RESTRICTED
WORLD TRADE S/WPGR/W/11/Add.9
7October 1996
ORGANIZATION
(96-4074)
Working Party onGATS Rules Original: English
COMMUNICATION FROM HONG KONG
Response totheQuestionnaire onGovernment Procurement ofServices
Thefollowing communication isbeing circulated attherequest ofthedelegation ofHong Kong
toMembers oftheWorking Party onGATS Rules.
_____________
I. EXISTING PROCUREMENT REGIMES
Definition
1. What isthedefinition ofgovernment procurement employed incompleting this
questionnaire?
Government procurement refers totheprocurement ofgoods andservices bythevarious
departments oftheHong Kong Government.
Administrative structure
2. Howaregovernment procurement activities administered? Towhatextent areprocurement
activities centralized? Please specify theidentity ofanycentral procurement agencies and
theirrespective responsibilities.
TheSecretary fortheTreasury hastheoverall responsibility ofensuring thatallgovernment
procurementactivitiesareconductedinaccordancewiththeregulationsandtenderingprocedures
issued byhim. Fortenders exceeding thespecified limits, departments willhavetoseekthe
acceptance bytheappropriate approving authority before entering intoacontract withthe
successful tenderer. Theauthority foracceptance ofatender isvested inoneofthesubsidiary
tender boards appointed bytheFinancial Secretary orinthecaseofahighvalue contract,
intheSecretary fortheTreasury whonormally actsontheadvice oftheCentral Tender Board.
Fortheprocurement ofgoods, theHong Kong Government adopts acentral purchasing system
using Government Supplies Department (GSD) asitsagent, except forlowvalue items which
arepurchased byindividual departments direct. Asregards services, while themajority of
services (including works contracts andconsultancy agreements) areobtained byindividual
departments, those which areprocured centrally aredonethrough GSD.S/WPGR/W/11/Add.9
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Laws andregulations inforce
3.(a) Please specify thelaws, regulations, rules, guidelines, decrees, decisions andother measures
governing government procurement. What isthescope oftheirapplication? Inparticular,
please describe anyexemptions thatexist. Please provide abrief summary ofthecontent
ofeachofthese measures.
TheStores Regulations, supplemented byFinancial Circulars issued bytheSecretary forthe
Treasury, govern thegovernment procurement process. Stores regulations areadministrative
measures made under thePublic Finance Ordinance andarenotstatutory. Theprocedures
laiddown inthese regulations andcirculars areconsistent withtheprovisions setoutinthe
Tokyo Round ofAgreement onGovernment Procurement.
Thetender procedures setoutintheStores Regulations arerequired tobefollowed byall
government departments fortheprocurement ofstores, services aswellascivilandengineering
works, withtheexception ofthefollowing forwhich separate procedures shallapply -
(i) Franchises, concessions, leases, licences, tenancies andotheritems procured bypublic
auction ormethod laiddown bystatute andgovernment regulations.
(ii) Private treaty grants ofland, landexchanges, extensions andshort-term tenancies of
land.
(iii) Consultancy service agreements approved byconsultant selection boards appointed
bytheSecretary fortheTreasury.
(b) Does theprocurement regime distinguish between theprocurement ofgoods andservices?
Ifso,thenhowistheapplication ofrulesdetermined incases ofjointprocurement involving
bothgoods andservices?
Apart from theprocurement ofconsultancy services which follow different procedures, we
donotmake adistinction between theprocurement ofgoods andservices.
Procurement procedures applied
4.(a) What procedures arefollowed intheprocurement process?
Depending onthenature ofprocurement, there aretwokinds ofprocedures tobefollowed
-tendering, andconsultants selection procedures. Forthepurchase ofgoods andservices,
including engineering andconstruction works where wecanspecify andquantify details of
tasksandperformance standards withareasonable degree ofprecision, thetendering procedures
arefollowed.
