Government ICT Procurement Policy Industry Survey

Slide 1: Government ICT Procurement Policy Forum Industry Survey Charles MOK Ex-officio Member Hong Kong Information Technology Federation 5 May 2008

Slide 2: The Survey  Co-organized by CAHK, HKCS, HKITF, WTIA, ISIA and SCK Office  Conducted from May-August 2007  Target: contractors/subcontractors with experience in Government ICT projects  31 completed questionnaires collected

Slide 3: Industry Survey Project Background Information

Slide 4: Value and types of contract Va lu e o f c o n tra c t Typ e s o f c o n tra c t ITP S A >HKD$ 1 0 m illio n ≦HKD$ 1 .3 m illio n 21% 13% 48% S OA- QPS 26% Op e n Te n d e r 61% HKD$ 1 .3 - 1 0 m illio n 31% N o . o f re s p o n d e n ts : 2 9 N o . o f re s p o n d e n ts : 3 1

Slide 5: Technical demonstration 33% 3% Tim e p ro vid e d fo r p re p a rin g te c h n ic a l d e m o n s tra tio n 23% Le s s th a n 1 w e e k 1 - 2 w e e ks 2 w e e ks - 1 m o n th 7% 1 - 3 m o n th s De m o n s tra tio n n o t re q u ire d 34% N o . o f re s p o n d e n ts : 3 0 Do yo u a g re e th a t s u ffic ie n t tim e w a s p ro vid e d to yo u fo r p re p a rin g te c h n ic a l d e m o n s tra tio n ? * N o . o f re s p o n d e n ts : 2 0 15% 30% 40% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% S tro n g ly Dis a g re e Dis a g re e N e u tra l A g re e S tro n g ly A g re e N o Co m m e n t *Question only available to contracts required technical demonstration

Slide 6: Contractor's liability Wa s th e c o n tra c to r's Typ e s o f lia b ility b e in g lia b ility lim ite d ? lim ite d 8% Ye s 44% 50% No 42% 56% In d ire ct o r co n s e q u e n tia l d a m a g e s to th e G o v 't To ta l lia b ility e xce p t th ird p a rty p e rs o n a l lo s s a n d d a m a g e s to in te lle ctu a l p ro p e rty N o . o f re s p o n d e n ts : 2 7 Oth e rs N o . o f re s p o n d e n ts : 1 2

Slide 7: Out-of-scope tasks  50% respondents were assigned with out- of-scope tasks (n=30) Re m u n e ra tio n a rra n g e m e n t fo r o u t- o f- s c o p e ta s k s * Oth e rs 7% Co s t a b s o rb e d b y ve nd o r A cco rd in g to m a rke t 13% p re v a ilin g ra te 40% Ba s e d o n ra te s p e cifie d o n co n tra ct 13% N o . o f re s p o n d e n ts : 1 5 Co n tra cto r in itia te d o ffe r G o v e rn m e n t in itia te d o ffe r 20% 7% *Question only available to contracts required technical demonstration

Slide 8: Out-of-scope tasks Do yo u a g re e th a t th e re m u n e ra tio n a c c e p ta b le ? N o . o f re s p o n d e n ts : 3 1 13% 16% 42% 6% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% S tro n g ly Dis a g re e D is a g re e N e u tra l A g re e S tro n g ly A g re e N o Co m m e n t

Slide 9: Profit margin Do yo u a g re e th a t th e p ro fit m a rg in o f Go ve rn m e n t c o n tra c ts m a tc h e d s im ila r c o n tra c ts in th e p riva te s e c to r? N o . o f re s p o n d e n ts : 3 1 29% 42% 29% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% S tro n g ly D is a g re e Dis a g re e N e u tra l A g re e S tro n g ly A g re e N o Co m m e n t

