West Kowloon needs tender care
6 February 2017
Webb-site has been digging into the West Kowloon Cultural District/Disaster/Desert. The architectural work on the proposed Hong Kong Palace Museum (HKPM) represents possibly the worst failure to tender a HK Government project since the Cyberport was awarded to Li Ka-Shing's son in 1999, which is ironic, because the office-hotel-mall complex retained by the Government is so devoid of technology tenants that the Government has moved the West Kowloon Cultural District Authority (WKCDA) there. Perhaps it should now be renamed the "Cultureport".
But it's not too late to tender the HKPM work, because our correspondence with Duncan Pescod (Mr Pescod), Chief Executive of WKCDA, confirms that the main contract for architectural services is still under negotiation, so there is no binding obligation on WKCDA to use Rocco Design Architects Ltd (RDA) as the architect. If the board members of WKCDA have any self-respect and influence, they should now order the management to tender the work properly. But they don't, of course.
On 23-Dec-2016, WKCDA announced the hitherto secret "Project P", stating vaguely that:
"The Board of the WKCDA has endorsed the appointment of Rocco Yim of Rocco Design Architects Limited as the architect to carry out the design of the HKPM."
Seeing the word "endorsed", we immediately suspected that some earlier agreement had been reached, fait accompli - many of the board members had not been told about the project until it was well underway. On 3-Jan-2017, we wrote to WKCDA asking:
- On what date was the appointment made?
- On what date did the WKCDA board endorse the appointment?
- Whether there was any tender or other competitive process for the appointment of the architect, if so the details of that, and if not, why not? We checked your “Tender Notices” page but could not find anything related to this.
- Details of the contract awarded to Rocco Design Architects Limited, including the date awarded and the contract amount. We could not find any details on your “Awarded Contracts” page.
With no reply, on 6-Jan-2017 we threatened to file a complaint with the Ombudsman under the Code on Access to Information. Meanwhile, the public pressure on the Government for an explanation increased, resulting in a press conference on 10-Jan-2017 for which a series of questions and answers was prepared (Q&A). On 13-Jan-2017 we received a letter from Mr Pescod, containing many of the same answers, but with some important differences. As the Q&A had by now disclosed, there were in fact two contracts at issue:
- The first, relatively small contract for HK$4.5m with RDA was "in June 2016 to provide consultancy services in respect of an ongoing study into the future use of the headland site (previously the MPV site)." MPV stands for "Mega-Performance Venue". The board has delegated authority to the management of WKCDA to award such contracts up to HK$5m without specific board approval.
- The second, much larger contract, still under negotiation, is for the main architectural work on the HKPM. Mr Pescod stated that "the Board took a decision to appoint RDA as lead consultant for the HKPM design on 28 November 2016. WKCDA is now finalizing the detailed terms of the consultancy agreement. The Board endorsed the budget for the provision of consultancy services for the design and construction of the project at its meeting held on 10 January 2017".
Criteria revised after decision
Now on our third question, WKCDA appears to have revised the history. In the Q&A on 10-Jan-2017, the Government asked itself question B3:
"Why did the WKCDA directly engage [RDA] to take charge of the design of the [HKPM] without open tendering, which is contrary to the principle of openness and fairness? Will the project be re-tendered?"
We pause to note that you cannot re-tender that which was not tendered in the first place. The answers given by the Government and Mr Pescod are shown below, with differences in italics:
|Q&A answer on 10-Jan||Mr Pescod's answer on 13-Jan|
|The WKCDA Management considers that HKPM is a unique museum with
very special nature to showcase the precious collections, culture and
history of the Palace Museum. WKCDA has the following considerations in
engaging the architect for the project:
(1) A local Chinese architect who must understand Chinese arts and culture;
(2) Understands the vision and development of WKCD; and
(3) Possesses the expertise gained through designing museums of a similar nature.
Mr Rocco Yim is a local-born Hong Kong architect...
|In light of the confidential nature of the discussions between
the Government, the Palace Museum and Ministries the WKCDA
management considers that the HKPM is a unique project, which will be
able to showcase the precious collections, culture and history of the
Palace Museum in Hong Kong. WKCDA has the following considerations in
engaging the architect for the project:
(1) A local architectural firm which understands Chinese arts and culture;
(2) Understands the vision and development of WKCD; and
(3) Possesses necessary expertise in designing museums of a similar nature.
RDA is a Hong Kong based architectural firm...
Notably, Mr Pescod now says that the WKCDA (or rather, its management, not the board) chose RDA because it is a local firm, rather than because its leader, Rocco Yim Sen Kee (Mr Yim), is a "local Chinese" or "local-born" architect. This comes after the Equal Opportunities Commission pointed out on 11-Jan-2017 that selecting an individual based on his race or national or ethnic origin may be in breach of the Race Discrimination Ordinance (see section 8).
Carrie Lam Cheng Yuet Ngor (Mrs Lam), who as Chief Secretary was also Chairman of WKCDA, stated at the press conference on 10-Jan-2017 that she approached Mr Yim in May 2016 and later delegated the contact to Mr Pescod. There was never any other candidate.
The Hong Kong Jockey Club, which holds a monopoly gambling/tax-collecting franchise, is providing HK$3.5bn of funding to WKCDA for the HKPM project. By coincidence, the HKJC appointed RDA in 2009 as Executive Architect on the Central Police Station project. That project temporarily stalled in May 2016 when a wall of one of the buildings collapsed after holes were bored in its brick columns. No blame has been apportioned amongst the various parties involved.
