B
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XCC(75)55
Although tender prices for the electrical and mechanical contracts will not be available until later in the programme, revised estimates have been prepared after reference to manufacturers' current prices. Thus all the initial representative tenders, which it was agreed in January should be presented for Honourable Members' consideration before contracts were let, are for civil engineering works, where estimating is more complex.
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The results of the Provisional Authority's analysis of these tenders, which are for three international contracts and one local contract, are shown at Annex B. For each tender a comparison is made between the indicated tender prices (at July 1975 prices) and the estimate (at October 1974 prices). The figures are broken down into main activity groupings. The indicated tender prices include a sum for contingencies, consistent with the estimates, as well as allowances to meet the cost of qualifications which contractors have attached to their tenders in accordance with normal practice for civil engineering con- tracts of this kind.
C.S. 166
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Annex B includes the lowest tender prices for each of the three international contracts, all of which are from Japan. In each case the price is less than, or approximately the same as, the estimate (at October 1974 prices). For international contract A the second lowest tender, which is from Europe, has also been shown. The second lowest tenders for International Contracts B and C were from Japan.
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It is the Provisional Authority's view that it would be im- prudent to award the first three international contracts to Japanese contractors, as this would undoubtedly discourage the European and North American civil contractors from quoting for subsequent civil engineering contracts, which, in turn, could lead to high tender prices from Japan for later contracts. Accordingly, the Provisional Authority considers that at least one of the first international contracts should be awarded to Europe, particularly having regard to increased European interest in subsequent civil engineering tenders.
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It should be emphasised that, whereas the estimates presented in January were based on October 1974 prices, these indicated tender prices are at July 1975 prices. In this period, although Hong Kong itself may have experienced a period of close to zero inflation, this has not been the case in the countries from which the international tenders originate. The average local and foreign elements in these international contracts amount to 55% and 45% respectively. In these circumstances,
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