For discussion FCR(95-96)113
on 19 January 1996

ITEM FOR FINANCE COMMITTEE

CAPITAL WORKS RESERVE FUND
HEAD 710 - COMPUTERISATION
Immigration Department
New Subhead “Hong Kong Special Administrative Region Travel Document Information System”
HEAD 47 - INFORMATION TECHNOLOGY SERVICES DEPARTMENT
Subhead 001 Salaries

Members are invited to approve -

1. a commitment of $164,516,000 for the development of a computer system to support the processing and issue of the travel documents of the Hong Kong Special Administrative Region; and
2. an increase in the ceiling placed on the total notional annual mid-point salary value of all non-directorate posts in the permanent establishment of the Information Technology Services Department in 1995-96 from $243,817,860 by $8,771,520 to $252,589,380 for creating non-directorate posts to provide development support for the implementation of the system.

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PROBLEM
PROPOSAL
JUSTIFICATION

Need for a new system
Improvement features of the new system
Implementation Plan

FINANCIAL IMPLICATIONS

Non-recurrent expenditure
Recurrent expenditure

BACKGROUND INFORMATION
Proposed Increase in the Establishment Ceiling of Information Technology Services Department
Agreed Minute on the Preparations for the Issue of the Passports of the Hong Kong Special Administrative Region

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PROBLEM

The Immigration Department (ImmD) needs to develop a new computer system to support the issue of passports and other travel documents of the Hong Kong Special Administrative Region (HKSAR) as from 1 July 1997.

PROPOSAL

2 The Director of Immigration (D of Imm), on the advice of the Director of Information Technology Services (DITS) and with the support of the Secretary for Security, proposes to develop and implement a new computer system at a non-recurrent commitment of $164,516,000 to support the processing, printing and issuing of HKSAR travel documents; and to manage the related records.

JUSTIFICATION

Need for a new system

3 To ensure that the HKSAR Government would be in a position to issue the HKSAR passports and other travel documents with effect from 1 July 1997, we need to develop a computer system which will be fully operational by that date to support the issue of such documents. We have to design the computer system to be capable of processing, printing and issuing the passports to the specifications agreed with the Chinese side. In accordance with provisions in the Sino-British Joint Declaration and the Basic Law, the HKSAR Government will issue the HKSAR passports and travel documents with the authorisation of the Chinese Government. Pursuant to the Agreed Minute on the preparation for the issue of the HKSAR passports initialled between the two sides, the Hong Kong ImmD will be responsible for developing a unique computerised issuing and record-keeping system for the printing of personal data in both English and Chinese, with digitised personal photographs and security photographic codes on the data page or the laminate of the HKSAR passports. DITS advises that we cannot modify the Immigration Records Information System (IRIS) which currently supports the issue of BN(O) and BDTC passports to meet these new requirements. Therefore, D of Imm needs to develop a new system.

Improvement features of the new system

4. The new system will be purposely designed to support the processing, printing and issuing of HKSAR passports and other HKSAR travel documents; and for managing the relevant records as from 1 July 1997. The new system will have the following improvement features -

1. capability and security - it will be able to print and issue the HKSAR passports to the specifications described in paragraph 3, which will greatly enhance the security of the HKSAR passport against forgery and other forms of tampering. The HKSAR passport will be one of the most technically advanced passports in the world and will have a design and format which meet international security and facilitation standards;
2. record-keeping - unlike the IRIS which stores records on microfilm and microfiches, the new system will use digitised record storage technology to store records in optical discs. The new system will thus enable more efficient retrieval of records and save manpower and accommodation needed for record keeping;
3. authentication of passports - the digitised record storage technology allows round-the-clock on-line access to the records, including the photograph of individual passport holders, by authorised staff. This will enable ImmD to give very quick responses at all hours to legitimate enquiries made locally or overseas for authenticating the identity of HKSAR passport holders. This will both facilitate Hong Kong travellers when their identity needs to be verified during their stay overseas, and improve the confidence of foreign countries in the integrity of the passport;
4. system capacity - while IRIS can only support the issue of at most 3 500 British passports per day, the proposed system will eventually have the capacity to issue up to 4 500 travel documents per day; and
5. accounting procedures - these procedures will be largely automated under the proposed system. This means greater efficiency, staff savings and fewer opportunities for abuse and error.

Implementation Plan

5. We plan to implement the proposal according to the following schedule -

6. We need to adhere very strictly to the above implementation timetable to ensure that the computer system will be ready by 1 July 1997 for the issue of the HKSAR passports from that date. The design capacity will be 2 500 travel documents daily on initial implementation. Further enhancement work will continue to increase this design capacity to about 4 500 in six months’ time. This phasing is essential because the HKSAR ImmD will need to cater for the urgent travelling needs of those who have no valid travel documents and those with travel documents with validity expiring within 12 months.

