TNAG-0426-FCO40-472-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 69

XCS(73)8

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4

Further Consultations with Consortia

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Paragraphs 21 - 27 of memorandum XCC(73)10 at Annex A examined two basic methods by which the construction and equipment of the MTR could be organised, namely:

(a)

(b)

a single-contract approach, which would involve awarding the contract for the construction and equipment of the MTR to one consortium; and

a multi-contract approach, which would involve international competitive tendering for a series of separate contracts;

and assessed the advantages and disadvantages of each of these approaches. The conclusion reached in paragraph 27 of that memorandum was that the information then available was insufficient for a definite choice to be made with certainty between the two approaches. In particular, it was considered that additional information was needed as to the prices and credit terms likely to be available, particularly from the various consortia which had submitted single-contract proposals. The further consultations which have since been held with the consortia have been aimed at obtaining this additional information to the greatest possible extent.

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Immediately after the decisions recorded in paragraph 2 above were taken, the Steering Group issued letters to the four consortia inviting them to enter into further consultations with the Group at the earliest opportunity. The objective of these consultations was briefly explained in the letters, and particular attention was drawn to the need for fairly firm. indications (albeit not firm commitments) of the pricing methods each consortium would adopt in negotiating the contract, and of the prices which would be likely to result from the application of such methods.

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In the consultations which took place towards the end of March, in which the Steering Group's objective was further explained in detail, all the consortia indicated that it would be quite impossible for them to provide the information required within the time limit set by the Group (which envisaged reporting back to Honourable Members by the end of April). They also stated that the amount of information available to them on various technical and design aspects was insufficient for even an indicative pricing exercise to be undertaken.

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Considering the consortia's difficulties, and recognising that the objective of the consultations would be completely negated if it were to insist on reporting back to Honourable Members by the end of April as originally planned, the Steering Group revised the timetable so as to give the consortia approximately two months in which to prepare and present their further proposals.

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