Tenders fortheprocurement ofgoods andservices areinvited inthefollowing ways :
(i) Open tendering -allinterested suppliers/contractors maytender;
(ii) Single, selective orrestricted tendering -invitation oftenders islimited tooneora
certain number ofselected suppliers/ contractors; and
(iii) Private tendering -single purchase ofgoods orprocurement ofservices notexceeding
aspecified financial limit.S/WPGR/W/11/Add.9
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Inobtaining services ofconsultants forproblem-solving andwhere thequality ofservice is
dependentonqualitieswhichcannotbepreciselyspecifiedorquantified,theconsultantsselection
procedures arefollowed. Consulting firms onthelong-list maintained forthepurpose of
obtaining aparticular kindofconsultancy service arefirstasked toindicate aninterest in
undertaking thestudy. Interested firms willthenbeinvited tobidbysubmitting atechnical
proposal together withaseparate financial proposal.
(b) Under whatcircumstances aredifferent procedures used? Forinstance, ifthemethod used
depends onthevalue oftheprocurement, thethresholds should begiven.
When procuring goods, theHong Kong Government ’spolicy istopurchase onaworldwide
basis, through opencompetitive tendering whenever possible. Services areprocured similarly
bytheuseofopentendering, where applicable, soastoobtain thebestvalue formoney.
Selective, restricted orsingle tenders areusedonlyinapproved circumstances, suchastoensure
compatibilitywithexistingequipment,orforpatentedorproprietaryproducts,orwhereservices
aretobeprovided byutility companies orwhere maintenance istobeexecuted onpatent or
specialised equipment, orforterm contracts where there areonly alimited number of
suppliers/contractors whowould bereliable inmeeting therequisite quality standard ordelivery
schedule overthetermofthecontract.
Goods andservices below avalue ofHK$0.5 million andHK$1 million respectively may
beprocured direct bytheuserdepartment through private tendering without recourse toatender
board. Normally forprivate tendering, aminimum offivequotations isobtained fromqualified
contractors/suppliers andthelowest quotation tospecification isaccepted.
TheArchitectural andAssociated Consultants Selection Board andtheEngineering and
Associated Consultants Selection Board approve theaward ofarchitectural andengineering
consultancy agreements respectively. Theaward ofother consultancy agreements withavalue
exceeding HK$0.5 million issubject totheapproval oftheSecretary fortheTreasury, who
normally actsontheadvice oftheCentral Consultants Selection Board.
(c) What arethetimelimits forsubmission ofbids?
Aminimum ofthree weeks isnormally provided toallow bothoverseas andlocaltenderers
toprepare andsubmit tenders. Forprocurements covered bytheTokyo Round ofGovernment
Procurement Agreement, atleastforty dayswould normally beallowed.
Publicity forinviting tenders
5.(a) How areintended procurements publicised? Areinvitations totender published? Ifso,
where, andinwhat languages?
TendernoticesforprocurementofgoodsandservicesthroughopeningtenderingbyGovernment
departments arepublished bothinEnglish andChinese intheHong Kong Government Gazette
onFriday (except when Friday isapublic holiday). Where necessary, tender notices may
alsobeadvertised inthelocaland/or international press.S/WPGR/W/11/Add.9
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(b) Dotheextent andformofpublicity differ according totendering procedures applied and/or
onthevalue ofprocurement?
Inthecase ofselective tendering, tender invitations may besent byletter toall
contractors/suppliers ontherelevant listsofqualified contractors/suppliers established forthe
purpose ofselective tendering.
Inthecaseofsingle orrestricted tendering conducted under approved circumstances, tender
invitations aresentbyletter toonlyoneoranumber ofcontractors/suppliers approved bythe
appropriate authority. Services notexceeding HK$20,000 invalue maybeobtained byuser
departments direct without recourse totender. Services costing overHK$20,000 butnot
exceeding HK$1 million forconstruction andengineering works andHK$0.5 million for
consultancy andother services maybeobtained byuserdepartments byprivate tendering.
