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The following is issued on behalf of the Housing Authority:
The Housing Authority will extend the requirement for on-demand bond to all new works contracts, including all nominated sub-contracts.
Improvement measures to secure payment of wages to workers have been included in the authorityˇ¦s building contracts and nominated sub-contracts tendered out from May 2006 onwards empowering the authority to effect payment of outstanding wages to workers in proven cases of default.
However, in the situation where the contractor or nominated sub-contractor is in liquidation or under a petition for winding up, the authority is bound by the insolvency law and cannot pay the workers of their proven wages in arrears.
Members of the authorityˇ¦s Building Committee and Tender Committee today (October 13) endorsed the proposal aimed at overcoming constraints imposed by the insolvency law to secure payment of wages in arrears of workers.
ˇ§On-demand bond can be utilised to secure payment of wages in arrears of the workers when the contractor or nominated sub-contractor is in liquidation or under a petition for winding up and even in the case of forfeiture of the contract or nominated sub-contract, or when there is no money due or becoming due under the contract or nominated sub-contract,ˇ¨ the Chairman of the Building Committee, Mr Ip Kwok-him, said.
Stressing that bond requirements were not unusual in the private sector, Mr Ip said that on-demand bond could enhance contractorˇ¦s self-discipline to perform his obligations duly and properly.
Since 1999, all foundation contractors and those building contractors who can only tender for contracts up to a value of $270 million have already been required to procure on-demand bonds amounting to 10% of the contract sum for the due performance of the contract.
Explaining details of the requirements for other types of contracts, Mr Ip said that the amount of bond should in general be commensurate with the approximate level of liabilities of the contractors and nominated sub-contractors in respect of workerˇ¦s wages in arrears under the Employment Ordinance.
ˇ§Such level of liabilities is different among different types of contracts as their respective labour content and contract duration are different. Bond percentages will range from 3% to 10%, depending on the types of contracts,ˇ¨ Mr Ip said.
Different bond percentages will apply to different contracts as detailed below:-
Contract Bond Amount for Bond Amount for each
Type Main Contract Nominated Sub-contract
---- ------------- ---------------------
I) NW1 10% of contract 3% of nominated
Building sum excluding sub-contract sum
(contractors nominated
who can sub-contract
tender for works
contracts up
to a value of
$270 million)
II) Foundation 10% of Not applicable
contract sum
III) Demolition 10% of Not applicable
contract sum
IV) NW2 Building 3% of 3% of nominated
(contractors who contract sum sub-contract sum
can tender for excluding
contracts of nominated
unlimited sub-contract
value) works
V) Civil 6% of 6% of nominated
Engineering contract sum sub-contract sum
excluding
nominated
sub-contract
works
VI) Term 5% of the Not applicable
Material total of
Testing, summary of
Term Ground tender
Investigation
etc.
ˇ§On-demand bond will not be imposed on landscape and other minor new works contracts in view of their small contract sum and short contract duration,ˇ¨ Mr Ip said.
ˇ§The bond will be released to the contractors six months after completion of the works,ˇ¨ he said.
Ends/Friday, October 13, 2006
Issued at HKT 16:33
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