The government was urged on Monday to rethink its information technology outsourcing programme and its funding for research and development projects. IT sector legislator Sin Chung-kai said the government's Information Technology Professional Services Arrangement (ITPSA) appeared to favour multinational firms and a number of academic institutions had been denied access to the Innovation and Technology Fund. Mr Sin's call for a rethink came less than a week after public consultation closed on Draft 2004 Digital 21 Strategy, the latest review of Hong Kong's IT strategy. Mr Sin said the review would allow Digital 21, launched in 1998 and revised in 2001, to sustain the momentum created in the past five years to harness IT advances for businesses, the community and the economy. The ITPSA, part of the government's IT outsourcing initiative, was launched last year to help accelerate and expand the local market for IT services. So far, about 23 30-month government IT services contracts have been awarded to 12 companies, who have received support from about 70 subcontractors. 'Since these agreements have been in force, 180 assignments with a total value of $142 million have been awarded,' Mr Sin said. Despite its success, 'there are a number of concerns that the programme does not bring in genuine benefits to the local IT industry', he said. With price a significant reason for selecting IT service contractors, the programme appeared to favour multinational firms, which were able to undercut smaller IT vendors, Mr Sin said. This has led to the limited participation from small local IT firms. Mr Sin said that the Information Technology Services Department had not given clear guidelines to project contractors on sub-contracting. The programme also lacked a mechanism for penalising or replacing contractors or subcontractors who did not give a sufficient standard of service. Furthermore, there was no forum to appeal against or challenge the results of ITPSA assessments, he said. Responding to Mr Sin's comments, the Information Technology Services Department said it was the 'government's long-established procurement principle to obtain value for money and to maintain a level playing field'. 'Specifically, there are no terms and conditions in the ITPSA contracts that would render multinational or large companies in a better position to offer lower bid prices,' it said. Small and medium-sized enterprises serving as ITPSA contractors have secured about 20 per cent of the work awarded so far by the government, both in volume and value, according to official data as at the end of last month. 'Government departments handle ITPSA work assignments in accordance with the contract provisions and the government's procurement regulations,' the department said. 'Under the ITPSA contracts, there are provisions for the government to terminate a contractor's services if the contractor fails to provide the required services. There are also contract provisions to claim liquidated damages for any loss or damages sustained by the government resulting from delay in delivery of services.' Hewlett-Packard Hong Kong managing director Peter Yeung said all IT vendors were subject to the same ITPSA rules. 'Pricing is only one of the factors in the evaluation process,' he said. On the allocation of Innovation and Technology Fund resources, Mr Sin said the fund's vetting mechanisms and criteria should be reviewed to ensure more transparency and include academic research projects such as those under the Vocational Training Council. He also lamented the programme's 'limited publicity channel' for promoting successful fund recipients. The fund, launched in 1999, aims to finance projects that contribute to innovation or technology developments in Hong Kong. It is administrated by the Innovation and Technology Commission. The commission wrote: 'The vetting committee members of [fund] come from academia and relevant industries. They have much knowledge regarding the latest technology development and the needs of the industries, and they provide objective views in assessing project proposals.' It also stressed that academic organisations, including the Vocational Training Council, were entitled to apply for funding.