light of the above factors, the Secretary for the Treasury authorised the Director of Government Supplies to enter into direct negotiations with Sikorsky to see if the option for four S76A helicopters could be converted into a revised order for two S70A helicopters on favourable terms and conditions. Intensive discussions then took place between representatives of the two sides and, as a result of these negotiations, Sikorsky agreed to revise the purchase price from an initial quotation of US$ 25.3 million to US$23.8 million for the package, as set out in paragraph 15(a) below, representing a price reduction of US$1.5 million. Sikorsky also undertook to improve on certain contractual terms related to warranty and aftersale service, etc.
The revised price of US$23.8 million
two S70A helicopters is US$4.5 million less than the price of US$ 28.3 million if the option for four S76A helicopters were taken up at this point in time.
for the
Conclusion
14.
The operational departments concerned, supported by the Secretary for Security, recommend that the expansion of the RHKAAF can best be completed by the purchase of two S70A helicopters. The Secretary for the Treasury and the Director of Government Supplies are satisfied that Sikorsky's revised proposal represents good value for money.
Financial implications
15.
The capital cost of the two S70As based on the negotiated tender price is as follows
(a) From Sikorsky for the
purchase of two S70A
US$
helicopters
(i)
two basic S70A helicopters
18,027,784
(ii)
special role equipment
1,318,636
(iii)
maintenance and pilot
657,076
training in Hong Kong
(iv)
delivery costs
88,608
(v)
spares and ground support equipment
3,734,990