Tenderers often need to incur immense expenditures in the preparation to bid for consultancy service contracts requiring design and planning proposals. If the unsuccessful bidders are small to medium-sized enterprises (SMEs), they would find this highly onerous and a disincentive to participate at all. Although the government currently adopts a two-envelope system, that is, giving scores and taking into consideration technical proposal, experience, human resources, and the tender price, the price frequently becomes the deciding factor, as the scores for the other factors usually do not differ much. This thereby greatly impacts the tenderers, especially the SMEs.
Therefore, I had once proposed that the government should consider reimbursing with a special subsidy in cash to the local SME teams bidding for design and build projects that failed, but had fulfilled the prescribed requirements. This is to encourage more participation and positive competition among relatively small local firms and young professionals, and that they could thereby acquire more practical experience and sharpen their professional skills.
In the recent Kai Tak Sports Park project tendering process, the government has for the first time, proposed to allocate a HK$180 million bid incentive to induce more operators to participate on the basis that unsuccessful bidders would be awarded $60 million or half the actual expenses incurred in preparing for the tender documents. However, this arrangement appears likely to be prone to repercussions even if it was well-intended.
Since the Kai Tak Sports Park project was tendered through a “design, build and operate” model, the expected bidders are likely to be mostly international enterprises with considerable resources. Under such circumstances, local SMEs would unlikely have much scope of participating in this development, apart from in the relatively peripheral items. Thus, local SMEs would hardly benefit, let alone have the opportunities to acquire new experience. Why should the government spend the colossal sum of $180 million to help a company with no payback instead of helping the local SMEs who are in genuine need of support?
Over the years, the government’s procurement and recruitment in many professional aspects have often shown its preference of a “brand-name effect”, i.e., preference for well-known foreign firms and expatriate talents. Local professionals, especially the younger ones were thus deprived of opportunities to participate in local, large-scale development projects.
A realistic way to help local businesses and our young professionals would be for the government to consider, where appropriate, sub-dividing the tenders of large projects into smaller projects to allow more bourgeoning SME firms to join and acquire more experience, even if this means increasing the government’s co-ordination workload. Moreover, we should actively consider setting out policies and measures to allow “priority for local professionals”, to enable more local enterprises and professionals to gain opportunities to participate in local development projects and, enhance the competitiveness of local enterprises in the international market.
Tony Tse is founder of Hong Kong Seek Road