WITHDRAWAL OF TENDERS AFTER ANNOUNCEMENT OF RESULTS (Penalties for contractors)

Dr Teo Ho Pin asked the Minister for Finance whether his Ministry will consider giving contractors the option to pay a penalty or be debarred from tendering all lines of business for one year when they withdraw their tenders after the announcement of the tender results.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, current guidelines on debarment are provided in Section B of Instruction Manual No. 3. The debarment period for withdrawal of tender after the award is made depends on the difference in the value of the tender withdrawn and the tender accepted subsequently. For example, if the difference is up to $100,000, the debarment period will be one year. The highest debarment period is five years. However, the guidelines also provide that a warning letter will suffice if the tender is withdrawn under special circumstances, due to genuine computational mistakes.

For revenue earning tenders, tenderers who withdraw from a tender after award have the option to pay the difference in the value of tender withdrawn and the tender finally accepted. If they pay the difference, they do not face debarment. However, for expenditure tenders, the option to pay the difference is currently not available.

Withdrawal of tender after the announcement of the tender results in additional administrative work and delay in a project. My Ministry takes a serious view of such defaults. Hence the current practice to debar offenders. However, compared to other defaults like abandonment of contract or corruption, withdrawal of tender after award is comparatively less serious. Hence we can consider the hon. Member's proposal to allow offenders an option to pay a penalty in lieu of debarment for withdrawal of tender after award is made. My Ministry will study the implications of such a proposal.