CONFIDENTIAL
XCC(92)89
Financial Requirements for Government Tenders
13
The work of the CTB is complemented by the action taken by the Works Branch in assessing the financial ability of tenderers to undertake works. Part of this work is independent of tender evaluation: companies wishing to bid for different classes of Government contracts must meet minimum levels of working and employed capital. For the present case, tenderers must be listed as Approved Contractors for Public Works, either on List I, Group C (contractors with main presence and head office in Hong Kong), or List II (contractors with main presence and head office outside Hong Kong), for which the working and employed capital requirements are each HK$6.8 million.
14
To be recommended for the award of a contract, tenderers must also show through their audited accounts that, at the time of awarding the contract, they will have available sufficient working and employed capital for the tender in question. For working capital, they must show that they have available the lesser of $6.8 million (the working capital described in the previous paragraph) or 6 per cent of the combined annual value of the contract they are tendering for plus all other contracts they are currently engaged on. Their employed capital must meet the minimum required for listing (i.e. $6.8 million).
15
If any deficiency comes to light during tender assessment, tenderers are warned that they must satisfy the Government that, by the time of award of tender, they will be able to rectify the position.
16
These precautions are necessary to ensure that companies undertaking Government works will not slow down work or even walk away from contracts due to cashflow difficulties. Such assurance is especially important in the case of the Tsing Ma Bridge, which is a key Airport Core Programme contract.
CTB Assessment
Hyundai
17
It has become clear from pre- and post-Gulf War accounts that Hyundai's financial ability to undertake the project had been considerably undermined between the time when they were prequalified (on the basis of their unaudited 1990 accounts) and submission of their tender. This was
Executive Council