For discussion
on 3 October 1997



Subhead 111 Hire of services and professional fees

    Members are invited to approve supplementary provision of $11,225,000.

The revised provision of $18,845,000 for 1997-98 is insufficient to meet anticipated expenditure on hiring security services for guarding vacant Government premises and land sites in 1997-98.


2. We propose that Members approve supplementary provision of $11,225,000 under Subhead 111 Hire of services and professional fees.


3. The Director of Lands (D of L) is responsible for the security of all vacant Government premises and land sites and the vacant premises thereon which are not allocated to or managed by other Government departments. These vacant land sites include mainly those whichthat have been reverted to the Government pending for sale or development, and those sensitive areas which, if not properly guarded, will have a vulnerable to high risk of being illegally used. These places need to be kept under close surveillance in order to avert occupation by intruders.

4. For cost-effective reasons, D of L has engaged contractors to The duties of guarding and patrolling these premises and sites and premises.have all along been undertaken by Government contractors who , Uunder the contract terms, these Government contractors have to provide security guards or watchmen to look after these places on a 24-hour or regular patrol basis, according to . We have provided guidelines set by the Lands Department. for setting the level of protection service required for such vacant government properties. Payment of the security services is accounted for under drawn from Head 91 Lands Department Subhead 111 Hire of services and professional fees. In the 1997-98 Estimates, of the total revised provision of $18,845,000 under this subhead, D of L has earmarked included $7,583,000 under this subhead for payment of the contract security services. He has estimated the requirement budget on the basis of the prevailing contract rates at the time the 1997-98 draft Estimates were prepared. Those contracts expired on 1 April 1997.

5. D of L conducted an open tender for the contract re-tendered for the security services early this year. In March 1997, the Public Works Tender Board (PWTB) accepted the recommended tender for a one year contract for the provision of security services from 1 April 1997 to 31 March 1998. In the tender exercise, the competing prices offered by the companies were generally much higher than the rates of the previous contracts. We In the course of tender evaluation, we have investigated the reasons for the sharp price increases in the course of tender evaluation and generally concluded that the increases were . We understood that the situation was mainly due to the transitional provision relating to watchmean's permits under the Security and Guarding Services Ordinance1 (Cap. 460). This transitional provision empowers the Security and Guarding Services Industry Authority to cancel an old watchman's permit with three months' notice. As a result, there are concerns amongst the The trade may be concerned that as the watchmean's permits deemed valid under the new Ordinance are being phased out gradually, the supply of low cost labour supply in this service field would diminishshrink in future. The bidders therefore tended to factor in the likely higher cost of labour in their tenders. , thereby driving up the costs of their business operations. With this concern, the companies took a prudent attitude and put up tender prices much higher than we had anticipated. In our recommendations to the PWTB, we drew our analysis to have drawn the attention of the Board and considered that a re-tendering would not be meaningful in those circumstances. members to this statutory requirement and its resultant effect on tender prices. We have eventually recommended and Tthe Board accepted the recommended a tender which we considered to be had made the best conforming offer against a reasonable price. Despite the fact that the accepted tender price was the second lowest among the competitors, Tthe contract rates in the accepted tender are still 148% higher than the previous rates in the preceding contract.

5. Based on the new contract rates, we estimate that the expenditure on the security services in 1997-98 would increase to $18,808,000. A breakdown of the forecast expenditure on the basis of 378 existing vacant Government premises and land sites is at Enclosure 1.

6. Despite the much higher cost of the security service, Though under the pressure of costly services, we do not consider it desirable appropriate to relax the level of security services. Leaving the vacant premises and land sites and vacant premises unguarded would attract illegal occupation by from squatters, and cause environmental nuisance problems such as dumping and, illegal parking and endanger even danger to the public. In the event that these vacant sites and premises were are unlawfully occupied, the costs of eviction and clearance would be muchvery higher. We therefore consider it essential and cost-effective to maintain the present level of security services for these places.