FINANCIAL IMPLICATIONS

Non-recurrent expenditure

7. D of Imm and DITS estimate that implementation of the proposed system will incur a non-recurrent cost of $219,514,000 over the five-year period from 1995-96 to 1999-2000. This comprises $164,516,000 for the purchase of computer hardware and software, site preparation and development services for which we are seeking Members’ approval of a new commitment; and $54,998,000 for in-house development staff for which we are seeking Members’ approval of an increase in the establishment ceiling of the Information Technology Services Department (ITSD). Details of the non-recurrent cost are as follows -

8. As regards paragraph 7(a), the cost of $88.4 million for the acquisition of computer hardware consists of $24.4 million for specialised equipment such as passport printers, photo-capture machines, quality assurance and security readers, $22 million for upgrading the mainframe equipment, $1.9 million for network, $8.3 million for midrange servers, $9.6 million for workstations and related equipment, $18.4 million for imaging equipment, $0.6 million for development equipment, $2.7 million for uninterrupted power supply and $0.5 million for standalone quota information system.

9. As regards paragraph 7(b), the cost of $25.9 million for the acquisition of computer software consists of $10.1 million for mainframe software, $8.6 million for LAN software, $5.5 million for imaging software and $1.7 million for development software.

10. As regards paragraph 7(c), the cost of $8.7 million is for site preparation for the computer room, record office, user offices, signal cables and accessories, electrical and uninterrupted power supply installation and special furniture for computer equipment.

11. As regards paragraph 7(d), the cost of $24.2 million for development services consists of $10 million for services integrating various computer equipment items and $14.2 million for the employment of contract staff involving 27.8 man-years of development efforts. The contract staff will work side-by-side with staff from the ITSD on system development.

12. As regards paragraph 7(e), the cost of $2.6 million is required for the acquisition of miscellaneous items such as start-up consumables and training for the project development staff.

13. As regards paragraph 7(f), the cost of $14.7 million represents a 10% contingency on the cost items set out in paragraph 7(a) to (e).

14. As regards paragraph 7(g)(i), the cost of $29.5 million represents the staff cost for the setting up of an ImmD project team comprising 28.1 man-years of Immigration grade officers and 18.9 man-years of clerical and operations staff to manage and implement the system according to the set time-frame. We do not need to increase the establishment ceiling of ImmD in 1995-96 for this purpose as the resources needed can be met from those released by the completion in 1995-96 of two projects, namely, the implementation of the Information Systems Strategy and the British Nationality Scheme. As to the arrangement for subsequent years, subject to Members’ approval of this proposal, we shall reflect ImmD’s need for additional staffing resources in the context of the annual Estimates.

15. As regards paragraph 7(g)(ii), the cost of $25.5 million represents the staff cost for the setting up of an ITSD development team comprising 40.7 man-years of staffing resources to develop and implement the system and 3.2 man-years of clerical staff for administrative support. This includes 17 man-

months of Chief Systems Manager ($2.6 million) which DITS will meet by internal redeployment. In terms of posts required in 1995-96, this involves a total of 23 additional posts, with a notional annual mid-point salary value of $8,771,520. Details are set out in Enclosure 1. To enable these posts to be created in 1995-96, DITS proposes to increase the establishment ceiling of ITSD by the same amount.

Recurrent expenditure

16. The annually recurrent expenditure for the proposed system is -

17. As regards paragraph 16(a) to (c), the annual expenditure is required for hardware and software maintenance, as well as the licence fees for special software for the passport production system.

18. As regards paragraph 16(d), the annual expenditure is required for the acquisition of laminate and observation labels for the passports, consumables for the imaging system and printing devices, computer tapes for backup storage, communication line rental, training and three man-years of ITSD contract staff to supplement ITSD staff resources for application maintenance.

19. As regards paragraph 16(e)(i), the annual expenditure is required to meet the staff cost of 11 posts in the ImmD for the administration, enhancement, help-desk and round-the-clock on-line operation of the system.

20. As regards paragraph 16(e)(ii), the annual expenditure is required to meet the staff cost of 11.5 man-years of ITSD staff resources for maintenance and technical support of the system.

21. We shall be able to partly offset the additional annually recurrent expenditure by staff and other savings arising from the discontinuation of maintaining the present system for issuing BN(O) and BDTC passports and the existing microfilm records. D of Imm estimates this at $5.8 million in 1997-98 rising to $8.9 million annually from 1998-99 onwards. This compares with the total non-recurrent costs of $219.5 million for the proposed computer system, or a theoretical pay-back period of around 26 years. However, we should note that the proposed computer system is justified on operational grounds and the main benefits are intangible - to meet the travelling needs of Hong Kong residents by enabling the HKSAR Government to issue travel documents to Hong Kong residents on 1 July 1997.

22. Subject to Members’ approval of the proposal, we shall offset the supplementary provision needed in 1995-96 by deleting an equivalent amount from Head 106 Miscellaneous Services Subhead 251 Additional commitments.

BACKGROUND INFORMATION

23. The Agreed Minute reached with the Chinese side on the preparation for the issue of the HKSAR passports and the proposed scheme for the issue of HKSAR passports to eligible applicants in an orderly manner from 1 July 1997 is at Enclosure 2. Members may wish to note in particular sections A (vii) and B (i) which relate to the proposed computer system for which a commitment is being sought.

