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Guide to Procurement

 

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.

Agreement on Government Procurement of the World Trade Organization

On 20 May 1997, Hong Kong acceded to the Agreement on Government Procurement of the World Trade Organization (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, WTO GPA 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.

WTO GPA applies to the following procuring entities of Hong Kong, China for contracts meeting the values specified –

    • all government bureaux and departments and other central government entities
      - 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 Airport Authority, the Hospital Authority, the Housing Authority and Housing Department, the Kowloon-Canton Railway Corporation and 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; and

(Special Drawing Rights (SDR) is an international currency unit set up by the International Monetary Fund. The current Hong Kong dollar equivalent to 1 SDR is available on WTO GPA’s website)

These procuring entities have to ensure that procurements covered by WTO GPA are conducted in accordance with the provisions of WTO GPA. In addition, we are required to provide a mechanism to consider challenges by suppliers against alleged breaches of the WTO 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 5 of Appendix I in Hong Kong, China's coverage schedule.

Hong Kong, China – New Zealand Closer Economic Partnership Agreement on Government Procurement

Hong Kong and New Zealand signed the Hong Kong, China – New Zealand Closer Economic Partnership Agreement ("HKC/NZ CEPA") on 29 March 2010. The HKC/NZ CEPA, which has entered into force on 1 January 2011, is Hong Kong China's first free trade agreement with a foreign economy. It covers a wide range of areas of mutual interest to Hong Kong and New Zealand, including government procurement. Chapter 12 of the HKC/NZ CEPA sets out Hong Kong, China's commitments on government procurement which are generally consistent with those under WTO GPA. It applies to procurements by government bureaux and departments of Hong Kong, China for contracts of a value of not less than – 

      • 130,000 SDR for procurement of goods and services other than construction services*
      • 5,000,000 SDR for construction services

* “Services other than construction services” means those services specified under the heading "Services (other than construction services)" in Section B for Hong Kong, China in Annex I to Chapter 12 of the HKC/NZ CEPA.

Text of the Agreement

Free Trade Agreement Between Hong Kong, China and Chile 

Hong Kong and Chile signed the Free Trade Agreement between Hong Kong, China and Chile ("HKC/CL FTA") on 7 September 2012. The HKC/CL FTA, which entered into force on 9 October 2014, encompasses trade in goods and services investment and other related areas, including government procurement. Chapter 9 of the HKC/CL FTA sets out Hong Kong, China's commitments on government procurement which are generally consistent with those under WTO GPA. It applies to procurements by government bureaux and departments of Hong Kong, China for contracts of a value of not less than – 

      • 130,000 SDR for procurement of goods and services other than construction services*
      • 5,000,000 SDR for construction services

* “Services other than construction services” means those services specified under the heading "Services (other than construction services)" in Part C for Hong Kong, China in Annex 9.1 to Chapter 9 of the HKC/CL FTA.

Text of the Agreement

Free Trade Agreement between Hong Kong, China and Australia  

Hong Kong and Australia signed the Free Trade Agreement between Hong Kong, China and Australia ("HKC/AU FTA") on 26 March 2019. The HKC/AU FTA, which entered into force on 17 January 2020, encompasses trade in goods and services, investment and other related areas, including government procurement. Chapter 13 of the HKC/AU FTA sets out Hong Kong, China's commitments on government procurement which are generally consistent with those under WTO GPA. It applies to procurements by government bureaux and departments of Hong Kong, China for contracts of a value of not less than – 

      • 130,000 SDR for procurement of goods and services other than construction services*
      • 5,000,000 SDR for construction services

* “Services other than construction services” means those services specified in Section E for Hong Kong, China in Annex 13-A to Chapter 13 of the HKC/AU FTA.