7. Based on the new contract rates, we estimate that expenditure on contract payments for the security services in 1997-98 would increase to $18,808,000. A breakdown of the forecast expenditure on the basis of the 378 existing Government sites which require guarding and regular patrolling is at Enclosure 1. To ensure that sufficient funding is available to meet the anticipated rise in expenditure on security services, D of L has examined the other activities charged to the same expenditure subhead to see whether there is scope for redeployment. and explored the possibility of redeploying resources under the subhead. He After carefully reviewing the expenditure to date and the anticipated expenditure, and re-prioritising work and commitments for other hired services, D of L has concluded that there is little scope for redeployment to cater for the demand. He he needs supplementary provision of $11,225,000 under this subhead in order to maintain the required services for all the sites and premises. The amount is calculated as follows -

Actual expenditure from 1 April 1997 to 11 August 19977,782
AddEstimated expenditure from 12 August 1997 to 31 March 199822,288
Estimated total expenditure for 1997-9830,070
LessRevised provision for 1997-9818,845
Shortfall 11,225

2 An analysis of the expenditure position of the subhead is at Enclosure 2.


8. If Members approve the proposal, we shallwill offset the supplementary provision required by deleting an equivalent amount under Head 106 Miscellaneous Services Subhead 251 Additional commitments.


9. We increased the approved provision for Subhead 111 from $15,270,000 to $18,845,000 under delegated authority in August 1997 by approving supplementary provision of $3,575,000. This is to meet expenditure on contracting out certain survey and mapping activities for some other urgent projects.

Planning, Environment and Lands Bureau
September 1997

Enclosure 1 to FCR(97-98)37

Estimated expenditure on security services in 1997-98

Estimated expenditure at new contract rates$
(a) 86 Government land sites for sale/disposal for development
(i) 43 guarded sites in the urban area 3,085,000
(ii) 28 guarded sites in the New Territories (NT)2,278,000
(iii) 15 patrol sites in the urban area 93,000
(b) 292 Government land sites guarded by District Lands Offices against illegal occupation/use
(i) 107 guarded sites in the urban area 7,847,000
(ii) 56 guarded sites in the NT 4,635,000
(iii) 100 patrol sites in the urban area620,000
(iv) 29 patrol sites in the NT250,000
Total 18,808,000

Notes -

  1. Among the 86 sites in (a) above, some are available for temporary use for more than 12 months pending sale in accordance with the Land Sale Programme or disposal for Government/Institution/Community use. To put these sites into effective use and to reduce the need for providing security services for them, Director of Lands (D of L) has been examining the feasibility of letting them on a short term basis to the private sector and other Government departments in response to applications.

  2. Most of the 292 sites in (b) above are not suitable for short term use disposal mainly because there is no proper vehicular access. However, they are vulnerable to illegal occupation and dumping of debris. Some of the sites are zoned Green Belt. D of L is providing security services to these sites until Director of Territory Development is ready to take over them for restoration works.

  3. Guarded sites are looked after by security guards on a 24-hour basis. Patrol sites are subject to regular patrol visits.

  4. The estimated expenditure is based on the number of sites as at 30 June 1997 and the assumption that the number of sites will remain unchanged in the remainder of 1997-98.

  5. About 12 premises are located on some of the 378 land sites requiring security services.

Enclosure 2 to FCR(97-98)37

Analysis of expenditure under
Head 91 Lands Department
Subhead 111 Hire of services and professional fees

$ ' 000
1997-98 Original approved estimate1997-98 Revised approved estimate (A)Actual expenditure up to 11 August 1997(B)Estimated expenditure from 12 August 1997 to 31 March 1998(C)1997-98 Revised estimate (D)=(B)+(C)
Subhead 111
Hire of services and professional fees
Item 527 Security services

- Government premises and land sites7,5007,5836,94811,86018,808
- Offices and others3602774273277
Item 528 Laundry services66-66
Item 548 Other professionalservices
- Professional fees for Land Tribunal cases and other claim cases3,0803,080 -3,0803,080
Item 549 Other hired services
- Survey and Mapping Office contracting-out services-3,575-3,5753,575
- Employment of temporary staff1,0621,2006675331,200
- Other Land Administration Office and Legal Advisory and Conveyancing Office contracting-out services etc.3,2623,1241632,9613,124

1 The Security amd Guarding Services Ordinance (Cap.460) came into operation on 1 June 1995. It provides for the establishment of a Security and Guarding Services Industry Authority, the issuing of permits to individuals doing security work, the licensing of security companies, and other connected matters. Under the Ordinance, a provision to repeal the Watchmen Ordinance (Cap.299) and a transitional provision rellating to permits issued under Cap.299 to watchmem came into effect on 1 June 1996. The transitional provision provides that a holder of a watchman's permit shall be deemed for the purpose of Cap. 460 to be a holder of a permit that is valid for an unlimited period of time. The Authority may cancel the watchman's permit with three months' notice.