TNAG-0310-FCO40-346-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 209

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DRAFT

In any works programme there is some risk of slippage which may of course be

offset by price rises but we would wish to build in some safeguard on this account

by altering wording of your condition paragraph 3(B) to read quote any underspending

in the capital works programme over the whole period, for any reason, would not

automatically result in any increase in the cash contribution but would be subject to

negotiation. unquote. Virement between one year and another remains essential

feature.

4.

You no doubt know that part of capital works programme is carried out direct by

DOE and not through Hong Kong PWD and total remaining value of this reducing element

is some £m1.3 during the five years. We had assumed that under arrangements to be

made for provision of capital works in kind Hong Kong will assume responsibility for

payments for this element as they become due. As financial year now advanced this

would further entail cash payment to DOE for expenditure to date. Assume you agree to

this treatment of element of programme not in hands of PWD even though provision is

nominally in kind.

5.

Throughout our consideration of the different proposals during the past months

we have had in mind throughout the importance of avoiding demarcation arguments about

whether or not a particular works requirement is or is not reckonable for the purposes

of the contribution. We therefore welcome condition A of your paragraph 3. It follows

that Hong Kong will accept in any particular case DOE assurance that the same criteria

and controls have been exercised as if HMG were paying.

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