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- 7.
XCS(73)12
Hong Kong Metro Constructors Cave not submitted a ceiling price. Instead, they have only submitted a range of three technical prices within which they are confident of establishing a contract price on a similar basis to the Anglo-Italian Group. To this would be added an assumed allowance for escalation to produce a lumpsum price at the time of signing the contract. This would, however, still be subject to "force majeure" which would include cost escalation over a threshold rate to be defined and "serious economic dislocations". Based on the Consortium's "expected" and "minimum" technical prices and assuming the same rate of cost escalation of 10% per annum as the Anglo-Italian Group, this consortium's "expected" and "minimum" ceiling prices could then vary between $6,000 million and $5, 400 million. Even on the most favourable view of their submission, therefore, they would only be able to meet the requirement of a final price not exceeding $5,000 million if they could, in the end, quote on the basis of their "minimum" technical price the rate of cost escalation was no more than 8% per annum. On the other hand, on a more unfavourable view, this consortium's final price, like that of the Anglo-Italian Group, could well be significantly above $5,000 million. It must also be noted that because this consortium have not yet quoted a ceiling price their submission can only be compared with hte others on the basis of assumptions.
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From this description of the differences between the bids it is apparent that:
(a) the Japanese Consortium is the only one offering
a firm price within the Government's ceiling of $5,000 million without subsequent cost escalation of any kind Although there is a possibility that one or both of the other two consortia might be able eventually to meet this requirement there is no certainty of this (and they would both still require cost escalation over a given level to be regarded as "force majeure");
(b) the Japanese bid is subject to a deadline and
lapses after 11th December 1973. It is clear, on the other hand, that both of the other two consortia would prefer to go back to the main sequence with firm prices not being fixed before April-June next year, that is to say, after all relevant information is available. If the Japanese bid were accepted this would enable an earlier start to be made on construction and also,
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