The $3.8b contract may be abandoned if it is ruled to have been awarded unfairly The controversial Central reclamation project could be thrown into further jeopardy when a ruling into an alleged breach of WTO rules during the tendering process is handed down this week. If preliminary findings are upheld, the government faces the possibility of having to abandon the existing $3.8 billion contract for phase 3 of the project and put it out again to re-tender, sources said. Senior officials and construction engineers warned such a result would be catastrophic and expose the government to a multi-million-dollar damages claim from the existing contractors, a joint venture between Leighton Contractors, China State Construction Engineering (Hong Kong) and Dutch marine works firm Van Oord ACZ. Headed by chairman Neil Kaplan, QC, the Review Body on Bid Challenges has been considering since April whether the Territory Development Department broke World Trade Organisation procurement rules and acted unfairly when it awarded the contract. Speaking from his office in London, Mr Kaplan told the Post he intended to hand down his judgment this week following a series of hearings and submissions behind closed doors earlier this year. The body is an independent statutory group set up as part of Hong Kong's adherence to WTO guidelines. Three rival contractors - China Harbour Engineering, Penta-Ocean Construction and Gammon Skanska - lodged the complaints alleging the government had broken WTO rules and acted unfairly by 'cherry-picking' favourable aspects of the winning tender. The department's chief engineer, Yeung Hung-hay, said they had obtained a preliminary judgment but were 'still seeking to clarify certain points' with the panel. He admitted the recommendation to put the entire project out to re-tender was among issues being discussed. 'Two of the losing tenders have no point but one does have a legitimate claim,' he said. 'I had better not say anything that might influence the final decision. 'But I do not know why this has become so controversial again ... we followed all the right procedures.' A spokesman for the tender-winning joint venture said the controversy followed a shift by the government away from the 'lowest price wins' mentality towards technical factors including safety, and records of environmental soundness and quality. 'Obviously this [the delays and pending judgment] is frustrating,' said Chris Gordon, spokesman for the joint-venture partners. 'We just want to get on with the job.' One senior engineer with a respected Hong Kong engineering consultancy firm, who asked not to be named, said: 'This is going to have major implications for the government if they have to put it out to re-tender. 'It will be catastrophic. They will face horrendous claims from the existing contractor if they have to re-tender the project. 'The contractor has been awarded the contract, they have mobilised all the resources and signed up contracts with major sub-contractors involving hundreds of millions of dollars worth of work. It would mean major claims from many entities including suppliers, sub-contractors ... it is a nightmare.' He said the government had only last year introduced the 'two envelope system' where it takes into account technical aspects as well as price in awarding contracts. 'This is a new system which contractors are not familiar with and that is where it has raised concern.' The Central reclamation project is already faced with opposition from environmentalists who are trying to have the project shut down. Dredging work resumed on the project last week after the government won the latest round of its court battle with the Society for the Protection of the Harbour. Another judicial review on the project is scheduled for between February 9 and 12.