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Case 1:	Prequalification

Case 1: Prequalification

Assisted by its consultant, an owners’ corporation (OC) conducted a prequalification exercise to shortlist contractors for invitation to tender for its building maintenance project.  To ensure that only contractors from his syndicate would be invited to tender, the consultant’s director offered tens of thousand dollars to the OC Chairman as an inducement for the latter’s assistance to persuade the OC to, among other things, adopt a set of overly demanding qualifying requirements, some of which irrelevant to or totally unnecessary for the project, e.g. possessing experience in new building construction works.  As a result, other suitable contractors not belonging to the syndicate were screened out, and those in the syndicate rigged the tender and offered inflated bids.

Offences Committed

The consultant’s director offered bribe to the OC Chairman, who was an agent of the OC, as an inducement to or reward for the latter to provide assistance in relation to the building maintenance project.   Both the consultant’s director and the OC Chairman, who had accepted the bribe, contravened Section 9 of the POBO.

Case in Perspective

An unscrupulous consultant appointed by an OC might form a syndicate with colluding contractors to secure the building maintenance project.  He might recommend the OC to only invite the colluding contractors for tender, adopt prequalification of tenderers but then specify overly demanding qualifying requirements to screen out competitors outside the syndicate, or favour his colluding contractors in the tender evaluation.  Such practices amount to tender rigging which is prohibited under the Competition Ordinance enforced by the Competition Commission.

Sometimes, the consultant may even offer bribes to the OC members in order to secure their connivance at the above malpractices.

For the selection of contractors and consultants, open tender should be adopted as far as possible.   For most building maintenance projects where requirements are simple and common (e.g. registration status, relevant experience), a prequalification exercise is not recommended and the qualifying requirements can be included as tender requirements in tender invitation.  Only for large-scale or complicated building maintenance projects, where consultants or contractors with specific expertise/experience are required, a prequalification exercise to shortlist consultants or contractors who have met specific qualifying requirements may be conducted before inviting qualified ones to bid.   Aside from being mindful that any unnecessary barriers would restrict tender competition, the OC may include an anti-collusion clause in the invitation documents.  If the OC decides to invite only a few tenderers, the list of tenderers should be drawn up by more than one person.