Chief Executive John Lee said on Saturday he is "very disappointed" with the Government Logistics Department's failure to act as a gatekeeper in the procurement process of bottled water for public offices.

The city's leader also vowed disciplinary action if negligence was found to be the cause of the failure.

"I am very disappointed that the incident occurred in a department responsible for procurement on a daily basis," Lee said.

"Our priority is to identify any shortcomings as quickly as possible and address any loopholes in our system and procedures to prevent a recurrence.

"If human factors, including negligence, are involved, we will handle them in accordance with the relevant civil service regulations in a strict and fair manner."

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, while inviting the Audit Commission to conduct a detailed investigation into the tender process for the contract involving water supply.

Lee called on a government task force, set up once the bottled water supply failures surfaced, to improve the procurement system, stipulate clear guidelines on conducting due diligence, and bolster training of officers, among other directives outlined.

"I have always emphasised that every dollar we spend is public money, which has to be spent wisely," he said.

"But spending money wisely does not just mean going for the lowest price, it also means assessing whether the value something can bring meets our standards."