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Trade and Industry Department The Government of the Hong Kong Special Administrative Region
Brand Hong Kong - Asia world city

Review Body on Bid Challenges

Summary of Case No. 04/2003

The rejection of a tender proposal for the supply of a fire-fighting vessel to the Government of the Hong Kong Special Administrative Region (HKSARG)

Company A (the complainant) lodged a bid challenge to the Review Body against the HKSARG (the respondent) for breaching Article XIII (4) (b) of the World Trade Organization Agreement on Government Procurement (GPA) in a tender exercise for the supply of a new fire-fighting vessel.

The respondent rejected the complainant's tender on the ground that the complainant could not conform to the mandatory warranty requirements and the requirements on financial information. The complainant, however, asserted that the respondent misconstrued the terms of the warranty provided and failed to recognize that the financial information submitted did meet the requirements in the tender invitation.

A Panel comprising the Chairman and two members of the Review Body was set up to consider the bid challenge. As neither party requested a hearing and the Panel did not find it necessary to conduct a hearing, both the complainant and the respondent supplied the Panel with written submissions. The decision of the Panel is summarized as follows -

  1. The Panel was of the view that the complainant's warranty offer, when properly construed, served the mandatory warranty requirements, and this ground alone should not have prevented the complainant's tender from being further examined by the respondent.
  2. On financial documentation, the Panel considered that the complainant had failed to provide its audited financial statement in a form that enabled the respondent to assess complainant's financial capability. The Panel agreed that such failure was sufficient to justify the respondent's rejection of the complainant's tender.
  3. The Panel rejected this complaint and concluded that there had not been a breach of the GPA.
  4. The Panel was however concerned that the procuring entity's interpretation of the warranty offered by the complainant was somewhat uncommercial. The Panel advised that a course in interpretation of commercial documents be provided to officers carrying out the screening process.