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Procurement policy of IT products and services and implementation of government IT projects
2015-07-08

Following is a question by the Hon Charles Peter Mok and a reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (July 8):

Question:

Some practitioners from the information technology (IT) sector have relayed to me that although the authorities have been committed to developing the innovation and technology industry in recent years, their procurement policy for IT products and services as well as approach for implementing government IT projects are both unable to dovetail with the development of the industry. In this connection, will the Government inform this Council:

(1) given that the authorities have set up specific service groups under the Standing Offer Agreement for Quality Professional Services for policy bureaux/government departments (B/Ds) to acquire IT professional services with contract value not exceeding HK$1.43 million, of the respective numbers of local small and medium enterprises (SMEs) which were awarded IT service contracts worth less than and more than HK$1.43 million in each of the past three years, and the respective areas of services involved in such contracts; among such contracts awarded by the Government, of the percentage of contracts awarded to SMEs; whether the authorities will, under the principle of not violating the Agreement on Government Procurement of the World Trade Organization, introduce more elements of “priority to locals” to the relevant procurement policies and procedures; if they will, of the details;

(2) given that the various B/Ds currently employ non-civil service contract staff to provide them with IT services, and they also procure this kind of services provided by the “body-shopping” contract (commonly called “T-contract”) staff employed by employment agencies, but the remuneration packages of these two types of staff are inferior to those of civil servants, whether the authorities will conduct studies on converting some of the posts held by the aforesaid two types of staff into civil service posts, so as to improve the remuneration packages of such staff and attract more people to join IT industry to dovetail with IT development; if they will not, whether the authorities will review the terms and conditions of “T-contracts”, with a view to improving the remuneration packages of agency workers; if they will, of the details; and

(3) given that the development of and demand for IT are rapidly advancing and changing, whether the authorities will encourage various B/Ds to adopt approaches in line with Agile development in implementing government IT projects, so as to reduce development costs, enhance efficiency and shorten the time required for development; if they will, of the details; if not, the reasons for that?

Reply:

President,

My reply to the three-part question is as follows:

(1) It is the policy of the Government to conduct procurement in the most cost-effective manner through open, fair and competitive processes. We do not favour or discriminate against any suppliers. We source contractors from the market through periodic open tendering exercises to provide the four most frequently sought categories of information technology (IT) professional services by government departments, and enter into Standing Offer Agreement for Quality Professional Services (SOA-QPS) with them. The selected contractors are required to possess specific experience and track records in respective service categories. Local small and medium enterprises (SMEs) have actively participated in the arrangement. Amongst the 43 contractors under the prevailing SOA-QPS3, 10 of them are SMEs. In the past three years, the numbers of SMEs which were awarded service contracts through SOA-QPS with value less than HK$1.43 million were five in 2012-13, 11 (Note) in 2013-14, and 10 in 2014-15. The numbers of SMEs which were awarded service contracts with value more than HK$1.43 million were two in 2012-13, one in 2013-14, and one in 2014-15. These service contracts involved all the four categories of services, namely programme/project pre-implementation services, system support and maintenance services, system development and implementation services, and information security and independent testing services.

In the past three years, the Government awarded a total of 915 contracts through SOA-QPS, including 200 (about 22 per cent) awarded to SMEs.

On the condition of not violating the Agreement on Government Procurement of the World Trade Organization, we would break a large-scale project down into multiple projects of manageable sizes without affecting the overall project so that SMEs can have more opportunities to participate in the tenders. We would also reduce the financial burden on potential tenderers (for example, lowering or waiving the tender and contract deposit requirement) so as to encourage SMEs to participate in government tenders.

(2) Under the principle of prudent management of public resources, the size of the civil service establishment has been kept under control and close monitoring with a view to maintaining a lean and efficient civil service. At the same time, we will ensure that there is sufficient manpower to deliver new public services and to improve existing ones. As far as I know, from the perspective of the Civil Service Bureau, government bureaux and departments (B/Ds) may in general consider engaging non-civil service contract staff to meet the operational and service needs:

– which may be time-limited, seasonal, or subject to market fluctuations;
– which require staff to work less than the conditioned hours of the civil service staff;
– which require tapping the latest expertise in a particular area; or
– where the mode of service delivery is under review or likely to be changed.

Moreover, under the purview of the Office of the Government Chief Information Officer (OGCIO), B/Ds may, in addition to the core team of civil service IT staff, engage contractors under T-contracts centrally administered by the OGCIO having regard to their operational needs so as to complement the IT manpower required to assist in developing and supporting IT systems.

Given that the nature of T-contract services is to complement the core team of civil servants in order to allow for flexibility to meet peaks and troughs in IT project-based manpower demand, it would not be effective and efficient to replace T-contract services by permanent civil service staff. At present, there is neither a mechanism nor a plan to directly convert T-contract staff to civil servants. Individual staff may apply for related civil service posts they are interested in. In the past five years, the Government had conducted open recruitment exercises for Analyst/Programmer II annually and there were cases of successful application for these civil service posts by contract staff every year.

The IT market is flourishing. Service contractors will review the remuneration package of their individual staff taking into account relevant factors such as job market situation. It has helped to keep the wage levels of T-contract staff buoyant and competitive. Moreover, the Government may initiate the rate adjustment mechanism under the T-contracts to adjust the contract ceiling rates as well as the individual service rates of in-serving T-contract staff on an annual basis. As far as we know, the staff have benefitted from it. The T-contracts have also included provisions to require the contractors to comply with the employment laws of Hong Kong, to act as responsible employers and not to include unreasonable terms and conditions in the employment contracts.

(3) The Government has been keeping track of the methodologies and trends of IT project development, and makes reference to and adopts appropriate methodologies for the development of various IT systems. The Agile Software Development Methodology (Agile Methodology) is an emerging IT project development methodology which is particularly suitable for projects that involve volatile requirements or frequent delivery of updated software versions. In the past two years, the OGCIO, the Leisure and Cultural Services Department and the Planning Department adopted the Agile Methodology in four IT projects on a pilot basis and the results were satisfactory, for example, better tracking and control of project progress through improved communication between users and development team; system being able to better meet user requirements through rapid delivery of system prototypes and continual revisions and enhancements, etc. Moreover, the OGCIO developed a Practice Guide for Agile Software Development based on the experience gained through the pilot projects and industry practices. In March 2015, the guide was promulgated to B/Ds to encourage them to adopt the Agile Methodology for developing IT projects as appropriate so as to improve efficiency and shorten the development lead time.

The OGCIO is organising training courses on the Agile Methodology for B/Ds and will arrange briefings on the methodology for the industry. The Practice Guide for Agile Software Development can also be downloaded from the OGCIO’s website for reference.

Note: SOA-QPS3 commenced in July 2013 succeeding the previous SOA-QPS2. The 11 SMEs in 2013-14 included four from SOA-QPS2 and nine from SOA-QPS3, amongst which two SMEs were contractors under both SOA-QPS2 and SOA-QPS3.
Ends/Wednesday, July 8, 2015
Issued at HKT 15:40

Office Of Hon. Charles Mok, Legislative Councillor (IT)