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OFFICIAL RECORD of PROCEEDINGS Wednesday, 3 LEGISLATIVE COUNCIL ─ 3 June 2015 12195 OFFICIAL RECORD OF PROCEEDINGS Wednesday, 3 June 2015 The Council met at Eleven o'clock MEMBERS PRESENT: THE PRESIDENT THE HONOURABLE JASPER TSANG YOK-SING, G.B.S., J.P. THE HONOURABLE ALBERT HO CHUN-YAN THE HONOURABLE LEE CHEUK-YAN THE HONOURABLE JAMES TO KUN-SUN THE HONOURABLE CHAN KAM-LAM, S.B.S., J.P. THE HONOURABLE LEUNG YIU-CHUNG THE HONOURABLE EMILY LAU WAI-HING, J.P. THE HONOURABLE TAM YIU-CHUNG, G.B.S., J.P. THE HONOURABLE ABRAHAM SHEK LAI-HIM, G.B.S., J.P. THE HONOURABLE TOMMY CHEUNG YU-YAN, S.B.S., J.P. THE HONOURABLE FREDERICK FUNG KIN-KEE, S.B.S., J.P. THE HONOURABLE VINCENT FANG KANG, S.B.S., J.P. THE HONOURABLE WONG KWOK-HING, B.B.S., M.H. 12196 LEGISLATIVE COUNCIL ─ 3 June 2015 PROF THE HONOURABLE JOSEPH LEE KOK-LONG, S.B.S., J.P., Ph.D., R.N. THE HONOURABLE JEFFREY LAM KIN-FUNG, G.B.S., J.P. THE HONOURABLE ANDREW LEUNG KWAN-YUEN, G.B.S., J.P. THE HONOURABLE WONG TING-KWONG, S.B.S., J.P. THE HONOURABLE RONNY TONG KA-WAH, S.C. THE HONOURABLE CYD HO SAU-LAN, J.P. THE HONOURABLE STARRY LEE WAI-KING, J.P. DR THE HONOURABLE LAM TAI-FAI, S.B.S., J.P. THE HONOURABLE CHAN HAK-KAN, J.P. THE HONOURABLE CHAN KIN-POR, B.B.S., J.P. DR THE HONOURABLE PRISCILLA LEUNG MEI-FUN, S.B.S., J.P. DR THE HONOURABLE LEUNG KA-LAU THE HONOURABLE CHEUNG KWOK-CHE THE HONOURABLE WONG KWOK-KIN, S.B.S. THE HONOURABLE IP KWOK-HIM, G.B.S., J.P. THE HONOURABLE MRS REGINA IP LAU SUK-YEE, G.B.S., J.P. THE HONOURABLE PAUL TSE WAI-CHUN, J.P. THE HONOURABLE ALAN LEONG KAH-KIT, S.C. THE HONOURABLE LEUNG KWOK-HUNG LEGISLATIVE COUNCIL ─ 3 June 2015 12197 THE HONOURABLE ALBERT CHAN WAI-YIP THE HONOURABLE WONG YUK-MAN THE HONOURABLE CLAUDIA MO THE HONOURABLE MICHAEL TIEN PUK-SUN, B.B.S., J.P. THE HONOURABLE JAMES TIEN PEI-CHUN, G.B.S., J.P. THE HONOURABLE NG LEUNG-SING, S.B.S., J.P. THE HONOURABLE STEVEN HO CHUN-YIN THE HONOURABLE FRANKIE YICK CHI-MING THE HONOURABLE WU CHI-WAI, M.H. THE HONOURABLE YIU SI-WING THE HONOURABLE GARY FAN KWOK-WAI THE HONOURABLE MA FUNG-KWOK, S.B.S., J.P. THE HONOURABLE CHARLES PETER MOK, J.P. THE HONOURABLE CHAN CHI-CHUEN THE HONOURABLE CHAN HAN-PAN, J.P. DR THE HONOURABLE KENNETH CHAN KA-LOK THE HONOURABLE CHAN YUEN-HAN, S.B.S., J.P. THE HONOURABLE LEUNG CHE-CHEUNG, B.B.S., M.H., J.P. THE HONOURABLE KENNETH LEUNG THE HONOURABLE ALICE MAK MEI-KUEN, J.P. 12198 LEGISLATIVE COUNCIL ─ 3 June 2015 DR THE HONOURABLE KWOK KA-KI THE HONOURABLE KWOK WAI-KEUNG THE HONOURABLE DENNIS KWOK THE HONOURABLE CHRISTOPHER CHEUNG WAH-FUNG, S.B.S., J.P. DR THE HONOURABLE FERNANDO CHEUNG CHIU-HUNG THE HONOURABLE SIN CHUNG-KAI, S.B.S., J.P. DR THE HONOURABLE HELENA WONG PIK-WAN THE HONOURABLE IP KIN-YUEN DR THE HONOURABLE ELIZABETH QUAT, J.P. THE HONOURABLE MARTIN LIAO CHEUNG-KONG, S.B.S., J.P. THE HONOURABLE POON SIU-PING, B.B.S., M.H. THE HONOURABLE TANG KA-PIU, J.P. DR THE HONOURABLE CHIANG LAI-WAN, J.P. IR DR THE HONOURABLE LO WAI-KWOK, B.B.S., M.H., J.P. THE HONOURABLE CHUNG KWOK-PAN THE HONOURABLE CHRISTOPHER CHUNG SHU-KUN, B.B.S., M.H., J.P. THE HONOURABLE TONY TSE WAI-CHUEN, B.B.S. MEMBER ABSENT: DR THE HONOURABLE LAU WONG-FAT, G.B.M., G.B.S., J.P. LEGISLATIVE COUNCIL ─ 3 June 2015 12199 PUBLIC OFFICERS ATTENDING: THE HONOURABLE JOHN TSANG CHUN-WAH, G.B.M., J.P. THE FINANCIAL SECRETARY MR YAU SHING-MU, J.P. SECRETARY FOR TRANSPORT AND HOUSING THE HONOURABLE MATTHEW CHEUNG KIN-CHUNG, G.B.S., J.P. SECRETARY FOR LABOUR AND WELFARE MR GODFREY LEUNG KING-KWOK, J.P. SECRETARY FOR COMMERCE AND ECONOMIC DEVELOPMENT THE HONOURABLE RAYMOND TAM CHI-YUEN, G.B.S., J.P. SECRETARY FOR CONSTITUTIONAL AND MAINLAND AFFAIRS DR THE HONOURABLE KO WING-MAN, B.B.S., J.P. SECRETARY FOR FOOD AND HEALTH THE HONOURABLE WONG KAM-SING, J.P. SECRETARY FOR THE ENVIRONMENT CLERKS IN ATTENDANCE: MR KENNETH CHEN WEI-ON, S.B.S., SECRETARY GENERAL MRS JUSTINA LAM CHENG BO-LING, DEPUTY SECRETARY GENERAL MISS FLORA TAI YIN-PING, ASSISTANT SECRETARY GENERAL MISS ODELIA LEUNG HING-YEE, ASSISTANT SECRETARY GENERAL 12200 LEGISLATIVE COUNCIL ─ 3 June 2015 PRESIDENT (in Cantonese): Will the Clerk please ring the bell to summon Members to the Chamber. (After the summoning bell had been rung, a number of Members entered the Chamber) TABLING OF PAPERS The following papers were laid on the table under Rule 21(2) of the Rules of Procedure: Subsidiary Legislation/Instruments L.N. No. Pharmacy and Poisons (Amendment) (No. 4) Regulation 2015 ........................................................................ 100/2015 Foreign Lawyers Practice (Amendment) Rules 2015 ........ 