Text of the Agreement

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 and Financial Services and the Treasury Bureau Circular Memoranda. The procedures laid down in these Regulations and Circulars/Circular Memoranda are fully consistent with the WTO GPA. The Stores and Procurement Regulations are applicable to stores purchased or acquired on behalf of Government, excluding land and buildings, as well as services performed by firms/organisations for and on behalf of Government and revenue contracts that generate revenue for and on behalf of Government.

Categories of Government Procurement and Procuring Entities

The Government Logistics Department (GLD) is Government's central procurement agent. Equipped with a modern warehouse and delivery fleet, GLD maintains a number of essential items and controlled forms. GLD also purchases through allocated bulk contracts a wide range of items commonly used by government bureaux/departments and non-government organisations. These include stationery and cleansing materials. The user departments can draw their requirements from the contractors direct against the allocated bulk contracts on an as and when required basis. GLD is the contracting party of these bulk contracts and provides contract administration service throughout the contractual period.

In addition, GLD acts as the procurement agent for specific stores and equipment required by government bureaux/departments and a few non-government organisations. The user departments will rely on GLD’s 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 the Transport Department, arms and ammunition for the Hong Kong Police Force, chlorine for water treatment plants and gases for medical and industrial purposes, etc.

Construction services are procured by works departments, under the overall supervision of the Development Bureau. In addition to giving general guidance and technical advice on tendering procedures and contract administration matters in respect of works contracts, the Development Bureau maintains lists of public works contractors and a central performance reporting system of public works contractors and provides support for financial vetting 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$1.4 million (for goods and general services), HK$3 million (for consultancy services) and HK$7 million (for services for construction and engineering works*) in value is normally done by the use of open and competitive tendering procedures so as to obtain the best value for money. Limited tendering (i.e. single or restricted tendering) are, in line with WTO GPA, 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.

* Services falling under Division 51 of the United Nations Provisional Central Product Classification Code which is accessible at https://www.wto.org/english/tratop_e/serv_e/cpc_provisional_complete_e.pdf

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 (optional for procurements not covered by WTO GPA). If necessary, they will be published on the Internet or in the local and/or international press and journals. 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, on the Internet, and/or sent by letter to all suppliers/contractors on the relevant approved lists of qualified suppliers/ contractors established for the purpose of selective tendering.  For procurements covered by WTO GPA, we will notify and provide the notice of tender invitation to the suppliers/contractors on the relevant approved lists of qualified suppliers/contractors that will be invited to tender.   Suppliers/contractors for public works who wish to apply for admission to the approved lists may approach the Development Bureau. Normally, they are required to meet certain qualification criteria or technical assessment for admission to the approved lists. Applications for admission may be submitted at any time and will be dealt with expeditiously.

Up-to-date lists and the method of application for admission to the lists of qualified suppliers/contractors are published in the homepage of the procuring entities on the Internet and are reviewed regularly. For procurements covered by WTO GPA, suppliers/contractors not already on the lists will also be considered unless under exceptional circumstances.

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 for prequalification will be published in the Government of the Hong Kong Special Administrative Region Gazette. If necessary, the invitations for prequalification will also be published on the Internet, local press and selected overseas journals for the particular trade/product. Consulates and trade commissions in Hong Kong and known suppliers/contractors will also be notified of the invitations for prequalification by letter, where appropriate.

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. These procedures are only used in circumstances which do not permit open tendering, for example, on grounds of extreme urgency or security, for protection of patents, copyrights or other exclusive rights or for reasons such as requirements of interchangeability or interoperability with the existing equipment, software, services or installations procured under the initial procurement.

The Government Tendering Process

Tender Documents and Specifications

Procuring entities 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, procuring entities 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 entities may recover the cost of the tender documents from tenderers.

