Secretary for Financial Services and the Treasury Christopher Hui says the government will seek to pinpoint areas for improvement in its procurement system as soon as possible before making an announcement to the public.

Xin Ding Xin – a company that was recently awarded a HK$52 million contract to provide bottled drinking water to certain government offices – is accused of lying about how it sourced the water from the mainland.

The government has since terminated all contracts with the firm and its associated companies for bottled water, chemicals and data entry services – and invited the Audit Commission to conduct a detailed investigation into the tender process for the contract involving water supply.

The administration has also established a cross-bureau task force to review its procurement process, aiming to deliver a report within three months.

Hui spoke to the media after chairing the task force's first meeting on Thursday.

“We will look at areas like due diligence required, issues on contract management and also quality control," he said.

"These are the relevant aspects that will be covered in our interim results. Because what we would expect is that before we make the final announcement, we hopefully would like to get the result earlier than the three months that we said earlier.”

The government will release the report to the public, but only after ensuring it won't interfere with ongoing police and customs investigations, Hui added.

The director of the Government Logistics Department (GLD), Carlson Chan, meanwhile, admitted that the department shoulders the main responsibility for the incident and apologised for sparking public concern.

“I fully understand that this incident has sparked significant public concern about government procurement and led to doubts among government colleagues about the safety of drinking water provided by suppliers,” he said.

“In this regard, we acknowledge shortcomings in our procedures, and on behalf of the GLD, I apologise to the public."

The company suspected of defrauding the government to win the water contact had allegedly obtained genuine documents through improper means while submitting them together with forged documents during the tender process, making it difficult for GLD staff to detect the fraudulent components during the review process, Chan said.

The incident shows that the current procurement mechanism may not be robust enough to prevent fraud, he said, promising to put forward improvement measures once the review process is completed.

Chief Secretary Eric Chan said the administration will follow a dedicated disciplinary mechanism to penalise civil servants for misconduct should they be found to be in the wrong.

He made the remarks after attending an event in Beijing in response to questions about whether officials should be held accountable.

Chan added the government is highly concerned about the incident, especially as it involved suspected fraud.

A company director and his shareholder wife have been arrested on suspicion of fraud and violating the Trade Descriptions Ordinance in connection with the saga.

The husband has been charged with fraud for allegedly providing false documents to win the water contract – while the latter is out on bail pending investigations.