TNAG-0422-FCO40-468-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 83

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than 5.25% more expensive than a hypothetical multi-contract

price; and third that it is lower than that offered by the

other consortia.

Finally all this must be achieved by the

beginning of April if the option of going out to tender is to

be abandoned and the deadline of starting construction by

1 January 1974 is to be met.

4.

It is clear from the Governor's letter that the initial

preference for a multi-contract approach is not shared by the

whole of ExCo. Nevertheless the way that the debate is

developing does pose severe problems for the British consortium.

The Governor emphasised earlier that these papers were

being sent to us as the administering power, and that we should

not make commercial use of them. I have, however, discussed

the general situation with Mr Glaves-Smith the responsible

Under-Secretary in the DTI. We agreed that it would be diffi-

cult for the British consortium to meet all the criteria

described above for a contract of this magnitude, which will

take so long to complete, where the available information is

still so scarce, and where the time allowed is so short. The

consortium cannot quote a reasonable safe price as a basis for

negotiation, both because the Hong Kong Government might as a

result decide to opt for multi-contracts, and also because the

Japanese, who have indicated (see the Governor's letter and

page 8 of Annex E to the main paper flagged "reference here").

that they will offer a fixed price for the first four stages,

are not likely to be scrupulous about quoting a low initial

figure in order to shut out the competition.

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15.