101/2015 Solicitors' Practice (Amendment) Rules 2015 ................... 102/2015 Limited Liability Partnerships (Top-up Insurance) Rules ... 103/2015 Other Papers No. 98 ─ Supplemental Report of the Public Accounts Committee on Report No. 63 of the Director of Audit on the Results of Value for Money Audits (June 2015 ─ P.A.C. Report No. 63A) Report No. 22/14-15 of the House Committee on Consideration of Subsidiary Legislation and Other Instruments ADDRESSES PRESIDENT (in Cantonese): Address. Mr Abraham SHEK will address the Council on the "Public Accounts Committee Report No. 63A". LEGISLATIVE COUNCIL ─ 3 June 2015 12201 Supplemental Report of the Public Accounts Committee on Report No. 63 of the Director of Audit on the Results of Value for Money Audits (June 2015 ─ P.A.C. Report No. 63A) MR ABRAHAM SHEK: President, on behalf of the Public Accounts Committee (the Committee), I have the honour to table our Report No. 63A today. This Report is supplemental to the Committee's Report No. 63 and contains our conclusions and recommendations on Chapter 4 of the Director of Audit's Report No. 63 on "Administration of the air traffic control and related services". Hong Kong is an international and regional aviation hub and the Civil Aviation Department (CAD) has an important role to provide a safe, reliable, effective and efficient air traffic control service. The Committee wishes to highlight that, for the purpose of protecting life and property, air safety must not be compromised under any circumstances. The Committee's Report looked into the irregularities found in the Director of Audit's Report in respect of the air traffic control and other related services. A total of six public hearings were held on this chapter and five hearings were devoted to gathering evidence on the procurement of the new Air Traffic Management System (ATMS) by the CAD. The Committee also paid a visit to the CAD to better understand the operation of existing ATMS and the testing of the new ATMS. The Committee finds it appalling and totally unacceptable that the existing Air Traffic Control system which, according to the Administration, ought to have been retired by December 2012 due to the end of production of some components and its limited functionalities and capacity. According to the Audit Report, the system had been operating above its planned capacity and the frequency of surveillance data display problem had increased since 2011. As at May 2015, no new, safe and reliable Air Traffic Control system is in operation and the latest estimate was that the new system would only be ready for operation in the first half of 2016. This is mainly due to a delay in the implementation of the ATMS contract, which is one of the eight major contracts of the system. Now, I shall touch on the subject of procurement of the new ATMS. The Committee strongly condemns the CAD for its incompetence and negligence in managing the procurement and implementation of the new ATMS project, with an original contract value of $486 million. Apart from the project 12202 LEGISLATIVE COUNCIL ─ 3 June 2015 being delayed for three and a half years, there are a number of irregularities found by the Committee in the public hearings. I will briefly highlight the irregularities in three aspects. Firstly, contract variations. Two contract variations were made by the CAD at a total cost of $89.2 million. The Committee is of the view that some items in these two variations should have been anticipated by the CAD. The situation is undesirable as the first contract variation was requested only 11 months after the award of the contract and two contract variations were made over a period of 17 months. Secondly, liquidated damages. According to the new ATMS contract, the contractor was only required to pay up to a maximum of $5 million as liquidated damages as a result of the delay in delivering the system in Phase 1 of the contract, that is, the commissioning of the new system. The Committee has doubts on the effect of such clause as an incentive for the contractor to expedite the delivery of the system as the same contractor was paid around $5.9 million a year for the upgrading and maintenance works of the existing system over the last three and a half years. Thirdly, tendering terms. The new ATMS contract only requires the tenderers to provide a system with a minimum track record of not less than six months but this short track record might not fully reflect the capability and performance of the new system to handle fluctuations in air traffic due to seasonal changes.
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