TNAG-0545-FCO40-640-Strength-of-garrison-in-Hong-Kong-1975 — Page 4

GR 275

IMMEDIAT

SYPHER/CAT A

CONFIDENTIAL

N

Γ

FM HONG KONG 080792Z

CONFIDENTIAL

LAST

AFF.

TO IMMEDIATE F C O TELNO 1243 OF 8 DECEMBER.

425

NEXT

REF.

447

FOR O'KEEFFE.

PLEASE PASS FOLLOWING TO DAVIES FROM JEAFFRESON.

A FURTHER POINT HAS ARISEN CONCERNING THE APPLICATION OF THE

TENDER PRICE INDEX TO THE BALANCE FOR WORKS SERVICES. AS ADVISED

IN PARA, 3 OF MY TELNO 1223 OF 4TH DECEMBER, BECAUSE OF WAGES AND

FLUCTUATION CLAUSES THE BALANCE SHOULD INCLUDE COMMITTED BUT UNSPENT

FUNDS IN RESPECT OF UNCOMPLETED CONTRACTS. BUT THE BALANCE SHOULD

NOT (REPEAT NOT) INCLUDE SUMS THAT CAN NO LONGER INFLATE. FOR EXAMPLE, IN CERTAIN CIRCUMSTANCES FINAL PAYMENT CAN BE SUBSTANTIALLY DELAYED AFTER WORK HAS BEEN COMPLETED AND IT WOULD BE INAPPROPRIATE

TO INFLATE THIS AMOUNT. THERE IS ALSO THE QUESTION OF RETENTION

HONEY. IN PRACTICE, THE MECHANICS FOR CALCULATING THE BALANCE ON

THIS RASIS MAY TURN OUT TO BE QUITE TRICKY, SO WE SUGGEST THE

PRINCIPLE BE INCLUDED IN THE STATEMENT OF FINANCIAL PROCEDURES BY

MEANS OF THE FOLLOWING AMENDMENTS, LEAVING THE DETAILS TO BE

WORKED OUT BY THE FINANCIAL PROCEDURES COMMITTEE

PARA. 5. DELETE ''ACTUAL EXPENDITURE ON WORKS SERVICES FOR THE

PREVIOUS QUARTER AND ESTIMATED EXPENDITURE FOR THE CURRENT QUARTER''

AND INSERT IN ITS PLACE PROVIDE THE NECESSARY INFORMATION ON

EXPENDITURE ON WORKS SERVICES''.

PARA. 18.

INSERT A NEW SENTENCE IMMEDIATELY BEFORE THE LAST SENTENCE

TO READ AS FOLLOWS:

2 2 THE BALANCE WILL BE CALCULATED IN SUCH A WAY AS TO AVOID APPLYING

THE INDEX TO SUMS WHICH WILL NOT INFLATE (E.G, REPRESENTED BY WORKS

COMPLETED BUT NOT PAID FOR AND BY RETENTION MONEY)''.

CONFIDENTIAL

12. A