G.F. 324 0003260
CONFIDENTIAL
22 10/0591/29 (1
CONFIDENTIAL
Dear Sir,
1st August, 1973.
I refer to the consultations which took piree in Hong 3 on 29th and 29th June, 1973 between reprosent:tiven of the British Group rad the Mass Transit Steering Group, copios of the records of which were subsequently sado available to you. : refer sise to your letters dated 7th, 18th, 20th an: 21st July, in which you provided further information in clarification or modification of the Britis Group's proposals of 4th Jung.
I am now to inform you that, after considering the teoring \roup's recommendations, the Governor in Jouncil Nat
(o
decided in principle to adopt the single-contract prouch for the construction and equipment of the first four stages of the Mace Transit 1lway; and
directed that the Steering (roup should forthwith enter into further exchanges with the four consortia cho have put forward single-contract proposals, with r view to msørtaining from each cousortium whether they would be
reparel tu oater into substantive ne solissians with Steering iroup.
la explimation of paragraph 2(b) above, and for your own confidential information, the decision to adopt the single-contract approach has been based largely (albeit not solely) on the need to limit uncertainty as to the final coat of the project. After careful consideration of all the factors involved, the Government has come to the conclusion that, because of the heavy interest burden, the finencial viability of the system would be assured only if the final contract price, after taking into account cost escalation and all other variations, is below the equivalent of il 5,000 million at the
The Hon. Sir Douglas lague, Butchison International itd., Prince's Building,
etc..
CONFIDENTIAL
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