Foreword The procurement policy of the Government of the
Hong Kong Special Administrative Region is to obtain goods
and services at the best value for money in support of
the Government's programmes and activities. We are committed
to providing equal opportunities for domestic and foreign
suppliers and service providers, participating or competing
in Government procurement. This means that contracts for
supplying goods or services to the Government of the Hong
Kong Special Administrative Region are awarded through
open, fair, competitive and transparent procedures. No
favours. No discrimination.
This Guide provides an overview of the procurement
regime of the Government of the Hong Kong Special Administrative
Region. It highlights the principles underlying our procurement
practices and summarises the Government procurement process
and the Government bodies involved in procurement.
Policy
and Principles
When buying for Government, we are guided by the twin policy objectives of
achieving best value for money and maintaining open and fair competition. These
two sets of objectives are complementary : by encouraging participation through
open, fair and transparent procurement procedures and practices, we obtain
responsive and competitive tenders from which we determine the most advantageous
one which best serves the public interest of the Hong Kong Special Administrative
Region.
Government procurement is based on the following
principles -
Public Accountability
Government procuring entities are buying with taxpayers' money. Clearly, we
have to be accountable to the public for the use of that money. We have an
obligation and are always prepared to account for our purchasing decisions
to the legislature which approves the use of public funds, to the community
and also to the prospective suppliers.
Value for Money
To achieve the best value for money, we take into account in our tender evaluation
not only the competitiveness in price, but also compliance with users' requirements,
reliability of performance, qualitative superiority, whole-life costs and
after-sale support, where applicable.
Transparency
We ensure that procedures and practices for selling to the Government are clear
and transparent to facilitate better understanding amongst suppliers and
contractors. To encourage them to submit responsive and competitive tenders,
we aim to provide all the necessary information in the tender documents.
Open and Fair Competition
We treat all tenderers on an equal footing. We do not discriminate between
products on the basis of their country of origin. In drawing up tender specifications
for the goods or services to be procured, we ensure that the characteristics
laid down for the goods or services will not create unnecessary obstacles
to international trade. We ensure that all potential tenderers are given
the same information for them to prepare their bids.
World
Trade Organization Agreement on Government Procurement
On 20 May 1997, Hong Kong acceded to the World Trade
Organization Agreement on Government Procurement
(WTO GPA). Prior to that, Hong Kong had been a signatory
to the Agreement on Government Procurement negotiated under the General Agreement
on Tariffs and Trade (GATT). From 1 July 1997 onwards, Hong Kong has continued
to be a party in the name of "Hong Kong, China". The object of the
WTO GPA is to provide for open and fair competition amongst domestic and foreign
suppliers and service providers. To this end, the Agreement prescribes a set
of requirements regarding non-discriminatory treatment of goods, services and
service suppliers, qualification of suppliers, tender procedures, tender specifications
and challenge procedures. The principles underlying the procurement system
of the Government of the Hong Kong Special Administrative Region are consistent
with the spirit and objectives of the WTO GPA.
The WTO GPA applies to the following procurement entities of Hong Kong, China
for contracts meeting the values specified -
all Government bureaux and departments
- for contracts of a value of not less than -
- 130,000 SDR for procurement of goods and specified services*
- 5,000,000 SDR for construction services, and
non-Government public bodies including the Housing
Authority and Housing Department, the Hospital Authority,
the Airport Authority, the MTR Corporation Limited
- for contracts of a value of not less than -
- 400,000 SDR for procurement of goods and specified services*
- 5,000,000 SDR for construction services
(Special Drawing Rights (SDR) is an international currency unit set up
by the IMF. The current US dollar equivalent to 1 SDR is about US$1.56)
These procurement entities have to ensure that procurements
covered by the Agreement are conducted in accordance
with the provisions of the Agreement. In addition,
we are required to provide a mechanism to consider
challenges by suppliers against alleged breaches of
the GPA by procuring entities in relation to the concerned
procurements. Also, we have to prepare an annual statistical
report on procurements to the WTO Committee on Government
Procurement.
*Specified services mean those services
specified in Annex 4 of Appendix I in Hong Kong,
China's Offer.
Laws
and Regulations Related to Government Procurement Article 106 of the Basic Law of the Hong Kong
Special Administrative Region of the People's Republic
of China states : "The Hong Kong Special Administrative
Region shall have independent finances." Article
110 states : "The monetary and financial systems
of the Hong Kong Special Administrative Region shall
be prescribed by law." The Public Finance Ordinance
(Chapter Two of the Laws of the Hong Kong Special
Administrative Region) provides the statutory framework
for the control and management of the public finances
of the Hong Kong Special Administrative Region.
The government procurement process is governed by
the Stores and Procurement Regulations issued by the
Financial Secretary under the Public Finance Ordinance.
