PROBLEM IS ESSENTIALLY COMMERCIAL.
3. APART FROM PRICE (WHERE METCAM'S PROBLEM IS NO DOUBT COMPOUNDED
BY LIKELY U.K INFLATION BETWEEN NOW AND 1982) THE MTR IS NOW QUANTIFYING THE COST OF TENDER QUALIFICATIONS REQUESTED BY CONTRACTORS FOR ADDITION TO THE BASE BID. THUS METCAM'S REFUSAL TO ACCEPT CONDITIONS SUCH AS MTR'S FORCE MAJEURE CLAUSE (WHICH EXCLUDES STRIKES) OR IMPORT DUTY GUARANTEE (SEE BELOW) CONTRASTS
UNFAVOURABLY WITH OTHER BIDDERS WHO HAVE PUT IN CLEAN BIDS. FOR YOUR OWN INFORMATION, THOMPSON TOLD ME THAT A RECENT
UNSUCCESSFUL BID BY U.K METRO CONTRACTORS FOR TWO LARGE MTR CIVIL ENGINEERING CONTRACTS WERE BEDEVILLED BY COMPLICATED QUALIFICATIONS ON WHICH THE MTR SET A PRICE.
1.
4. THE MTR'S IMPORT DUTY GUARANTEE CLAUSE REQUIRES CONTRACTORS
TO ACCEPT LIABILITY FOR ANY IMPORT DUTY WHICH MAY BE IMPOSED BY
THE HONG KONG GOVERNMENT BETWEEN CONTRACT SIGNATURE AND THE TIME
OF DELIVERY. AS YOU WILL BE AWARE HONG KONG HAS TRADITIONALLY IMPOSED NO TARIFFS ON MANUFACTURED GOODS (OTHER THAN ALCOHOL, SPIRITS, CIGARETTES AND TOBACCO) AND RISK IS THEREFORE NEGLIGIBLE. MTR ARGUE THAT SINCE OTHER CONTRACTORS CAN ACCEPT THE RISK METCAM SHOULD DO LIKEWISE. I WONDER WHETHER THIS IS NOT PERHAPS AN AREA WHERE H.M.G COULD OFFER METCAM SOME COMFORT IF THEY DECIDED TO WAIVE THEIR QUALIFICATION.
5. SANSOME ALSO TOLD ME THAT HE CANNOT PUT IN A FIXED PRICE BID
FOR THE FURTHER OPTION CONTAINEDIN THIS CONTRACT BECAUSE ECGD'S
COST ESCALATION SCHEME EXPIRES IN MARCH, 1979. THIS IS A FAMILIAR PROBLEM AND I REGRET THAT UNTIL YESTERDAY I WAS UNAWARE THAT THE STAGE 2 CONTRACT IS FOR 150 CARS PLUS AN OPTION FOR A FURTHER 70 1.E THE SAME AS STAGE 1.
6. SANSOME AND THE CHIEF EXECUTIVES OF OTHER COMPETITORS WILL BE
SEEING THOMPSON IN SERIES TOMORROW MORNING. I SHALL REPORT HIS
FINDINGS ON MONDAY, LOSS OF THIS CONTRACT WOULD BE A SERIOUS BLOW
TO OUR CREDIBILITY IN THIS MARKET FOLLOWING OUR SUCCESS IN STAGE 1.
1 AM CONVINCED THAT THE MTR ARE NOT SIMPLY ADOPTING A NEGOTIATING
POSITION. THEY HAVE RECEIVED VERY ATTRACTIVE BIDS, PARTICULARL Y
FROM THE CANADIANS WHICH WILL REQUIRE SOME FUNDAMENTAL
-ETHINKING FROM METCAM. WE SHOULD ALSO START TO CONSIDER WHAT
IF ANY GOVERNMENT FINANCIAL HELP IS AVAILABLE.
ARCH