Tender Notice

Invitations for tender include –

      • a broad description of the requirements and, where applicable, a description of any options;
      • estimated quantities and time-frame for delivery of goods or services;
      • the closing date and time for receipt of tenders;
      • the place for obtaining tender documents;
      • the place for lodging tenders;
      • whether the procurement is covered by WTO GPA;
      • a list and brief description of the qualifications/conditions for participation and any requirements for specific documents or certifications to be provided by suppliers/contractors (if such requirements for specific documents or certifications are not included in the tender documents that are made available to suppliers/contractors);
      • a list of criteria that will be used to select the qualified suppliers/contractors if a limited number of qualified suppliers/contractors are to be invited to tender; and
      • name and address of the procuring entity and the contact details for enquiries.

For procurement covered by WTO GPA, the tender notice also serves as a summary notice.

Normally, at least three weeks will be allowed for tenderers to submit their bids. For procurements covered by WTO GPA, at least 40 days should normally be allowed. In the case of extreme urgency, procuring entity 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 awarded by GLD and tenders for supply of stores exceeding $10 million.

Submission and Opening of Tenders

Tenderers must deposit their tenders in the tender box as specified in the tender notice (“Specified Tender Box”) before the tender closing date and time stipulated in the tender notice. We will not consider any tenders received after tender closing and any tenders not deposited in the Specified Tender Box. Late and misplaced tenders will be returned to the tenderers. 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. In case of blockage of the public access to the location of the Specified Tender Box on the tender closing date, the Government will announce extension of the tender closing time until further notice. Following removal of the blockage, the Government will announce the extended tender closing time as soon as practicable. The above announcements will be made via press releases on the website of the Information Services Department (http://www.info.gov.hk/gia/general/today.htm).

After tender closing, the designated tender opening team will commence the tender opening procedures immediately. Only tenders which are due are opened and authenticated by the tender opening team. The tender opening team will make appropriate records of the tenders received and then send the originals of the authenticated tenders to the procuring entity for evaluation.

Evaluation of Tenders

The procuring entity 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 procuring entity will recommend acceptance of a tender which fully complies with the tender terms and conditions and specifications and is the lowest in tendered 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 entities will then submit their tender recommendations to the relevant tender boards or departmental tender committees for approval.

Tender Boards/Committees

The Financial Secretary/Secretary for Financial Services and the Treasury has appointed or authorised designated officers to appoint the following tender boards/committees, 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 tenders which exceed those values specified for the subsidiary tender boards and departmental tender committees. Currently tenders for goods and general services exceeding $30 million and tenders for construction services exceeding $100 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 $60 million, except those tenders dealt with by the Public Works Tender Board or departmental tender committees.
      • 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 $200 million.
      • Departmental Tender Committees each chaired by a directorate officer not lower than D2 rank to deal with tenders (other than those for services for construction and engineering works) of a value not exceeding $10 million.

In considering a tender report, the tender board/departmental tender committee takes into account the procuring entity/tender assessment panel's recommendation and justifications. The tender board/departmental tender committee may seek clarifications from the procuring entity/tender assessment panel before accepting the tender recommendation. The decision for rejecting a tender in a tender exercise must be made by the relevant tender board/departmental tender committee.

Award of Tenders

Upon notification of the approval by the approving authority, the procuring entity will inform the successful tenderer in writing of the acceptance of his tender and invite the supplier/contractor to execute a contract with the entity. The procuring entity will also inform unsuccessful tenderers of the outcome of their bids and the reasons why their tenders are unsuccessful.

We publish the name of the tenderer awarded the contract and the contract sum of all contracts awarded in the preceding month 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), DDP (Delivered Duty Paid) or FIS (Free into Storehouse including stacking) terms as stipulated in the Tender Schedule.

Payment Terms

Details of payment terms and methods are stated in the tender documents. 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. For service contracts, milestone payments related to performance targets or services provided is the norm. Payment should normally be effected within 30 calendar days upon acceptance of deliverables. Local suppliers are mostly paid by cheques and overseas suppliers by telegraphic transfer, bank draft or letter of credit.