These Regulations are supplemented by Financial Circulars
issued by the Secretary for Financial Services and
the Treasury from time to time. The procedures laid
down in these Regulations and Circulars are fully consistent
with the provisions in the WTO GPA. The Stores and
Procurement Regulations cover all stores purchased
or acquired on behalf of Government, excluding land
and buildings, as well as services performed by contractors
for and on behalf of Government, including construction
and engineering works.
Categories
of Government Procurement and Procuring Entities The Government Logistics Department (GLD) is the
Government's central procurement agent. Equipped with
a modern warehouse and delivery fleet, GLD maintains
a number of essential items and controlled forms. GLD
pays for the cost of these items from an advance account
in the first instance and recovers the costs from the
end-users when they draw the goods from GLD. GLD also
purchases through allocated bulk contracts a wide range
of items commonly used by Government departments and
many non-government organizations. These include stationery
and cleansing materials. The user departments can draw
their requirements directly from the contractors against
the allocated bulk contracts on as and when required
basis and pay for the stores from their own account.
GLD remains the contracting party and provides contract
administration service throughout the contractual period.
In addition, GLD acts as the purchasing agent for
specific stores and equipment required by user departments
and a few non-government organizations. The user departments
will pay for these stores from their own account but
rely on GLD for expertise in sourcing, tendering, negotiations
and contract administration. The goods purchased by
GLD on behalf of user departments are diverse : they
include aircraft for the Government Flying Service,
electronic parking devices for Transport Department,
arms and ammunition for the Police, chlorine for water
treatment plants and gases for medical and industrial
purposes.
Construction services are procured by the individual
works departments concerned, under the general supervision
of Development Bureau. In addition
to giving general guidance and technical advice on
tendering procedures and contract administration matters
in respect of works contracts, Development Bureau maintains a register of approved works
contractors and a central works contractors performance
report system and provides financial vetting support
where necessary.
Services procured by Government also include consultancy
services on financial or management aspects as well
as other types of service contracts. Typical examples
of service contracts tendered by Government are cleaning,
property management, management of parking meters,
and operation of transport and waste management facilities.
Types
of Government Procurement As laid down in the Stores and Procurement Regulations,
government procurement exceeding HK$1.43 million (for
goods and general services) and HK$4 million (for construction
and engineering services) in value is normally done by
the use of open and competitive tendering procedures
so as to obtain the best value for money. Limited or
restrictive tendering procedures are, in line with the
WTO GPA provisions, only permissible under specified
exceptional circumstances. Where the nature of the contract
(such as a contract that is time critical or one that
requires particularly high levels of skills and proven
reliability) dictates that tenders have to be invited
from qualified suppliers/contractors, selective tendering
or prequalified tendering may be used.
The various types of tenders are invited in the following
ways -
Open Tendering
Tender invitations are published in the Government of the Hong Kong Special
Administrative Region Gazette, in the local press, on the Internet, and in
selected overseas journals as appropriate. We will also notify consulates
and overseas trade commissions where appropriate. All interested suppliers/contractors
are free to submit tenders.
Selective Tendering
Tender invitations are published in the Government of the Hong Kong Special
Administrative Region Gazette, or are sent by letter to all suppliers/contractors
on the relevant approved lists of qualified suppliers/contractors established
and approved for the purpose of selective tendering. Suppliers/contractors
for public works who wish to apply for admission to the approved list may
approach Development Bureau. Normally, they are required
to meet certain qualification criteria or technical assessment to ensure
suitability. Applications for inclusion may be submitted at any time and
will be dealt with expeditiously.
Up-to-date lists and the method of application for
inclusion in the lists are published in the Government
of the Hong Kong Special Administrative Region Gazette
annually and are reviewed regularly. For procurements
covered by the WTO GPA, suppliers/contractors not already
on the lists may also be considered provided there
is sufficient time to complete the qualification procedure.
Prequalified Tendering
Tender invitations are sent by letter to those prequalified suppliers/contractors
approved by the Permanent Secretary for Financial Services and the Treasury
(Treasury) on the advice of the Central Tender Board. Invitations to apply
for prequalification may take the form of open tendering or selective tendering
and the respective procedures will apply.
Single or Restricted Tendering
(these fall under "limited tendering" specified in the WTO GPA)
Tender invitations are sent to only one or a number of suppliers/contractors
approved by the Permanent Secretary for Financial Services and the Treasury
(Treasury) or the Director of Government Logistics. This procedure is only
used when circumstances do not permit open tendering, for example, on grounds
of extreme urgency or security, for proprietary products or for reasons of
compatibility.
The
Government Tendering Process Tender Documents and Specifications
Procuring departments are required to provide in the tender documents all the
necessary information to assist the bidders to prepare their tenders. In drawing
up tender specifications for goods or services to be procured, departments
are required to ensure that the characteristics laid down for the products
or services are based on functional and performance requirements. Where standards
are referred to, these should, where practicable, be international standards.
