LCQ10: Outsourced service contracts for public cleansing services
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Question:
Regarding the outsourced service contracts for public cleansing services, will the Government inform this Council:
(1) according to the information provided by the Government in reply to a Member's question on the Estimates of Expenditure 2026-2027, among the 77 public cleansing service contracts awarded by the Food and Environmental Hygiene Department (FEHD) in the past three years, more than two-thirds were secured by two cleansing service contractors (contractors), whether the authorities have analysed the reasons why such service contracts were predominantly secured by certain contractors;
(2) given that the authorities have indicated that, based on the information provided by contractors in their tenders, staff costs account for about 80 per cent of the total value of the FEHD's street cleansing service contracts in recent years, whether the authorities are aware of the detailed breakdown of the relevant staff costs (e.g. wages, end-of-contract gratuities, etc.), and whether the authorities have examined and verified the accuracy of the information provided by the contractors in their tenders;
(3) according to the information provided by the Government in reply to my question on the Estimates of Expenditure 2026-2027, it can be deduced that staff costs may only account for about 50 per cent to 60 per cent of the value of public cleansing service contracts; whether the authorities have made comparisons with the outsourced cleansing service contracts in the market to ensure that the profit level and the proportion of staff costs of the contractors under the public cleansing service contracts are comparable to those of outsourced cleansing services in the market; if so, of the details; if not, the reasons for that; and
(4) of the measures the authorities have in place to prevent contractors from securing public cleansing service contracts through means such as price-fixing and bid-rigging; in the past three years, whether the authorities have conducted investigations or sought follow-up action from law enforcement agencies in respect of suspected bid-rigging by contractors; if so, of the details?
Reply:
President,
The Food and Environmental Hygiene Department (FEHD) has all along been following the Government's procurement policy to obtain goods and services through fair, open and competitive procurement procedures. The system allows flexibility for departments to determine tender requirements and evaluation methods based on the nature of the goods and services as well as market conditions when conducting procurement. In general, contracts are awarded to tenderers who have met the essential requirements as set out in the tender documents and have attained the highest score according to the evaluation method. The reply to various parts of the question is as follows:
(1) The award of multiple outsourced public cleansing service contracts to certain contractors is mainly due to the fact that they have obtained the highest scores under the tender evaluation mechanism across various tender exercises. To ensure that cleansing services do not become over-reliant on a single contractor, the FEHD has, with effect from March 2025, incorporated tender terms and assessment criteria into new public cleansing service tender invitations to limit the maximum number of contracts that can be awarded to the same contractor in each tender exercise.
(2) & (3) Apart from street cleansing services, the FEHD's public cleansing service contracts also cover other service areas including household waste collection and management of public cleansing facilities (such as public toilets and refuse collection points). As general outsourced cleansing service contracts in the market differ from those of the FEHD in terms of scale, scope of services and specific requirements, a direct comparison may not be appropriate.
When evaluating tenders for public cleansing service contracts, the FEHD scrutinises the proportion of staff expenditure therein carefully and compares with that of similar service contracts in the past to ascertain whether it falls within a reasonable range. Should any anomalies be identified, the FEHD could reject such tenders, and consider adopting more appropriate terms or assessment criteria in future tender exercises to ensure the proper use of public funds.
For the FEHD's outsourced street cleansing service contracts, based on the information provided by the contractors in the tenders, it is estimated that staff expenditure accounts for about 80 per cent of the total contract value. Such expenditure covers the wages of non-skilled workers, holiday pay, Mandatory Provident Fund contributions, contract gratuity, annual leave pay, as well as the wages and contract gratuity of skilled workers (e.g. supervisors), etc. As mentioned above, during tender evaluation, the FEHD scrutinises tenderers' specific service commitments, including the monthly wages of non-skilled workers and manpower deployment, to assess whether the proportion of staff expenditure falls within a reasonable range. Furthermore, after contract commencement, the FEHD also verifies whether the wages of non-skilled workers are consistent with the levels stated in the tender, and conducts site inspections and meetings with non-skilled workers from time to time to ensure that their wages and benefits are protected.
(4) The Standard Terms and Conditions for Tenders and Contracts formulated by the Government Logistics Department contain provisions to prevent collusive practices and bribery. As part of the tender submission, tenderers shall submit a Non-Collusive Tendering Certificate. In the event that a tenderer breaches any representations, warranties and/or undertakings contained in the Non-Collusive Tendering Certificate, the Government shall be entitled to reject the tenderer's tender or terminate the contract with the contractor. Furthermore, the Government will take into account the tenderer's past adverse records when evaluating its future tenders. Over the past three years, the FEHD has not detected any suspected anti-competitive bidding in relation to its public cleansing service contracts.
According to the Commerce and Economic Development Bureau, collusive conducts such as bid-rigging are considered serious anti-competitive conduct under the Competition Ordinance (Cap. 619). The Competition Commission (Commission) is an independent statutory body responsible for enforcing the Competition Ordinance, and its functions include investigating anti-competitive conduct. Upon receiving any complaints or referrals from government departments regarding anti-competitive conduct, the Commission will follow up and take appropriate enforcement actions. The Commission does not maintain breakdown figures for cases involving government outsourced service contracts or tenders.
Ends/Wednesday, May 20, 2026
Issued at HKT 11:40
Issued at HKT 11:40
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