a.
to accept the European bid (the Japanese offer seems to be too low and there are valid doubts about the further appreciation of the yen);
b.
to argue that the British bid is politically desirable and that there will be a reduction price after the tender award;
C. to reopen tendering on the grounds that there were too few bids in accordance with the specification.
We are advised that for either option (b) or (c) to have any chance of swinging the contract back to Metro Cam the Hong Kong Government need to know by Friday 10 November whether Metro Cam could reduce their bid by approximately £7m sterling. The Trade Commissioner has asked for instructions to reach him first thing tomorrow morning, 10 November.
Departments have looked at the considerations of national interest involve and the possibilities open to HMG to assist.
On the employment and industry side, a successful bid would provide some 2400 man-years of work. Apart from direct employment effects, failure in the political and technically helpful atmosphere of hong Kong would be exploited by Metro Cam's competitors elsewhere in the world, with potentially ruinous effects on prospects of gaining future sales. This would put the company at a grave disadvantage in a world market for new railway development which could run into several £'000Ms over the next few years. The loss of competitive edge could lead to a progressive weakening in our ability to win orders, which would have severe longer term effects on the railway rolling-stock and equipment manufactuters.
On the trade side, looking to our opportunities in China, the Hong Kong section of the Kowloon/Canton railway could be a foundation for further railway orders as China pursues her plans for major new expansion of the infrastructure. Whereas Transmark believe that they are well placed to obtain the role of adviserto the Chinese, their ability to swing business towards the UK would be extremely difficult if we had been seen to fail in a project where all the background considerations were apparently in our favour. Conversely, of course, success should pave the way for success elsewhere, and, most immediately, help to establish Metro Cam's claims for the next stage of the mass transit scheme,
On the political side, it would clearly help to consolidate the improve- ment in UK/China relations over Hong Kong if a British firm were to gain the contracts for the modernisation of the whole of the KC railway from Kowloon to Canton. Conversely, the Chinese are not going to be very impressed if a British company is unable to win the contract despite the advantages it has in a British colony and specifications from British consultants.
Against these considerations of industrial, trade and political advantage must be weighed the danger that any especial assistance by the Government) could affect the UK's stance in the Multilateral Trade Negotiations, render more difficult the maintenance of the consensus on credit policy and possibly open the way to unwelcome subsidisation of exports by other governments.
Against this background we have looked at those things which could be done either by the company or the Government to reduce the price without going beyond current policy. So far we have found that the company can
Page 60Page 61
No comments yet.
Private notes are available after approval.