JU
Department of Trade and industryx
Overseas Finance & Planning Division
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COMMERCIAL-IN-CONFIDENCE
I A C Kinnear Esq
British Trade Commission
HONG KO
Dear Kinnar
RECEIVED IN REGISTRY No. 61
- 3 FEB 1975
HKK 2/4
Your reference
Our teference
Date
OPG 300
27 February 1975
HONG KONG MASS TRANSIT
1
Things have begun to move at this end on the contracts publicised in the MTA's brochure, which was given a wide circulation among British civil contractors and railway equipment manufacturers. David Royce discussed the scheme with Harry Jackson and Norman Scott, both of GEC's Headquarters team at Stanhope Cate and I took the opportunity of meeting Messrs Ridley and Andrew who stressed the importance the MTA attached to bidders' ability to keep to the required delivery dates. We touched on the case for an M & E package, on which question they took a rather neutral line but said that apart from any credit advantage, one attraction of a package was that it would renove from the MTA the responsibility for inter- facing its component parts.
2 David Royce took a meeting last week at which the British approach to the scheme was discussed. I attach a copy of the note of the mecting from which you will see that it is not going to be plain sailing. Having burnt their fingers in the first bidding round the civil contractors are extremely wary, The letter which Hugo Kindersley is to send on their behalf to the MTA will mention the assurance which the MTA failed to act upon, that negotiations with the British Group would be re- opened if the Japanese withdrêw. We doubt that civil firms can be persuaded to respond unless the MTA are willing to handle the civil portion on the sort of lines which Kindersley's letter will spell out i.e involving target prices and the use of bills of quantity. Once the letter is sent and I shall of course let you have a copy action at your end may, I think, be called for, in assessing the MTA's reaction to it and perhaps also in seeking to press the case for the method it proposes for handling the contracts. It would be helpful in deciding on tactics if you were able to find out and let me know, when the time comes, what sort of response the MTA has had to its invitations to prequalify.
3 Turning to the Hi & E contracts, GEC too feel sore about their treatment by the MTL on the first bidding round. Their tendering costs, they say, amounted to over £100,000 and they are not disposed to incur costs of this order again without adequate safeguards. Although they are willing to let their subsidiaries go after individual contracts, before committing themselves to putting a package together they wish to have assurances from the MTA that the scheme will go forward (the note of the meeting mentions the reasons underlying their doubts) and that they will be com pensated for their costs if it does not. 1 would be grateful for your advice, as
1
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