| Unlimited
liability of procurement policy
Under the existing liability regime of
procurement policy, it is a usual practice
of the Government ICT contracts that regardless
of the nature or size of contracts, the
liability to direct and indirect damages
is unlimited.
The effect of such uncapped liability policy
or "one size fits all" approach
is that there is a trend of Multinational
Companies (MNC) bidding less and less because
these companies cannot afford to have their
name and company future at risk of incurring
a significant liability. For SMEs, they
also could not run such risk and in the
worst case, they may just abstain from bidding
government projects.
The result of this is not only bad to the
companies not bidding but also unhealthy
to Hong Kong and the ICT industry as a whole,
as there is less and less choice of technology
and solution, and MNC are not willing to
bring in state-of-the-art technology to
Hong Kong.
To encourage more industry players in the
government contracts to drive competition
and innovation, several countries, such
as Canada, Germany, Switzerland and the
United Kingdom have already reformed and
specified in details in their procurement
policy in respect of the types of claims
and financial limits of liability for which
a vendor may be held liable under the Government
ICT contracts.
To improve the liability regime under the
Government ICT contract, I request the Government
to review the existing procurement policies,
moving away from a default position of "one
size fits all" or uncapped liability
to a flexible approach of limiting the liability
of ICT vendors which can be tailored to
the individual circumstances of each contract
and which is not excessively bureaucratic
or costly for the parties to implement and
comply with.
Jan 2006 |