Tender specifications should not be drawn up to suit a particular brand or
country of origin.
Tender documents normally include standard contract
forms covering the general aspects of tender and contract
requirements, special conditions of contract, detailed
price schedules, additional information and instructions
applicable to a particular contract. Tender documents
are generally issued free of charge but procuring departments
may levy a non-refundable sum from tenderers to cover
the cost of the tender documents.
Tender Notice Invitations to tender include -
a broad description of the requirement;
estimated quantities and timing;
the closing date and time for tenders;
the place for lodging tenders;
whether the procurement is covered by the WTO
GPA;
where to obtain tender documents; and
name of the office or officer and a telephone
contact for enquiries.
Normally, we allow at least three weeks for tenderers
to submit their bids. For procurements covered by the
WTO GPA, at least 40 days should normally be allowed.
In the case of extreme urgency, procuring department
will have to seek the prior approval of the Permanent
Secretary for Financial Services and the Treasury (Treasury)
for reducing the period for receipt of tenders. This
authority has been delegated to the Director of Government
Logistics in respect of tenders conducted by the Government
Logistics Department.
Submission and Opening of Tenders
Tenderers must submit their tenders before the tender closing date and time
stipulated in the tender notice. We will not consider any tenders received
after the tender closing time. Late tenders will be returned to the tenderers.
For paper-based tendering, tenderers must also ensure that their tenders
are deposited correctly in the tender box specified in the tender notice.
For electronic tendering, tenderers must ensure that transmission of their
tenders to the electronic tendering system is completed before the tender
closing date and time specified in the tender notice.
At the closing time of tenders, the designated tender
opening team will open the respective tender box. Only
tenders which are due are opened and authenticated
by the tender opening team. The tender opening team
will make appropriate records on file of the tenders
received and then send the originals of the authenticated
tenders to the procuring department for evaluation.
Evaluation of Tenders
The procuring department is responsible for evaluating the tenders to determine
whether they meet the conditions and specifications laid down in the tender
document.
To ensure the best value for money, these conditions
and specifications may include the time of delivery/completion,
quality of goods offered, designs proposed, maintenance
and spare parts provision, warranty and guarantees
as appropriate. Usually, the department will recommend
acceptance of a tender which fully complies with the
tender conditions and specifications and is the lowest
in tender sum. Where pre-determined criteria other
than price are included in the tender assessment, the
recommended tender is the one which, in terms of specified
evaluation criteria, is determined to be the most advantageous.
The procuring departments will then submit their recommendations
in the form of a tender report to the relevant tender
boards for approval.
Tender Boards
The Financial Secretary has appointed the following tender boards, each consisting
of not less than three persons, to consider and decide on the acceptance
of tenders -
Central Tender Board chaired by
the Permanent Secretary for Financial Services and
the Treasury (Treasury) to deal with high value tenders
which exceed those values specified for the subsidiary
tender boards. Currently tenders for goods and general
services exceeding $10 million and tenders for construction
services exceeding $30 million are considered by
the Central Tender Board.
Government Logistics Department Tender
Board chaired by the Director of Government
Logistics to deal with tenders, including revenue
tenders, of a value not exceeding $10 million,
except those tenders dealt with by other subsidiary
tender boards.
Public Works Tender Board chaired
by the Deputy Director of Architectural Services
to deal with tenders for works and related contracts
of a value not exceeding $30 million.
Marine Department Tender Board chaired
by the Deputy Director of Marine to consider marine
tenders, excluding revenue tenders, of a value not
exceeding $5 million.
In considering a department's tender report, the
tender board takes into account the department's recommendation
and justifications. The board may seek clarifications
from the department before accepting the department's
recommendation. The decision not to accept any tender
in a tender exercise must be made by the relevant tender
board.
Award of Tenders
Upon notification of the tender board's approval, the procuring department
will inform the successful tenderer in writing of the acceptance of his tender
and invite the supplier/contractor to execute a contract with the department.
The procuring department will also inform unsuccessful tenderers of the outcome
of their bids, and upon request from the tenderers, the reasons why their
tenders are unsuccessful. Given our commitment to respect commercial confidence,
we ensure that the details given will not disclose tender information provided
by another tenderer in confidence.
We publish the name of the tenderer awarded the contract
and the contract sum of all contracts awarded in the
preceding month in the Government of the Hong Kong
Special Administrative Region Gazette and on the Internet
in the following month.
Delivery Requirement
Delivery of goods is usually made on a consignment or on an as and when required
basis. Tenderers are required to quote their prices at FOB (Free
on Board), CIF (Cost, Insurance and Freight), or DDP (Delivered
Duty Paid) or FIS (Free into Storehouse including stacking)
terms as stipulated in the Tender Schedule.