Slide 10: Industry survey General Comments on Government ICT Projects

Slide 11: Innovativeness Do yo u a g re e th a t s u ffic ie n t e m p h a s is is p la c e d o n b id d e rs ' in n o va tive n e s s fo r S O A - Q PS c o n tra c ts ? 16% 23% 32% 29% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% N o . o f re s p o n d e n ts : 3 1 S tro n g ly D is a g re e D is a g re e N e u tra l A g re e S tro n g ly A g re e N o Co m m e n t Do yo u a g re e th a t s u ffic ie n t e m p h a s is is p la c e d o n b id d e rs ' in n o va tive n e s s fo r o p e n te n d e r c o n tra c ts ? 13% 35% 32% 6% 13% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% N o . o f re s p o n d e n ts : 3 1 S tro n g ly D is a g re e D is a g re e N e u tra l A g re e S tro n g ly A g re e N o Co m m e n t

Slide 12: Technical competency Do yo u a g re e th a t s u ffic ie n t e m p h a s is is p la c e d o n b id d e rs ' te c h n ic a l c o m p e te n c y fo r o p e n te n d e r c o n tra c ts ? 10% 32% 26% 16% 6% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% N o . o f re s p o n d e n ts : 3 1 S tro n g ly D is a g re e Dis a g re e N e u tra l A g re e S tro n g ly A g re e N o Co m m e n t

Slide 13: Current liability regime… d e te rs y o u fro m p a rticip a tin g in Go v e rn m e n t ICT co n tra cts ? 6% 39% 26% 55% 29% m a tch e s ris k p ro file o f Go v e rn m e n t ICT co n tra cts ? 23% 19% 45% 10% 3 % 10% cre a te s b u rd e n in y o u r ca p ita l p ro v is io n in g ? 35% 35% 64% 29% p re v e n ts co n tra cto rs fro m s u p p ly in g in n o v a tive s o lu tio n s to th e Go v e rn m e n t? 3% 6% 29% 26% 61% 35% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% N o . o f re s p o n d e n ts : 3 1 S tro n g ly Dis a g re e D is a g re e N e u tra l A g re e S tro n g ly A g re e N o Co m m e n t

Slide 14: Industry survey Policy Suggestions

Slide 15: Highest priority to see a change in policy Pa y m e n t a rra n g e m e n ts 4% Un lim ite d lia b ility Te n d e rin g p ro ce s s re g im e 17% 48% S e le ctio n crite ria 31% N o . o f re s p o n d e n ts : 2 3

Slide 16: Unlimited liability regime S u g g e s tio n s o n re fo rm in g th e lia b ility re g im e Ca p p in g in d ire c t a n d 18% c o n s e q u e n tia l lia b ilitie s fo r a ll Go ve rn m e n t c o n tra c ts Ca rryin g o u t ris k a s s e s s m e n t e xe rc is e s 50% b e fo re d e te rm in in g lia b ilitie s M a k in g n e g o tia tio n s 32% w ith c o n tra c to rs to d e te rm in e lia b ilitie s N o . o f re s p o n d e n ts : 2 2

Slide 17: Selection criteria S u g g e s tio n s o n im p ro vin g th e s e le c tio n c rite ria 4% M a in ta in in g a fa ir a n d c o m p e titive te n d e rin g e n viro n m e n t M o re e m p h a s is o n 42% te c h n ic a l c o m p e te n c y o f 54% b id d e r Oth e rs N o . o f re s p o n d e n ts : 2 4

Slide 18: Tendering process S u g g e s tio n s o n te n d e rin g p ro c e s s Pro vid in g b id d e rs 12% s u ffic ie n t tim e to p re p a re te c h n ic a l d e m o n s tra tio n A s s e rtive ly n o tifyin g p o te n tia l b id d e rs a b o u t 17% n e w te n d e rs 50% To b e m o re re s p o n s ive to b id d e rs ' e n q u irie s Oth e rs 21%

Slide 19: Payment arrangements S u g g e s tio n s o n p a ym e n t a rra n g e m e n ts S a tis fa c to ry re q u ire m e n t 10% s h o u ld b e b a s e d o n o b je c tive ta rg e ts 9% Re m u n e ra tio n fo r o u t- o f- s c o p e ta s k s s h o u ld b e b a s e d 43% o n m a rk e t p re va ilin g ra te o r c o m m e rc ia l n e g o tia tio n s M in im iz in g d e la y in p a ym e n t 38% Oth e rs

Slide 20: Thank You