(c) What details oftheintended procurement arenormally published? Isthere aminimum set
ofinformation thatisrequired tobepublished? Ifso,please specify.
Information published intender invitations covers thetender reference, theprocuring entity,
adescription ofthegoods orservices required, theaddress andtelephone number oftheoffice
fromwhich forms oftender andfurther particulars maybeobtained, theexact location ofthe
tender boxinwhich tenders aretobedeposited, andtheclosing dateandtimeforreceipt of
tenders.
(d) Arethere anycharges forobtaining thefullsetoftender documents? Ifso,please specify
anddescribe howthese charges areset?
There isnocharge forobtaining afullsetoftender documents fromtheprocuring department.
(e) Areelectronic means usedtoadvertise procurement opportunities? What isthenature of
systems thatareinplace? Aredifferent tendering provisions applied tocontracts advertised
inthismanner? Ifso,please describe.
Inaddition topublishing tender notices intheGovernment Gazette, anoutline ofthetender
information onprocurement ofgoods andservices bygovernment departments isprovided
ontheFinance Branch Home Page ontheInternet (Address: http:// www. info.
gov.hk/fb/tender.htm). Updating ofthetender information ontheInternet willbemade every
Friday. Inaddition, aforecast ofinvitations totender forcivilandengineering works is
published onthe Works Branch Home Page onthe Internet (Address :
http://www.wpelb.gov.hk/). Thetender information published ontheInternet isbasically the
same asthatprovided inthetender notices published intheGovernment Gazette andthesame
tendering provisions apply.
Requirements laiddown forpossible suppliers
6.(a) Arethere registration, residence orother requirements forpotential suppliers?
There isnorestriction onthequalification oreligibility oftenderers wishing totender forgoods
andservices invited bywayofopentendering. Where thereisfrequent needtoinvite tenders
forservices orgoods butwhere notallcontractors/suppliers inthemarket arecapable of
delivering, departments could establish alistofqualified contractors/suppliers forthepurpose
ofrestricted tendering, subject totheprior approval oftheSecretary fortheTreasury.
Departments maintaining suchlistsarerequired topublish theup-to-date listsandthemethodS/WPGR/W/11/Add.9
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ofapplication andassessment intheGovernment Gazette annually. Interested overseas
companies wishing totender forworks contracts arerequired either tosetuparegistered office
inHong Kong ortoappoint alocalagent whomustbeaperson ofgoodstanding. Asageneral
rule,thequalification criteria andassessment method should notdiscriminate among foreign
contractors/suppliers orbetween domestic andforeign contractors/suppliers.
(b) What isthenature ofanyconditions forparticipation required from suppliers -such as
financial guarantees, commercial standing andtechnical qualifications? Dotheconditions
ofparticipation varyaccording tothenature ofthetender process and/or thevalue ofthe
intended procurement?
Forregistration asasupplier under theappropriate category ofproducts inthequalified list
establishedbygovernmentdepartments,interestedfirmsarerequiredtoprovidecompanydetails
including organisation andstaff, financial resources andbusiness activities together with
supporting documents. Inthecasewhere theproducts require technical clearance toassess
theirsuitability foruse,thetechnical datashould alsobeprovided. Tobeaccepted asan
approved contractor under theappropriate category ofcivilengineering works orapproved
suppliersofmaterialsandspecialistcontractorsforpublicworks,interestedfirmsneedtoprovide
theircompany details, financial background, withsupporting evidence onwork experience.
They arerequired tosetuparegistered office inHong Kong ortoappoint alocalagent. In
thecaseofanextremely complex project involving veryhighvalue orveryrigidcompletion
programme; anexercise willbeconducted toprequalify alistoftenderers whoarefinancially
andtechnically capable ofundertaking theproject.
Similar conditions apply totheregistration ofservice providers. Interested companies are
required toprovide company details, financial background, withsupporting evidence onthe
provision oftherelevant service, availability ofadequate manpower, equipment, plants and
materials.
