Procurement review report published

January 20, 2026

Secretary for Financial Services & the Treasury Christopher Hui:

In response to your question about what we have done to improve the regulatory regime or the overall regime of the Government in procurement, I think this is exactly the purpose we have set out to do when I led the task force to look at what are areas that we can do further. 

Along those lines, we have already identified four areas including, in terms of the mechanism to deal with the assessment and also the contract management of tendering. 

At the same time, to look into the technology to make sure that there will be wider circulation of information within the Government in case of any issues that we want to highlight to other procuring departments.

And also, at the same time, a lot of these measures have been implemented.

In conclusion, I would say that we have already identified the issues and we have put them into practice and will continue to do so.

Secretary for the Civil Service Ingrid Yeung:

I think this procurement of drinking water incident has drawn extensive attention from the public and brought serious disrepute to the Government. 

In this light, after consulting the Honours & Non-official Justices of the Peace Selection Committee, the Government has decided to reverse the previously announced decision to award the Silver Bauhinia Star to (the former Director of Government Logistics) Mr (Carlson) Chan and Mr Chan has been informed.

The Government today released the report of the Task Force on Review of Government Procurement Regime as well as the disciplinary investigation regarding the incident in the procurement of bottled drinking water and follow-up actions.

The report on the government procurement regime summarised measures focusing on four directions - institutional change, reshaping work culture, enhancement in cross-departmental information exchange, and application of technologies and artificial intelligence (AI), so as to holistically refine the tendering and procurement procedures.

A financial vetting requirement has been introduced to the tendering of goods contracts with a value exceeding $15 million since January 1, making it on par with the prevailing practice of conducting financial vetting for service contracts with that value.

Additionally, following revisions to the Standard Terms & Conditions of Tenders & Contracts (STC) that empower procurement officers to disqualify a tenderer for not being capable of fulfilling the contract terms, and to terminate a contract immediately if a contractor has made a material misrepresentation during the contract period, the STC has been further updated to stipulate that the Government may terminate a contract immediately on public interest grounds.

On the technology front, the Government Logistics Department (GLD) will adopt an AI tool to assist in information search on tenderers and contractors on a pilot basis in the first quarter this year, and the AI tool will be extended to other procuring departments for adoption subject to the trial outcome.

Secretary for Financial Services & the Treasury Christopher Hui, who chaired the task force, said the measures have been under implementation, adding that they will be put into practice continuously.

Meanwhile, the disciplinary investigation in relation to the bottled drinking water procurement incident has revealed that the performance of three GLD officers was not up to the standards commensurate with their ranks and experience in the procurement exercise.

According to the investigation, the lack of vigilance and judgement of these officers led to their failure to identify obvious irregularities and report to their seniors in a timely manner, resulting in the department missing the chance to detect false documents and take appropriate action earlier.

There is prima facie evidence that two of the three officers, including one directorate officer, failed to appreciate the significance of obvious irregularities and report to their seniors in a timely manner. The Government will initiate disciplinary proceedings against them with punishment to be meted out, based on the findings of the disciplinary inquiry.

The deficiencies in the work performance of the two officers will also be reflected in their appraisals and no increment will be granted to the officers who have yet not reached the maximum salary point of their ranks.

The Government will reflect the inadequacy in vigilance, judgement, and analytical power of the remaining GLD officer in the appraisal report and will not grant that officer an increment. Written advice will also be served, requiring the officer to demonstrate significant improvement in these competencies in the future.

Having identified the officers who failed to report the irregularities to their seniors, the investigation did not find any act of negligence on the part of former Director of Government Logistics Carlson Chan in the incident.

However, the fact that these three GLD officers failed to perform up to the standards commensurate with their ranks reflects some prevalence of such substandard performance in the department, therefore the Government decided to reverse the earlier decision to award Mr Chan the Silver Bauhinia Star.

Noting that the incident has drawn extensive attention from the public and brought serious disrepute to the Government, Secretary for the Civil Service Ingrid Yeung said the reversal decision was made after consulting the Honours & Non-official Justices of the Peace Selection Committee.