Payment Terms
Detailed payment terms and methods are stated in the tender documents. Local
suppliers are mostly paid by cheques and overseas suppliers by telegraphic
transfer, bank draft or letter of credit. In supplies contracts, payment
is normally made upon acceptance of goods though milestone payments related
to performance targets may apply for contracts of high value and complexity.
In service contracts, milestone payments related to performance targets or
service provided is the norm.
The
Consultancy Selection Process Introduction
Government departments employ consultants when the necessary staff required to
undertake the work is not available in the civil service or within the time frame
required, and the nature and duration of the assignment does not justify the
Government recruiting or training staff specifically for the purpose. The consultancy
services engaged may be in areas, such as finance, management, engineering and
architectural support and public relations, etc. The Government's procurement
principles of value for money, open and fair competition and accountability apply
to the procurement of consultancy service.
Consultants Selection Procedures
The output and outcome of any consultancy service procured is dependent on
the experience, capability, expertise, and method of approach of the selected
consultants. These qualities are often more difficult to quantify and specify
with a reasonable degree of precision than procurement of goods or other
services. As a result, it is considered not appropriate to obtain consultancy
services through the usual tendering process. We have therefore established
a set of consultants selection procedures.
Depending on the nature of the consultancy, procuring departments shortlist
consultants having regard to their relevant experience in the field and invite
them to submit an expression of interest. Consultants who have expressed an
interest and been shortlisted will then be invited to submit technical proposals
on the basis of a consultancy brief. As in the case of tender documents, the
consultancy brief contains the necessary information to assist firms to prepare
their submissions. A consultancy brief normally covers the objective and scope
of the consultancy, duties and duration of the consultancy, information required
from consultants' proposals, the deliverables expected where applicable, method
of assessing the proposals and any special features or terms and conditions
of the consultancy agreement.
To reflect the importance attached to quality and to allow an unbiased assessment
of the qualitative aspects of the proposals, the evaluation of consultants'
submissions will involve the technical assessment to be carried out in the
first instance, followed by the fee assessment separately. Consultants are
required to submit technical proposals and fee proposals in separate sealed
envelopes. Procuring departments are required to determine with the approval
of the relevant consultants selection board the technical assessment criteria
before inviting proposals from shortlisted consultants.
As part of the selection process, the procuring departments may invite consultants
to make a presentation of their proposals. The assessment panel will evaluate
the consultants' technical proposals according to the pre-determined selection
criteria and marking scheme. Only after completion of the technical assessment
will the fee proposals be opened and evaluated. Normally, the consultant who
attains the highest combined technical/fee score is recommended for appointment.
All appointments of consultants can only be made after the relevant consultants
selection board has accepted the department's recommendation.
Consultants Selection Boards
Similar to procurement of goods and other services, the Secretary for Financial
Services and the Treasury under the authority delegated to him by the Financial
Secretary has appointed the following consultants selection boards to consider
the employment of consultants -
Central Consultants Selection Board chaired by the Permanent Secretary for
Financial Services and the Treasury (Treasury) to consider the appointment
of all consultants other than engineering and architectural consultants;
Architectural and Associated Consultants Selection Board chaired by the Director
of Architectural Services to consider the appointment of architectural and
associated consultants for projects undertaken by the Government; and
Engineering and Associated Consultants Selection Board chaired by the Director
of Civil Engineering and Development to consider the appointment of engineering and associated
consultants for projects undertaken by the Government.
How to Register as Consultants
Several government offices maintain lists from which consultants may be sourced.
These include -
Management Accounting Division of The Treasury Branch, Financial Services and
the Treasury Bureau which maintains a list of financial consultants;
Efficiency Unit which maintains a list of general management consultants;
Architectural and Associated Consultants Selection Board which maintains a
list of architectural consultants; and
Engineering and Associated Consultants Selection Board which maintains a list
of engineering consultants.
Consultants wishing to be considered for registration on these lists may approach
the above offices direct.
Procedures
for Handling Complaints We are committed to maintaining an open and fair procurement
system. Any supplier or contractor who feels aggrieved
may lodge a complaint with the procuring department or
the relevant tender board considering that particular tender.
As a party to the WTO GPA, we are required to provide
a mechanism to deal with complaints from suppliers/contractors
on alleged breaches of the Agreement. The independent
Review Body on Bid Challenges was set up on 30 December
1998 to handle bid challenges.
Suppliers/contractors/consulting firms who wish to
make a complaint against an allegation of corruption
should approach the Independent Commission Against
Corruption on 2526 6366 (telephone) or 2868 4344 (fax).
Useful
Contacts Further information on tendering matters including
tender notices, forecast of Government procurements and
tender awards may also be obtained from the following
homepages of the Government of the Hong Kong Special Administrative Region on
the Internet -
