Missing facts of civil aviation regulator’s statement

Press release

The Civil Aviation Department (CAD) and the Transport and Housing Bureau issued press releases yesterday at 9pm in response to FactWire’s report on ‘Documents Reveal Close Ties Of Civil Aviation Regulator With Consultant Of The Troubled Air Traffic Control System‘. The two press releases admitted that National Air Traffic Services (NATS), UK’s famed provider of air traffic control services, was awarded with a contract on assessing the CAD’s new air traffic management system (ATMS) that did not go through open tendering and was awarded by single tendering.

However, both press releases emphasized that it was the full responsibility of the Bureau, instead of the CAD, in the procurement procedure of hiring NATS. This is to illustrate that there are no conflict of interests in the CAD’s role, contrary to FactWire’s report of close ties between the CAD and NATS. However, the CAD statement has missed some important facts below:

1. The CAD did not touch upon FactWire’s assertion that there was an internal analysis comparing consultant services provided by the International Civil Aviation Organization (ICAO) and NATS before the procurement. The analysis found that the non-profit ICAO did not involve commercial operations and interests and was relatively neutral and objective. NATS – as a privatized provider of air traffic control services – would have ‘more flexibility in commercial interests’ and meeting requirements of government contracts. The analysis further mentioned that there would be a synergy effect, since NATS had worked with the CAD in the past and would potentially provide consulting services to the third runway project in the future.

2. The CAD states in the press release that it ‘understands that NATS promotes different forms of cooperation, including becoming strategic partners, with different countries or regions… Yet, the CAD and NATS have not entered into strategic partnership.’ This means that the CAD confirmed the authenticity of CAD internal documents in 2009 FactWire acquired and mentioned in the report. The documents show that NATS suggested to form a ‘strategic partnership’ and mentioned that NATS ‘will also put together a proposal for CAD on the North Runway missed approach procedures… NATS was requested to keep cost down to HK$1.3 million’. The CAD does not deny the points concerning NATS’s proposal on the North Runway and the request to keep the cost down, which shows it is not the first time the department requested NATS to keep the cost of contract down to align with the single or selective tendering procedures.

The CAD press release states that it ‘only provides information on technical aspects for the tender exercise concerned’, and the press release of the Bureau states that ‘the CAD had only provided professional inputs on the scope of services and technical requirements to the quotation document’. However, the suggestions the CAD made to the Bureau and whether they involved recommending NATS and recruiting by single tendering remain unknown to the public.

FactWire reported that the CAD explained to the procurement department that the service provider ‘should have representatives in Hong Kong’, that ‘NATS had participated in the Airspace and Runway Capacity Study in 2008 and possibly other projects concerning Hong Kong International Airport’s third runway’, that ‘NATS was the only firm that could meet all requirements within the two-month timeframe’ and that the budget is ‘below HK$1.4 million’. This matches with the reasons stated in the press release of the Bureau explaining why it hired NATS by single tendering, and fitted requirements of the government procurement procedures. Was it due to multiple coincidences, or did the Bureau communicate with the CAD on hiring NATS prior to the procurement?

FactWire made enquiries to the Bureau on the issue yesterday night and set the deadline for responses to be at 2pm today, on the following:

Did the CAD recommend or suggest to the Bureau to hire NATS as the consultant? Any discussions between the CAD and the Bureau on hiring consulting firms, perhaps specifying NATS, by single tendering? Did the CAD provide factors for consideration to the Bureau on hiring consulting firms, perhaps NATS specifically? Until ___ today, no responses have been received from the Bureau so far.

There are still frequent business dealings between the CAD and NATS

The close ties between the CAD and NATS is an indisputable fact. FactWire confirmed with documents that the CAD invited NATS to participate in selective tender for at least two times, in early September and late December last year, on the ‘Provision of Consultancy Services for Study on the Regulation of Unmanned Aircraft Systems in Hong Kong’ and the ‘Provision of In-house Training Service on Air Traffic Control Tower Design and Construction’.

Documents from 2009 till now show that the CAD is an important commercial client to NATS, which matches with the statements that NATS ‘had worked with the CAD in the past’, that NATS ‘would potentially provide consulting services to the third runway project in the future’ and that there will be ‘more flexibility in commercial interests’ if NATS is hired as the consultant.

FactWire must stress that multiple problems such as ‘system failure’ and detections of ‘ghost target’ and ‘target drop’ occurred since the launch of the new ATMS in November last year, causing concern from the public as to whether the new ATMS operates safely. The Bureau and the CAD thus issued at least nine press releases and quoted NATS ‘independent feedback’ to prove that the new ATMS is operating smoothly and safely.  Therefore, it is of utmost public interest as to whether NATS provides objective, professional and neutral feedback as an ‘independant consultant’. The Bureau could not resolve the public’s concerns simply by stating that it ‘fully complied with the government’s procurement procedures’ in appointing NATS.

The advantages of hiring independent investigative agencies such as the ICAO, a specialized agency of the United Nations include being ‘neutral and objective’ and ‘with no commercial conflict of interest’, as stated in the CAD internal analysis. In fact, investigative agencies worldwide, including EUROCONTROL and ICAO, are international independent organizations free from any commercial interests. Other business-run aviation service providers, such as NAV CANADAAirservices Australia and Airways from New Zealand also offers independent consulting services. However, the public could not know whether the Bureau’s decision to hire NATS as the independent consultant is based on commercial or public interests.

The CAD emphasizes that ‘NATS is a major international air navigation services provider in the United Kingdom (UK) which provides air navigation services to more than 10 airports’. However, NATS was privatized in 2001 and 51 per cent shares are currently held by private shareholders or airlines, so it is, unlike the CAD, not a law enforcement organization monitoring aviation safety. UK’s Civil Aviation Authority (CAA) and the European Aviation Safety Agency, on the other hand, are law enforcement organizations responsible for monitoring aviation safety.

In fact, there were controversies concerning the air traffic control services provided by NATS in the past. The most severe case, dated back in December 2014, was a system failure in the NATS-operated Area Control Centre (ACC) in Swanwick, causing traffic gridlock in at least ten UK airports. Around 10,000 passengers were affected and the UK’s Secretary of State for Transport commented that it was ‘unacceptable’. An independent investigation then carried out by the UK authorities found out that there was malfunction in the aircraft data processor and back-up processor in the ACC at the same time. NATS was discovered a year after the incident yet to implement the suggestions for improvement made by the authorities. In December 2013, malfunction occurred in the communication system at the ACC in Swanwick, resulting to multiple flight delays and cancellations.

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