(c) Dothere existlistsofapproved suppliers? Ifso,what aretheprocedures forchecking the
capability offirms applying forinclusion ontenderers 'mailing lists? Arelistsofapproved
suppliers, ifany,regularly reviewed/updated?
Government departments mayestablish different listsofapproved suppliers/contractors for
specific categories ofproducts, services andworks. Interested firms maycheck withthe
departments concerned toseewhether theyaresuitable forinclusion intheapproved lists.
Atpresent, theGSD andWorks Branch ofHong Kong Government arethetwomain
departments maintaining most oftheregistered/approved listsusedbyvarious government
departments. While GSDmaintains registered listsofsuppliers forvarious products, theWorks
Branch maintains listsofapproved contractors forworks categories andsuppliers ofmaterials
andspecialist contractors forpublic works.
There isnotimelimit forinterested companies tosubmit applications forinclusion inthe
approved listsofcontractors/suppliers. Applications could bemade anytimetothegovernment
departmentconcerneddirect.Applicationsarecheckedagainsttheapprovedqualificationcriteria
andassessed inaccordance withtheapproved assessment method. Approved listsarereviewed
regularly toensure thatnewapplications areprocessed promptly.S/WPGR/W/11/Add.9
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Criteria forassessing bidsandawarding contracts
7.(a) What criteria aretaken intoaccount intheaward oftenders? Arecriteria foraward of
contracts made available inadvance topotential suppliers?
Tenders aregenerally accepted onthebasisoftheircompliance withthetender specifications
andthetendered sum. Departments select theoffers thatrepresent thebestvalue formoney,
having regard totheirsuitability inmeeting theusers’requirements, competitiveness inprice,
maintenance andother operational costs, reliability ofperformance andwhere applicable,
after-sale services. Thecountry oforigin ofthegoods andservices isnotaconsideration in
theaward ofcontracts. Ifselection criteria areadopted forselecting thesupplier/contractor
foraparticular contract, thecriteria areoutlined inthetender documents fortenderers ’
information.
(b) Isprocurement subject toanyoffset provisions, suchaslocal content, technology transfer
orcountertrade requirements?
Generally,procurementofgoodsandservicesinitiatedbygovernmentdepartmentsisnotsubject
toanyoffset provisions .However, forconsultancy agreement, aspecific commitment onthe
partofconsultants totraingovernment staffisrequired andprovided forintheagreement,
where appropriate.
(c) Ispreference given toanyparticular enterprises orgroup ofenterprises? Ifso,please specify.
Nopreference isgiven toanyparticular enterprises orgroup ofenterprises. Hong Kong
Government operates alevel playing field inprocurement andensures anopen andfair
competition amongst domestic andforeign suppliers.
(d) Dotheprocurement criteria differ according tosector orregion oftheeconomy?
Thesame tendering principles apply regardless ofwhich sector orregion oftheeconomy.
(e) What isthemargin ofchoice ordiscretion allowed tothepurchasing authority? What does
theextent, ifany,ofdiscretion allowed depend upon?
Unless thecontract istobeawarded onthebasis ofsome predetermined assessment criteria
previously approved bytheappropriate tender board prior toinvitation oftender, selection
ofatender isgenerally based onitscompliance withthetender requirements andwhether it
represents thebestvalue formoney.
Disclosure ofbidsreceived andcontracts awarded
8.(a) How aretenders received, registered andopened?
Tenders arerequired tobedeposited bythetenderers tothedesignated tender boxbefore the
specified tender closing time. Adesignated teamofpersonnel fromtherelevant tender board
willcollect tenders from thetender box,openandregister thetenders received andsendthe
tenders totheprocuring department fortender evaluation.S/WPGR/W/11/Add.9
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(b) Areentities required topublish details ofthecontracts awarded and/or notify unsuccessful
tenderers?