The Consultants Selection Process

Introduction

Government bureaux/departments employ consultants when the expertise and qualified staff required for the assignment is not available in Government 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. Government's procurement principles of value for money, open and fair competition and accountability apply to the procurement of consultancy services.

Consultants Selection Procedures

The output and outcome of any consultancy services 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 normal tendering process. We have therefore established a set of consultants selection procedures.

Depending on the nature of the consultancy, procuring entities invite submission of consultancy proposals on the basis of a consultancy brief either from the consulting firms direct or from shortlisted consulting firms which have expressed interest in the consultancy. As in the case of tender documents, the consultancy brief contains necessary information to assist consulting firms to prepare their submissions. A consultancy brief normally covers the objective and scope of the consultancy, expertise/experience of the consulting firm as well as experience/qualifications of the consulting team required to undertake the consultancy, duties of the consulting team, duration and timeframe of the consultancy, information required for the consultancy proposals, method of assessing the consultancy proposals, the deliverables for each phase of the consultancy, the payment schedule and other related terms and conditions and any special features of the consultancy agreement.

To reflect the importance attached to the quality and to allow an unbiased assessment of the qualitative aspects of the proposals, the evaluation of consultancy proposals will involve the technical assessment, followed by the fee assessment. Consulting firms are required to submit technical proposals and fee proposals in separate sealed envelopes. Procuring entities are required to draw up with the approval of the relevant consultants selection board a marking scheme for assessment of consultancy proposals before inviting consultancy proposals from consulting firms.

As part of the selection process, the procuring entities may invite consulting firms to make a presentation of their proposals. The assessment panel will evaluate the consulting firms' 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 consulting firm who attains the highest combined technical and fee score is recommended for appointment. All appointments of consultants can only be made after the relevant consultants selection board has accepted the procuring entity's recommendation.

Consultants Selection Boards/Committees

Similar to procurement of goods and other services, the Financial Secretary/Secretary for Financial Services and the Treasury has appointed or authorised designated officers to appoint the following consultants selection boards/committees to consider the selection and appointment of consultants –

      • Central Consultants Selection Board chaired by the Permanent Secretary for Financial Services and the Treasury (Treasury) to consider selection and the appointment of all consultants, other than engineering and architectural consultants, and those selected and appointed by departmental consultants selection committees.
      • Architectural and Associated Consultants Selection Board chaired by the Director of Architectural Services to consider the selection and appointment of architectural and associated consultants for government projects, other than those selected and appointed by departmental consultants selection committees.
      • Engineering and Associated Consultants Selection Board chaired by the Director of Civil Engineering and Development to consider the selection and appointment of engineering and associated consultants for government projects, other than those selected and appointed by departmental consultants selection committees.
      • Departmental Consultants Selection Committees each chaired by a directorate officer not lower than D2 rank to consider the selection and appointment of consultants for consultancy assignments not exceeding $10 million.

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 of the Financial Services and the Treasury Bureau which maintains a list of financial consultants;
      • Efficiency Office 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.

Consulting firms 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, contractor or consulting firm who feels aggrieved may lodge a complaint with the procuring entity or the relevant tender board or consultants selection board considering that particular tender or consultancy proposal. The procuring entity should give a substantive reply within ten working days. An interim reply will be sent to the complainant if a substantive reply cannot be issued within the above timeframe.

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 WTO GPA. The independent Review Body on Bid Challenges was set up on 30 December 1998 to handle bid challenges. Enquiries on complaints against alleged breaches of WTO GPA, HKC/NZ CEPA, HKC/CL FTA and HKC/AU FTA should be addressed to the Secretariat of the Review Body on Bid Challenges under the Trade and Industry Department on 3403 6227 (telephone) or 2390 7479 (fax).

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 be obtained from the following homepages of the Government of the Hong Kong Special Administrative Region on the Internet –

Suppliers/contractors may approach the following offices for enquiries relating to specific areas of tendering matters –

Consulting firms may approach the following offices for enquiries relating to registration on lists of consultants –