Policy Address 2017 Review: HKSAR Government embarks on digital transformation

Fanny Law and Raymond Wong expect the government to bring better e-gov servicesApart from the unprecedented focus on technology and innovation development, the latest Policy Address announced last month also demonstrates Chief Executives Carrie Lam’s commitment to transform the government’s technology practice. Policies that include a new procurement arrangement and CE-led Steering Committee on Innovation and Technology are considered by industry veterans and former civil servants as a digital transformation within the Hong Kong SAR Government.

“The overall direction is positive and encouraging, but it also raises a lot of question marks, particularly around the implementation,” Raymond Wong, the former assistant director (information systems) of the Hong Kong Immigration Department told Computerworld Hong Kong.

“With Carrie’s personal commitment in technology development and close collaboration between her executive council members, I am confident with the upcoming development in technology,” said Fanny Law, chairman of the board of directors at the Hong Kong Science and Technology Park (HKSTP). “Of course, the results remain to be revealed upon the deployment of these policies.”

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New procurement arrangement enhances tech capabilities

One of the most significant announcements related to the enterprise IT market is the government’s new technology procurement arrangement. After years of complain from local IT professionals, the latest policy address stated to “explore the inclusion of innovation and technology as a tender requirement and will not award contract only by reference to the lowest bid.”

“This is a vital change for both the government and local IT industry,” said Wong, who led the city’s smart ID and e-Channel initiatives in the early 2000s. He said the government’s technology procurement policy has dragged and blocked the city’s technology innovation.

“It was a very bad decision [to award contract based on price],” he said. “When price dominates the tender reviewing criteria, bidders were encouraged to propose the worst technology solution to the government.”

Not only were the government departments presented with the lowest technology capabilities to implement their IT projects, the technology vendors were also forced to squeeze their profit margin simply to win the government contracts, creating a formula for failure.

Wong noted that during the smart ID project more than a decade ago, the tender reviewing criteria proportion between technology solutions and price was 6:4. “It was a bitter experience for me to fight for a higher proportion in technology capabilities,” he said.  “But such proportion has gone worse since then.”

According to Ted Suen, president of Hong Kong Computer Society (HKCS) and head of IT at MTR Corporation, the current proportion between technology solutions and price is 3:7.

The proportion between technology capabilities and price should be updated to 1:1,” suggested Suen, who previously held executive positions in IT outsourcing services providers.

“It has been a problem for awarding contract based on the lowest bid,” he said. “Bidders had been compensating technology capabilities to reach the lowest price, in order to win any government contracts.”

While it is encouraging to see that the government realizes the need to change, Suen noted that details are yet to be available about the new arrangement.

Subject to WTO GPA

In addition to enhancing the technology capabilities in government IT projects, the proposed procurement arrangement also aims to “encourage local technological innovation.”

But Wong questioned the implementation details, as the HKSAR Government is subject to the WTO’s Agreement on Government Procurement (GPA). This means the government procurement process should be open, fair and transparent to both local and international parties.

“How can the government encourage local technology innovation if it’s not able to give preference to technologies developed locally?” asked Wong. He added that international brands have been a preference for major IT projects, partly because of their proven technologies and the lack of track records from the local technology startups.

Law from HKSTP, also a former high-ranking civil servant, added that GPA applies only to government procurement of good and services that reach a substantial investment size.

“For projects that prefer to adopt local technologies or innovation, their deal size tends to be much smaller,” she said. “I believe it is possible to meet the WTO’s agreement as well as to offer preference to technologies developed locally.”