Contracts awarded bytender boards arepublished forgeneral information intheGovernment
Gazette before theendofthefollowing month. Thenotice contains information onthe
procurement entity, description ofthecontract awarded, name ofthesuccessful tenderer and
theamount ofthecontract. Inaddition tonotifying thesuccessful tenderer ofaccepting his
tender, theprocuring department isrequired toinform allunsuccessful tenderers oftheresult
ofthetender exercise.
(c) Areentities required topublish, orprovide tounsuccessful bidders, pertinent reasons why
theirbidwasrejected?
Procuring departments arenotrequired topublish thereasons forrejecting bidsmade by
unsuccessful tenderers. Unsuccessful tenderers aretoldofthereasons whytheirbidshave
notbeenaccepted.
Treatment granted todomestic andforeign services and/or suppliers
9. What laws, regulations, procedures orpractices accord domestic services and/or suppliers
treatment more favourable thanthataccorded toforeign services and/or suppliers, oraccord
services and/or suppliers ofaMember more favourable treatment thanthose ofanother
Member? Please specify how, ifatall,more favourable treatment isaccorded. Please also
specify theworking definition of"domestic" inrelation todomestic services andsuppliers.
AsHong Kong Government adopts anon-discriminatory tendering system intheprocurement
ofgoods andservices, wedonotgivepreference todomestic suppliers orsuppliers fromany
particular Member. There aretherefore nolaws, regulations, procedures orpractices according
preferential treatment todomestic oroverseas services orsuppliers.
Procedures forhearing andreviewing complaints/appeals
10. What, ifany,aretheprocedures available forparties, domestic andforeign, tolodge
complaints against theaward ofacontract? Please provide details.
Contractors/suppliers maylodge complaints about theprocess orresult ofatender exercise
totheprocuring department direct ortotherelevant tender board, Independent Commission
Against Corruption, ortheOffice oftheCommissioner forAdministrative Complaints
(COMAC). Under theCommissioner forAdministrative Complaints Ordinance (Cap.397),
theCOMAC isempowered toinvestigate acomplaint concerning theprocedures adopted in
inviting tenders, determining thequalification ofpersons entitled totender andtheselection
ofthesuccessful tenderer.
Onreceipt ofacomplaint orthereferral ofacomplaint from other offices, theHead ofthe
Department responsible forthecontract willdealwiththecomplaint withaviewtoproviding
anearly andsubstantive reply tothecomplainant direct orthrough thereferral office. An
interim reply would besenttothecomplainant ifasubstantive reply cannot beissued shortly.S/WPGR/W/11/Add.9
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II. MEMBERSHIP OFPLURILATERAL, REGIONAL AND/OR BILATERAL AGREEMENTS
11. IstheMember party toanyplurilateral, regional and/or bilateral agreements withprovisions
ongovernment procurement? Ifso,please describe therelevant provisions.
TheHong Kong Government became aparty tothe“GATT Agreement onGovernment
Procurement ”on17December 1979. Hong Kong isaMember Economy oftheAsia-Pacific
Economic Cooperation (APEC).
III. ECONOMIC IMPORTANCE OFSERVICES PROCUREMENT
12.(a) Please provide statistics (ifavailable) onthenumber andvalue ofservices procurements
- onbothanaggregate andsectoral basis;
- byorigin ofservices andsuppliers.
Theprocurement statistics inrespect ofgovernment departments fortheyear1994-95 are
summarised asfollows -
Supply ofGoods
ContractsService Contracts Works Contracts
No. Value No. Value No. Value
8590 $6,012.2M 310 $1,207.8M 358 $28,388.1M
Remarks: Statistics only include procurement ofgoods andservices ofavalue exceeding
HK$0.5 million and$1million respectively.
(b) Please provide statistics (ifavailable) onthe
- share ofservices procurement intotalprocurement;
- share ofprocurement ofeachservice intotaldomestic output oftheservice;
- share ofprocurement ofeachservice intotaldomestic consumption oftheservice.
Information notavailable.
.