24. It is Government’s policy to determine the application fee for travel documents on a full cost recovery basis. We cannot estimate the application fee for the HKSAR passport at this stage as a number of cost elements, including the cost of a blank passport, remain unknown.

25. We apologise for the late issue of this paper for Members’ consideration at the meeting on 19 January 1996. As Members are aware, the Agreed Minute was initialled between the two sides on 10 January 1996 and, as explained in paragraph 6 above, the development of the proposed computer system is subject to a very tight timetable.

Security Branch
January 1996

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Enclosure 1 to FCR(95-96)113

Proposed Increase in the Establishment Ceiling of Information Technology Services Department

The ceiling placed on the total notional annual mid-point salary (NAMS) value of all non-directorate posts in the permanent establishment of the Information Technology Services Department in 1995-96 will be increased from $243,817,860, by $8,771,520, to $252,589,380 for creating the following non-directorate posts for implementation of the HKSAR Travel Document Information System -

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Enclosure 2 to FCR(95-96)113

Agreed Minute on the Preparations for the Issue of the Passports of the Hong Kong Special Administrative Region

The two sides of the Sino-British Joint Liaison Group, bearing in mind -

the provisions of the second paragraph of Chapter XIV of Annex I to the Sino-British Joint Declaration on the Question of Hong Kong and Article 154 of the Basic Law of the Hong Kong Special Administrative Region (HKSAR) of the People’s Republic of China which provide that the Central People’s Government shall authorise the HKSAR Government to issue, in accordance with law, passports of the HKSAR of the People’s Republic of China to all Chinese citizens who hold permanent identity cards of the HKSAR; and

the urgent need to prepare and plan for the issue of the HKSAR passports and for the protection of their integrity at all stages so that their issue may begin on 1 July 1997,

have held discussions in Hong Kong and have reached the following understandings -

A. The Chinese side confirm that -

1. in accordance with the provisions of Article 154 of the Basic Law of the HKSAR, the Central People’s Government will authorise the Government of the HKSAR to issue, in accordance with law, passports of the HKSAR of the People’s Republic of China to all Chinese citizens who hold permanent identity cards of the HKSAR;
2. the authority to issue the passports of the HKSAR will be the Immigration Department of the HKSAR;
3. in accordance with international practice, diplomatic and consular missions of the People’s Republic of China in foreign countries and other Chinese authorities in foreign countries under the entrustment of the Ministry of Foreign Affairs of the People’s Republic of China may issue HKSAR passports to eligible applicants outside the territory of China and handle the related matters. The passports will be issued after details of the applicants have been verified by the HKSAR Immigration Department;
4. the HKSAR Immigration Department will be the only authority permitted to enter personal details onto the data page of HKSAR passports;
5. the Chinese side will be responsible for the manufacture of the blank HKSAR passports and will take effective measures to ensure the security of the manufacturing process;
6. from 1 July 1997, the HKSAR Immigration Department will be the only authority to order the blank HKSAR passports;
7. from 1 July 1997 only those HKSAR Government officials and designated contractors who have responsibility for the development and maintenance of the computer system and who have been authorised by the Director of the HKSAR Immigration Department will have access to the system described in paragraph B(i) below;
8. the HKSAR Immigration Department will have in place a system for the secure collection of the blank HKSAR passports from the manufacturer and a system for the secure distribution of them; and
9. the HKSAR Immigration Department may carry out other tasks relating to the issue of the HKSAR passports when necessary.

B. The British side confirm that -

1. the Hong Kong Immigration Department will develop a secure and unique computerised issuing and record-keeping system for the printing of personal data, digitising a personal photograph and the printing of a secure photographic code on the data page or the laminate for the issue of the HKSAR passports by the HKSAR Government from 1 July 1997;
2. only those Hong Kong Government officials and designated contractors who have responsibility for the development and maintenance of the computer system and who have been authorised by the Director of Immigration will have access to the system described in paragraph B(i) above;
3. the Hong Kong Government will make a plan to make good preparations for the issue of the HKSAR passports securely to applicants eligible for such passports;
4. the Hong Kong Government will settle eligibility assessment procedures;
5. the Hong Kong Government will design and be responsible for producing the relevant forms;
6. the Hong Kong Immigration Department will make proper arrangements before 1 July 1997 for the secure collection of the blank HKSAR passports and their secure distribution to specified issuing places; and
7. the Hong Kong Immigration Department may make other preparations for the issue of the HKSAR passports when necessary.

C. The two sides note that legislative amendments will be needed to allow for the smooth issue of the HKSAR passports as from 1 July 1997 and will discuss this further. The two sides also note that the Joint Declaration and the Basic Law provide that the Central People’s Government shall authorise the HKSAR Government to issue, in accordance with law, travel documents of the HKSAR. The two sides will discuss this further with the objective of reaching an early consensus.

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