TNAG-0422-FCO40-468-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 82

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DOR ANNEY

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instant see sep sub

Sikh a permal jike Celler for in Drople refire wixt und u HK would,

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CONFIDENTIAL

-well be prof Vuble/3

Mr Wilford

Sir D Watson

PS Mr Royle

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I agree. But might it

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sent the letter

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سعد

HONG KONG: MASS TRANSIT SYSTEM Rec, a letter?

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A.R

1. We have now received the Hong Kong Executive Council

Paper, which was taken in the Council on 13 February, together

with an explanatory letter of 16 February from the Governor.

2. The ExCo paper is clearly biased towards a multi-contract

solution. The crucial passage is from pages 14 19 of the

main paper (paras 22 31). This purports to set out the

advantages and disadvantages of a single-contract and multi-

contract approach. The argument is deficient in several

respects. For example it is argued that the employment of a

consortium would probably delay the start of work by up to 12

months by comparison with a multi-contract approach. In fact

the opposite is probably the case. Again the paper acknow-

ledges that multi-contracts would create a management and

co-ordination problem. But this problem is not quantified and

is apparently ignored in the balancing paragraph 25 where it is concluded that the "better" (not just the cheaper) approach

should be deduced by comparing price against credit terms.

3. Given this general approach and the valid comment in the

Governor's letter that a multi-contract price could not be

established without actually going out to tender, it is clear

that the onus of proof is now on each of the consortia to

establish, first a fixed price; second that this price is less

CONFIDENTIAL

/than