LCQ3: Improving procurement processes of Government and public organisations
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Question:
It has been reported that a government department was recently found to have serious oversights and deficiencies in implementing its procurement process. There are views that the incident reflects the Government's failure to exercise rigorous supervision at the implementation level. In this connection, will the Government inform this Council:
(1) how it will step up supervision of government departments' procurement processes to ensure strict adherence to procurement guidelines; whether it will introduce more frequent third-party audits or digital monitoring systems to promptly identify and rectify anomalies in procurement processes;
(2) when reviewing the existing procurement processes, whether it will consider optimising aspects such as contract management, supplier performance evaluation and price-quality balancing mechanisms, introducing more flexible and competitive procurement models (e.g. electronic tendering or dynamic pricing systems), and enhancing the transparency of procurement information (e.g. regularly submitting summaries of government departments' procurement contracts and supplier ratings to this Council, so that this Council can more effectively monitor the procurement processes); and
(3) whether it will formulate clearer operational guidelines on procurement for public organisations (e.g. the Hospital Authority and the Hong Kong Housing Authority), and provide regular training and technical support to reduce procurement issues arising from errors in implementation details?
Reply:
President,
Government bureaux and departments (hereafter referred to as "departments") procure a wide variety of goods and services, ranging from common goods and professional items (e.g. pharmaceuticals and testing equipment) to service contracts (e.g. management of elderly homes and street cleansing). Having regard to society's concern over individual government procurement exercises recently, the question raised by the Hon Shang Hailong provides a good opportunity for me to elaborate on the government procurement regime:
(1) and (2) The Government's procurement policy is to obtain goods and services at the best value for money through fair, open and competitive procurement procedures. Meanwhile, the Stores and Procurement Regulations (SPRs) and relevant circulars set out the procurement framework and provide detailed guidelines on procurement procedures.
Indeed, not all government procurement exercises are handled by the Government Logistics Department (GLD). In general, GLD supplies commonly used items to departments and procures goods for departments at a value exceeding $10 million, whereas respective departments are responsible for procuring services as well as goods at a lower value. When conducting procurement, public officers should follow the SPRs and relevant circulars strictly. Controlling Officers of the departments also have the responsibility to remind officers under their purview to comply with the relevant regulations and closely monitor their compliance.
The prevailing procurement regime has put in place checks and balances with clear segregation of responsibilities and well-defined workflow to safeguard the procurement process. As far as the procurement of goods and services is concerned, departments formulate procurement requirements in accordance with their operational needs, and tender assessment panels (TAPs) evaluate tender submissions and recommend a tender for acceptance. TAPs' recommendation is subject to further evaluation by tender committees chaired by directorate officers of the departments. Depending on contract value, procurement exercises at a higher value may warrant scrutiny by the GLD Tender Board or the Central Tender Board to ensure compliance.
In addition, we have put in place other measures to monitor departments' procurement work. Currently, departments should conduct biennial self-assessments to enhance staff awareness of compliance with procurement regulations and strengthen self-monitoring. As a third-party audit, GLD has also set up a dedicated team to conduct random on-site inspection of departments' procurement records from time to time. Over the past three years, GLD has inspected more than 100 procurement cases per year on average, and suggested improvement measures for specific cases.
We acknowledge the importance of continuously enhancing the professional knowledge and execution abilities of procurement staff. Therefore, GLD regularly organises seminars and training courses. Over the past three years, GLD has organised more than 20 training activities in total, with over 1 600 attendances.
We are also committed to fostering digitalisation. The Government's digitalised tendering system, commissioned starting from 2009, gradually enables suppliers to access tender notices, download tender documents, make tender submissions, and access notices of contract award, etc, online. We will continue to keep pace with the times and explore introducing technology in procurement work or monitoring procedures, thereby stepping up procurement efficiency.
In terms of performance evaluation and contract management, departments take into account tenderers' track records in tender evaluation. As stipulated in the prevailing standard contract terms, the Government has the right to disqualify tenderers with previous significant or persistent contract defaults. After contract award, departments should evaluate contractors' performance regularly, and take actions in accordance with contract terms in case of unsatisfactory performance, such as issuance of warnings, suspension of payments, deduction from contract deposit, and even contract termination.
The Government has been maintaining high transparency of procurement information. The public can access tender notices, contract award information, major procurement forecasts, and standard contract terms, etc, online.
Having convened its first meeting in late August, the task force (Task Force on Review of Government Procurement Regime) will put forward enhancement proposals with a focus on aspects such as due diligence, tender requirements, contract management, and quality assurance.
(3) As regards the Hon Shang's question on public organisations, public organisations may devise their own procurement regimes based on their needs. The Hospital Authority and the Hong Kong Housing Authority have devised respective procurement regulations or guidelines for their staff to follow, and have organised regular training courses for them. The Government will share our best practices with public organisations from time to time, so as to ensure proper use of public resources.
Thank you, President.
Ends/Wednesday, September 10, 2025
Issued at HKT 13:05
Issued at HKT 13:05
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