Hong Kong regulators publish stricter rules against contractors

The Development Bureau (DEVB) of the Hong Kong Special Administrative Region (SAR) in November 2022 published the Technical Circular (Works) No. 4/2022 (Circular) (35-page /235KB) detailing the new rules against contractors on the List of Approved Contractors for Public Works and List of Approved Suppliers of Materials and Specialist Contractors for Public Works (Lists). 

A contractor will be suspended from tendering for public works if it caused a serious incident on a construction site; has been convicted of five or more site safety offences, or has been convicted of environmental offences arising out of separate incidents in any six month period. The typical period of a suspension ranges from one to 12 months but it can be longer.

It is yet to be seen whether the strengthened regulatory action or the proposed penalties proposed under the Occupational Safety and Health Amendment Bill will deter contractors.

Review by the Panel is administrative in nature, similar to an enquiry by the Contractors Registration Committee (CRC). No guidelines have been given as to how matters will be decided, in comparison with principles and standards laid down by courts when considering similar offences. It is still unclear whether a contractor’s safety management system will, in practice, be further enhanced to avoid being penalised under the strengthened regulatory actions.

Different from the previous regime where contactors may face voluntary suspension or mandatory suspension, there is now a unitary regime where contractors will be suspended from tendering for public works. This means contractors cannot refuse to accept the recommendation of voluntary suspension. Also, imposing a suspension no longer depends on whether a contractor has failed to comply with other forms of regulatory actions or has a record of repeated attendance before the Panel of Enquiry, as they applied to the previous mandatory suspension regime. However, contractors can still apply for a review of the DEVB’s decision.

Another major change is that if the Panel considers there to be systematic deficiencies in the contractor’s safety management system, the regulatory action may be applied across the board to any relevant or all categories for which that contractor is listed. This differs from the previous system, which stated that regulatory action would only apply to the relevant category on the list where a serious incident or offences occurred. Regulatory actions include suspension, demotion, downgrading or removal of the contractor from the lists.

Other regulatory actions include issuing warning letters, conducting independent safety audits at the relevant contractor’s site and requesting the contractor to submit an improvement proposal, remain in place. However, all these actions would be published on the DEVB’s website and so these records could be adopted and become a criterion in assessing private sector’s tenders.

For private projects, the Buildings Department (BD) enforces enhanced regulatory action via the registration system of contractors. This is done by a review of and reference to the contractor’s suspension records by the CRC. This means errant contractors could face the risk of not having their BD registration renewed and thereby losing the right to involve in private projects in Hong Kong SAR.

Co-written by Bernice Shang of Pinsent Masons.