3
You may well ask what we mean by a "firm price bid".
In essence it is a lump sum price for the execution of the
whole job, subject to agreement between the Anglo-Italian
Group and the Mass Transit Authority upon conditions of contract
such as the definition of force majeure and the treatment of
escalation. The latter is clearly the most important single
--
factor in this situation and there are a number of different
suggestions we can make. Common to all of them, however, is
our very firm view that escalation of costs in Hong Kong
should be recovered by the application of formulae since
changes in
these costs cannot reasonably be assessed by us,
but can be reflected to some degree in the fare-structure of
the System. As far as escalation of costs in the U.K. and Italy
are concerned, they can either be covered by formulae along the
lines of those already submitted by us to you in June or they
can be covered by an appropriate contingency in the lump sum
price, with the possible exception of certain materials where
price variations are unpredictable.
We foresee no difficulty in fitting together the
British and Italian financial proposals, which have lready
been outlined to you, into one coherent financial plan for
the project as a whole. There will indeed be some advantages
to be gained in this respect from the merger of the British
and Italian Groups, since a certain number of the off-shore
purchases of equipment and services envisaged by the Italian
Group can be directed towards the U.K. and would, under these
circumstances, qualify for the long term export finance
guaranteed by E.C.G.D.
proposal.
We look forward to hearing your reactions to this
No comments yet.
Private notes are available after approval.