Reforming liability regimes for ICT

In November last year, the Office of the Government Chief Information Officer (OGCIO) awarded 40 standing offer agreements to 22 companies for the provision of professional services to undertake information technology (IT) projects in the Hong Kong government.

The outsourcing initiative is a long-awaited New Year gift to the IT industry. The new scheme, aimed at enlarging delivery capacity for government IT services, will certainly create a market of sufficient size to encourage further development of the IT industry.

Very often, winning government business comprises an important part of the strategy of many IT companies. Serving the government sector is attractive not only because of the size of the market, but also the range of opportunities available and the strategic importance of having an internationally recognized customer.

Uncapped liability

For this reason, an effective procurement policy is extremely important to support industry growth while realizing government ICT procurement objectives.

But under the existing procurement policy, there is an accepted, yet onerous, practice: the government requires contractors to accept uncapped liability for all losses and damages arising out of, or resulting from the performance of the contract, including both direct and consequential damages.