CONFIDENTIAL
XCC(92)89
21
As is normal for such tenderers, the Government has given Hyundai every opportunity to put its financial position in order. Our ultimate requirements of Hyundai were made in an honest attempt to put them in a position where the Government could have confidence that their financial position would not cause a high degree of risk that they would default on this important contract. It appears to the Government that domestic political problems faced by Hyundai in Korea have made it extremely difficult for them to comply. Hyundai has requested the Government to consider accepting their original accounts as evidence of sufficient capital to complete the project. To do so, the Government would have to accept debts from the Middle East as evidence of sufficient working capital. This we feel unable to do.
22
The conclusions above have been reached only after protracted correspondence and discussion with Hyundai. Notwithstanding their financial difficulties, the Government has fully evaluated Hyundai's tender on the basis of cost and technical ability.
23
Hyundai's modified tender price was so low that, in the view of the TAT, it was highly likely that many if not all the cost centres in the contract would turn in a loss to the tenderer. Hyundai is assessed to have underestimated the works involved in terms of quality, scope, resources and price. Hyundai has also told us that it deliberately quoted a very low price to create a bridge-head through which the company could hope to obtain further contracts in Hong Kong in future. Given their financial position, and in the event that Hyundai sustained losses on the contract, there is a clear danger that they would seek every opportunity to claim against Government.
24
Technically, Hyundai's bid was evaluated as the weakest of all the tenders submitted. Following detailed technical clarifications, the TAT has estimated the probability of Hyundai completing the Tsing Ma Bridge on time at 65 per cent at best and under 45 per cent under adverse circumstances. Among the reasons for this evaluation is that Hyundai have demonstrated a relatively poor appreciation of the technical, management, staffing and programming demands for this difficult project. Furthermore, their proposed source of spun cables for the bridge is an American company which last manufactured such cables twenty years ago. Although the technology has not changed, this factory would have to
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