TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 142

COMMERCIAL IN CONFIDENCE

MR FARRY OFF

199

HONG KONG MASS TRANSIT SYSTEM

cc Mr Cotterill ECGD

Miss Lackey CR#2 Mr Watson OFP (0.4) Mr Stuart FCO

I asked Mr Wyatt of Costain to call in this afternoon for a general talk about the civil engineering side of this project.

I said to him that I had nothing new or dramatic to report, but that I thought I should tell him that I felt a little unease at some of the reports coming back from liong Kong about the civil engineering element in the British Group. There nad first been the concern about whether they could tackle all the tunnelling (which had happily been cleared up) and more recently there had been one or two reports that the Hong Kong authorities felt that the British

Finally, engineers were being more cautious than their competitors. it had been reported to me that the Hong Kong Government thought that the civil engineers were the "weak link" in the British Group. I asked Mr Wyatt to comment.

Mr Wyatt replied that Costain's own experience in Hong Kong over the tunnel had impressed on them the necessity to treat the Hong Kong Government as very hard bargainers. Costain had accepted conditions in that contract which had resulted in their getting little or no profit. They could not afford to take risks in a project of this 8120. He denied, however, that Costain were forcing the other members of the civil engineering group to take an over-cautious attitude. On the contrary, they had encouraged the others to go as far as they had. He ended by saying that the civil engineering group had put a lot of work into the projce, they still very nuch wanted to get it and would fight hard to do so, but in the last resort they would have to drop out if the Hong Kong Coverment insisted on conditions which they regarded as unreasonable,

I said that I fully understood this and there was no question of asking the civil engineers to undertake work on terms which they thought unreasonable. I wondered, however, whether in the earlier talks they might have placed too much stress on their conditions and safeguards. Without giving them up in any way, they might create a better impression at the next round if they were to stress the positive attractions of the British Group including their previous experience in operating in Hong Kong, the enormous resources at the disposal of the British contractors, and the fact that they wore probably making a more realistic assessment of the situation (because of their earlier experience) than any of their competitors. Mr Wyatt said that he realised the importance of stressing these positive aspects of the British Group's proposals.

FW Clavos-Smith

OFF

V/S Rm 407 Ext 3649

20 August 1973

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