Webb-site has no doubt that RDA and its leader, Rocco Yim, are qualified for the main HKPM job, either by the original criteria or the revised ones. That's not the point. RDA is not the only firm in the world that would be qualified, even on the narrow and now-revised criteria, and they should have to compete for the job. Even if you accept the excuse that the initial small contract could not have been tendered because the project was still "confidential" (ever heard of non-disclosure agreements?), it is no longer confidential, and that excuse drops away for the main contract.
It is worth nothing that the Deputy Chairman of WKCDA, Ronald Joseph Arculli, is now heading up Mrs Lam's Chief Executive selection campaign, along with another WKCD board member, Bernard Chan Chi Sze. His father Robin Chan Yau Hing is one of the "senior advisers" on her campaign.
The architects cartel
While we are on the subject of local architects, the Hong Kong Institute of Architects (HKIA) came under fire from the Competition Commission in a media release on 28-Nov-2016 for its continuing anti-competitive requirements in its Code of Conduct, including the requirement in Rule 3.1 that members should "uphold and apply...the Scale of Professional Charges" - in other words, price-fixing, something that we wrote about on 25-Jan-2015. The Scale of Professional Charges has disappeared from its website but can be found in the internet archive, requiring a fee of 4.5% for "Group I" projects (specifically including museums) up to HK$1bn, and "negotiable" above that. HKIA is a statutory body, so it is exempt from the Competition Ordinance unless and until the Chief Executive of HK issues a notice to put them in. However, HKIA's members are not exempt.
For the HK$3.5bn HKPM then, the fee could be in the region of 4% or HK$140m. WKCDA declined to disclose the budget to Webb-site, claiming that it is commercially sensitive information and "in any event, as the contract is still being negotiated with RDA there is no formal agreement in place yet".
There is another point on which most of the media have not yet focused. HK prides itself on purportedly being an open and free market. It is a member of the World Trade Organization and a signatory to the Government Procurement Agreement (GPA), which requires open tenders above certain thresholds and with certain exceptions. Each member commits to its own coverage schedules. In Hong Kong's case, the goods and services threshold for Government Departments in Annex 1 is HK$1.484m. Annex 3 specifies a higher threshold of HK$4.565m for good and services procured by five other arms of the Government, namely the Airport Authority, Hospital Authority, Housing Authority, Kowloon-Canton Railway Corporation (yes, it still exists) and MTR Corporation Ltd (0066). This list has not been updated in a long time, so it doesn't specifically include newer Government-controlled entities such as:
- Competition Commission
- Estate Agents Authority
- Hong Kong Cyberport Management Company Limited
- Hong Kong International Theme Parks Limited (owner of HK Disneyland)
- Hong Kong Science and Technology Parks Corporation
- Insurance Authority
- Mandatory Provident Fund Schemes Authority
- Sale of First-Hand Residential Properties Authority
- Securities and Futures Commission
- West Kowloon Cultural District Authority
However, the Government should ensure that all its arms and legs properly tender in accordance with the spirit of these commitments. Readers will note that the preliminary June contract of HK$4.5m fell just below the HK$4.565m of Annex 3 entities, as well as the delegated limit set by the board of HK$5m. The much larger main contract would not qualify for a size-exemption.
On 16-Jan-2017, we wrote to WKCDA again. We asked, amongst other things, whether the WKCDA considered itself bound by Hong Kong's WTO commitments. Mr Pescod replied in a letter dated 24-Jan-2017 that although WKCDA is not named in Annex 3:
"Despite this, WKCDA conducts its procurement activities in accordance with the WTO-GPA. The procurement of consultancies is specifically excluded from the operation of the WTO-GPA."
By implication, Mr Pescod, for WKCDA, claims that the provision of architectural and project management services by RDA amounts to a "consultancy". Annex 7 of HK's commitments states that HK's GPA does not cover "All consultancy and franchise arrangements". We wrote again, asking, by what stretch of the imagination could architectural and project management services constitute an exempt "consultancy"? At this point, perhaps fearing a judicial review or legislative enquiry, WKCDA responded on 27-Jan-2017:
"As the WTO-GPA is an international treaty we do not believe it is appropriate to offer an interpretation of its terms."
Surely, you must have some interpretation in mind, Mr Pescod. Try, for example, the approach of the Government's Architectural Services Department - here is a list of its expected tenders for Jan-Jun-2017.
Our final question in the second letter was whether we are correct that as the main agreement is still under negotiation with RDA, there is currently no contractual obligation on WKCDA to use RDA for this work, and therefore the WKCDA board could, if it wishes, open the contract to tender. Mr Pescod agreed, writing "technically you are correct", but then said that this "should not be taken as providing an opportunity for the contract to be put out to tender."
We think that's a matter for the board to decide, Mr Pescod.
© Webb-site.com, 2017
Organisations in this story
- COMPETITION COMMISSION
- HONG KONG INSTITUTE OF ARCHITECTS (THE)
- WEST KOWLOON CULTURAL DISTRICT AUTHORITY
People in this story
- Arculli, Ronald Joseph
- Chan, Bernard Chi Sze (aka Charnwut Sophonpanich)
- Lam Cheng, Carrie Yuet Ngor
- Pescod, Duncan Warren