Coronavirus: Hong Kong government departments can directly purchase masks worth up to HK$10 million without tendering

Alvin Lum

All Hong Kong government departments are now allowed to directly purchase HK$10 million (US$1.2 million) worth of masks without any tendering procedures until further notice, the Post has learned.

The controversial move came into effect on Tuesday, as the city’s administration and residents are desperately searching for the supplies of the protective gear amid the coronavirus outbreak.

Citing “extreme urgency” due to the public health crisis, Chief Executive Carrie Lam Cheng Yuet-ngor and her cabinet decided last Tuesday that tendering procedures could be skipped if the supplies did not exceed HK$1.4 million, according to an internal document obtained by the Post.

“Due to the urgent need for masks and subject to funding availability, controlling officers and the heads of departments may exercise their authority … to go by direct purchase if the estimated sum in each procurement does not exceed HK$1.4 million,” the circular read.

Based on the circular, the Government Logistics Department also obtained legal advice from the Department of Justice that the World Trade Organisation’s government procurement agreement could be relaxed in this situation, while various departments would not need to consult the justice department “until further notice” if the amount did not exceed the stipulated sum.

Civil servants who bought masks could also be reimbursed, the circular added, so long as each purchase was “reasonable”, did not exceed HK$5,000, and was approved by an entry-grade supplies or executive officer.

Mask orders up to HK$10 million could still be directly purchased if there is “very strong justification”.

Chief Executive Carrie Lam’s cabinet decided last Tuesday that tendering could be skipped if the supplies of mask did not exceed stipulated amount of HK$1.4 million. Photo: Robert Ng

On February 4, Lam admitted that the city had only a month’s stock of the face coverings, while ordering officials “to take off” their masks to save up for supplies – a controversial move for which she later apologised.

Insiders from various departments said that their respective departments had tightened up or even completely stopped distributing masks following Lam’s order.

Hong Kong is facing a shortage of masks, toilet paper and leadership

Two government lawyers in the Department of Justice told the Post that they were not given masks unless they could prove that they needed to go to courts for urgent hearings. They were also asked not to return to offices unless there was justification.

“The management was perhaps worried they would have to give us more masks if we came back,” a lawyer said. “But I need justification to get back to work, seriously?”

Based on an internal circular by the Secretary for Financial Services and the Treasury to the heads of departments obtained by the Post, Lam and her cabinet decided last Tuesday that masks procured by the Government Logistics Department would “only be provided” to personnel involved in health care, quarantine duties, essential public services, cleaning, and frontline staff and sick residents of elderly care homes and disability care centres.

Since it was decided that centrally procured masks will no longer be given to other civil servants, Lam said at the same meeting that various departments “should be permitted to procure masks on their own” to meet “essential operational needs”.

Textile and garment industry legislator Felix Chung of the Liberal Party says the government move will ‘only worsen the situation’. Photo: Nora Tam

Even if the value exceeded HK$1.4 million, departments could still skip tendering process and directly place purchase as long as the orders did not exceed HK$10 million.

The rules, covered in sections 331 to 333 in government’s procurement regulations, allowed direct purchase when “tendering would not be an effective means of obtaining the requisite stores or services or procuring revenue contracts, supported with very strong justifications”. Legal advice is advised when in doubt.

According to the rules, the approval from the Financial Services and the Treasury Bureau will be required only when purchases exceed HK$10 million.

The bureau later confirmed that heads of departments were allowed to procure masks on their own. It stressed that staff members who received such stocks should be those who had frequent contact with the public under “essential operational needs”, or because of inherent health problems or any other special requirement.

Elderly citizens queue up to get free surgical masks in Yau Ma Tei on February 13. Photo: Sam Tsang

Major disciplinary forces and departments with heavy use of masks, such as police and the Education Bureau, have also not responded to requests for comments, only referring to the same reply.

The government should not work like that. It’s essentially fighting for masks with the citizens

Felix Chung, Liberal Party lawmaker

Lawmakers have criticised the move as ineffective, which will “only worsen the situation”.

Liberal Party lawmaker Felix Chung Kwok-pan, who is also manufacturing reusable masks, described the move as “stupid”.

“The government should not work like that. It’s essentially fighting for masks with the citizens,” Chung said. “The suppliers will only raise the price.”

Civic Party lawmaker Alvin Yeung Ngok-kiu also criticised the move as “unsophisticated and counterproductive”.

“This is basically departments competing among themselves for masks, why can’t they procure centrally from the Government Logistics Department?”

Since January, the government has only received 4 million out of about 50 million masks sourced globally via its trade and economic offices. The Government Logistics Department said it had been reaching out to supplies all over the world to purchase masks.

The government is facing difficulties in getting bulk orders, whereas orders in smaller quantities are easier to obtain. I don’t think it would affect the price in the private market

Ronny Tong, adviser to Carrie Lam in the Executive Council

But Ronny Tong Ka-wah, an adviser to Lam in the Executive Council, said the move of separate procurement was justified amid a shortage of masks.

“The government is facing difficulties in getting bulk orders, whereas orders in smaller quantities are easier to obtain,” Tong said. “I don’t think it would affect the price in the private market as it’s a free competitive market anyway.”

‘Incompetent and slow’: Hong Kong ministers under fire for virus response

Lee Fong-chung, chairman of the Senior Government Officers Association, said as part of the government’s procurement regulations, the heads of various departments could generally allow direct purchase under HK$1.4 million, while procurement up to HK$10 million required the respective departments to set up a tendering committee.

“Whether it requires tendering depends on if there are sufficient suppliers, for instance stationery or computer equipment or safety equipment should be procured via tendering,” Lee said. “There is a shortage of masks, so I feel it’s reasonable to procure the safety gear whether by tendering or direct purchase by individual departments.”

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