith the responsible
Under-Secretary in the DTI. We agreed that it would be diffi-
cult for the British consortium to meet all the criteria
described above for a contract of this magnitude, which will
take so long to complete, where the available information is
still so scarce, and where the time allowed is so short. The
consortium cannot quote a reasonable safe price as a basis for
negotiation, both because the Hong Kong Government might as a
result decide to opt for multi-contracts, and also because the
Japanese, who have indicated (see the Governor's letter and
page 8 of Annex E to the main paper flagged "reference here").
that they will offer a fixed price for the first four stages,
are not likely to be scrupulous about quoting a low initial
figure in order to shut out the competition.
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15.