The contract for the construction of the Ministry of Health’s Brickdam, Georgetown head office has been terminated by the government, which has cited several breaches in its agreement with the contractor, Chung’s Global Enterprise, as being among the reasons for the decision.
Among the breaches highlighted are the lengthy delay in the completion of the building, and the increase of the prices on the bill of quantities for variations to the contract which helped to bloat the estimate for the construction of the building by an additional sum of $513 million.
In an October 31st, 2020 letter sent to the Chief Executive Officer of Chung’s Global Enterprise, Cleon Chung, and which was seen by Sunday Stabroek, Attorney General Anil Nandlall informed that the contract was terminated with immediate effect.
The firm was awarded the contract on two occasions, first in 2017 and in January 2019. The work period was scheduled to last a year.
The letter states that the contract breached the conditions stipulated in Clause 40.1 of the contract Agreement.
“In breach of the said contract and despite having been granted two extensions totaling 317 calendar days after the original completion date of July 19, 2019, to date you have not completed the works,” the letter states.
According to the letter, the ministry pointed out that after a visit at the end of September 2020, less than 70% of the works were completed despite the contractor receiving a sum of $308,449,233. The sum was handed over as an advance payment/mobilization of payments on eight interim payment certificates.
Further, the letter alleges that Chung’s Global Enterprise breached the contract agreement when he on 3rd of August, 2020 repriced the bill of quantities for variations to the contract.
“In further breach of the said Contract, you submitted on the 3rd August, 2020, a repriced Bill of Quantities for Variations to the Contract which contained a breakdown of all completed works and its corresponding value and a breakdown of outstanding works to be completed and its estimated value in which the estimated value and additional amount of money to complete the works exceeded the contract sum by the additional sum of $513,382,164 being required,” it added.
The contractor is required to provide a breakdown of all completed works with a corresponding value and a breakdown of all works to be completed and its estimated value.
It was also pointed out that the contract was being terminated on the grounds that the contractor 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 the contract.
This section allows for the employer to request information at any time and the contractor is required to provide a detail breakdown of prices of change in the quantities within seven days of receipt. This clause gives the employer the opportunity to evaluate the rates and value of consumables material and compares it to the bill of quantities.
“In consequences of the aforesaid fundamental breaches of the said contract and in addition to termination, you are hereby informed that the Government of Guyana intends to institute legal proceedings against your for breach of contract and liquidated damages,” the letter adds.
The 2017 Auditor General’s report, presented in September 2018, had stated that even after a year the contract was awarded, works for the construction of the building remained at a standstill. At that time, an advance payment of $71.365 million was made to the contractor.
“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 …,” stated the report which was presented to the National Assembly in 2018.
In examining the ministry’s accounts, the Audit Office said that included in the amount of $164.198 million allocated for reconstruction of ministry’s head office is an amount of $71.365 million, which represents payment for a contract awarded in the sum of $365.487 million by the National Procurement and Tender Administration Board for the first phase of construction works.
According to a table included in the report, $164 million was set aside for the reconstruction of the complex, a car park, fence, guard hut and electrical works.
The contract was awarded to the lowest of the eight bidders, against the Engineer’s Estimate of $546.751 million.
A perusal of the contract shows that it was signed on November 8th, 2017, with a duration of one year and an equally-long defects liability period. The start date was noted as 14 days after the signing of the contract but this was subject to the details of the order to commence, the report said, before adding that on November 27th, 2017, the contractor received an advance payment of $71.365 million, representing 20% of the contract sum.
In response, the ministry pointed out that though the contract was signed on November 8th, 2017, the contractor was given his commencement order on July 19th, 2018. According to the response, prior to the commencement order, the contactor was engaged in: site preparation works and the relocation of the ministry’s assets to make the site available for construction; construction of a bridge ($7.793 million); removal of derelict vehicles and equipment ($1.026 million); supply of a 40ft container ($1.368 million); supply and installation of a signboard ($1.493 million); construction of a transport office ($7.922 million); and construction of a pump room and installation of pressurized plumbing system ($3.420 million).
The ministry informed the Audit Office that its assets had to be relocated because it was encumbering “the footprint of the new building.” It added that further to the commencement order, a pile testing exercise was carried out by the supervisory consultant (Vikab) Guyana Ltd, with the aid of the contractor, to garner sub-surface data, to complete the foundation designs. In this respect, with orders from the consultant, the contractor has proceeded with foundation works, and has commenced stockpiling the respective piles for the said works.
No reason was given for the second signing of the contract but it was announced by then Minister of State Joseph Harmon at a post-Cabinet Press briefing.
In 2009, the then Ministry of Health head office on Brickdam had been torched.
