TNAG-2250-FCO40-3233-Hong-Kong-police-patrol-boats-1991 — Page 11

19101OZ

REFERRED TO MR BURNS, AUSS FOR DIS ADVICE COPIED DTI

LNMDAN 3181 HMLNAN 8268

CONFIDENTIAL

PPOLN OTTER

FM HKB TO FCOLN

190906 APR

GRS 798

CONFIDENTIAL

FM BTC HONG KONG

TO PRIORITY FCO

TELNO 129

OF 190906Z APRIL 91

AND TO PRIORITY DTI, MODUK, ECGD

FOR BURNS AUSS FCO

FOR MEADWAY OT2 DTI

FOR GROSSMAN ARMD 3C MOD

PATROL BOAT ORDER

SUMMARY

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1. WE MIGHT CONSIDER WHETHER THERE IS ANYTHING MORE WE CAN DO TO SUPPORT BRITISH COMPANIES COMPETING FOR THIS ORDER. IT WILL HAVE EMPLOYMENT AND OTHER IMPLICATIONS IN THE UK. A MINISTERIAL MESSAGE TO THE GOVERNOR MIGHT BE CONSIDERED.

DETAIL

2. IN VARIOUS TELEGRAMS AND CORRESPONDENCE I HAVE DESCRIBED THIS REQUIREMENT FOR 6 PATROL BOATS TO A VALUE OF ABOUT POUNDS 30 MILLION, AND HAVE SUGGESTED IT BE RAISED BY MINISTERS WITH THE HONG KONG GOVERNMENT. IT WAS BROUGHT UP BY MR SAINSBURY IN SEPTEMBER 1990 AND BY MR LILLEY IN JANUARY, WITH THE GOVERNOR, DURING THEIR VISITS HERE. MY TELEGRAM 190911Z MARCH SUGGESTED THAT THE SECRETARY OF STATE MIGHT ALSO RAISE IT WHEN HERE EARLIER THIS MONTH.

3. AS ALWAYS IN TENDERING SITUATIONS HERE IT IS HARD TO GET ANY FIRM INFORMATION. HOWEVER IT APPEARS THAT OF THE 5 BIDDERS THE CONTEST IS NOW BETWEEN VOSPER THORNYCROFT OF THE UK AND ASI (AUSTRALIAN SHIPBUILDING INDUSTRIES) AND THAT THE HONG KONG MARINE DEPARTMENT'S TECHNICAL EVALUATION HAS GIVEN THE EDGE TO VOSPER THORNYCROFT. I HAVE NO INFORMATION ON COMPARATIVE PRICES ALTHOUGH VOSPER THORNYCROFT HAVE PUT TOGETHER AN ATTRACTIVE FINANCIAL PACKAGE WITH HELP FROM SCHRODERS, AND SAY THAT SO KEEN ARE THEY TO GET THE WORK THAT THEIR PRICE WILL CERTAINLY BRING THEM NO PROFIT AND POSSIBLY A LOSS. THE VALIDITY OF TENDERS HAS BEEN EXTENDED TO 31 MAY SO A DECISION WILL BE REQUIRED BY THEN. I AM TOLD IN CONFIDENCE ON THE HONG KONG GOVERNMENT SIDE THAT THE TENDERED PRICE FOR THE VESSELS IS MORE THAN TWICE THAT PUT IN THE ESTIMATES (LARGELY BECAUSE THE ESTIMATES USED OUT OF DATE FIGURES FOR MUCH LESS SOPHISTICATED VESSELS). THE REQUIREMENT WILL THEREFORE BE EXAMINED BY THE FINANCE COMMITTEE WHO WOULD HAVE TO PROVIDE THE EXTRA MONEY CAND WHO COULD THEREFORE DECIDE TO SCALE BACK THE REQUIREMENT) BEFORE GOING TO THE TENDER BOARD FOR THE FINAL CHOICE. BOTH THE FINANCE COMMITTEE AND THE TENDER BOARD MEETINGS ARE LIKELY TO TAKE PLACE DURING MAY.

4. IF VOSPER THORNYCROFT DO NOT GET THIS ORDER THEY WILL HAVE TO RELEASE 200 OF THEIR TOTAL WORKFORCE OF 2,500 IMMEDIATELY FROM THEIR SOUTHAMPTON SHIPYARD AND FURTHER REDUNDANCIES MIGHT FOLLOW. IF THEY ARE SUCCESSFUL IT WILL BE A NEW DESIGN WHICH WILL GET THEM BACK INTO THIS CLASS OF BOAT WHICH THEY WOULD HOPE TO SELL ELSEWHERE, WHICH EXPLAINS THEIR WILLINGNESS TO TAKE ON THE

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