Govt terminates multi-million dollar contract for new Health Ministry HQ

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The state of the building in August 2019, more than a year after the project should have been completed (file photo)

After repeated breaches by a contractor, protracted delays and almost tripling of the contract costs, the Government has terminated a $356.8 million contract that was awarded to Chung’s Global Enterprise to construct the headquarters of the Health Ministry.

In a letter seen by this publication, Attorney General Anil Nandlall wrote to Cleon Chung of Chung’s Global Enterprise and informed him that the contract was being terminated effective October 31, 2020, on the grounds of contractual breaches.

Chung’s was awarded the contract since 2017, to construct the Public Health Ministry’s head office building at Lot 1 Brickdam for the sum of $356.8 million.
Works commenced on July 19, 2018, and the contractor was supposed to complete the project within a year.

However, in September 2020, despite receiving $308.4 million for advance payments and mobilisation expenses, as well as two extensions totalling 317 days, permanent works are only 70 per cent completed at the site.

To add insult to injury, the contractor submitted a repriced bill of quantities, demanding an additional sum of $513.3 million on August 3, 2020 – a mere one day after the Government officially changed hands with the swearing-in of President Dr Irfaan Ali. This is almost triple the previously agreed price of $356.8 million.

The new bill of quantities submitted by the contractor contained a breakdown of all completed works and its corresponding cost, as well as a breakdown of the outstanding works to be completed and their estimated cost.

Attorney General Anil Nandlall

“In further breach of the said contract you failed to respond within the required time in submitting additional requested information on the priced bill of quantities pursuant to Clause 28.2 of General Conditions of Contract which provide that at the request of the employer, the contractor within seven days shall provide the employer with a detailed breakdown of prices of change in the quantities indicating the rates for kinds of works and value of consumable material. The employer shall evaluate those rates and value of consumable material in comparison with the bill of quantities,” Nandlall wrote to the contractor.

The Attorney General, therefore, instructed the contractor to immediately stop all works, secure and vacate the site as soon as possible. According to Nandlall’s letter, the Government is not only terminating the contract but also instituting legal proceedings against the contractor for breach of contract and liquidated damages.

Auditor General Deodat Sharma himself had previously flagged the delayed state of the project under the nose of the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government.

In the 2017 audit report, it was pointed out that the project was at a standstill during an August 2018 site visit. By this time, the contractor had already collected $71.3 million in advance payments.

“At the time of the physical verification on 13 August 2018, nine months after the signing of the contract, only piles for the foundation of the building have been driven at the site… In addition, only two workers were seen on site despite the fact that the works were significantly behind schedule. Also, only one piece of equipment was noted and there was no material present, even though the contractor had received the advance payment,” the Auditor General wrote in the report.

In their response at the time, the Ministry had claimed that the contractor spent some $25 million in preparatory works at the site, which had included the construction of a bridge and construction of a transport office.

The Ministry’s head office was destroyed by fire back in 2009. In justifying the project, former Public Health Minister Volda Lawrence had cited the need for an office that could house the various offices of the Ministry and provide persons with a “one-stop-shop.”

Last year August, the former Minister had appeared confident that the building could be commissioned in the first quarter of 2020. Even then, however, she had spoken of “issues” hampering the project.