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Govt. rescinds Health Ministry HQ contract after 90% of $356M paid
… project incomplete despite 317 days extension
Kaieteur News – Although Chung’s Global Enterprise was handed more than 90% of the $356 million contract cost and given a 317-day extension period for the construction of the Health Ministry’s main office, works remain incomplete forcing the governing administration to terminate his services.
CEO of Chung’s Global Enterprise, Cleon Chung
Attorney General and Minister of Legal Affairs, Anil Nandlall
In the termination letter sent to Cleon Chung of Chung’s Global Enterprise, Attorney General and Legal Affairs Minister, Anil Nandlall informed him that the contract was being terminated with immediate effect starting October 31 on the grounds of fundamental breach of the conditions stipulated in the contract.
Chung was handed the $356.8 million contract since 2017 with works officially commencing on July 19, 2018. He was later handed two extensions totaling 371 days but failed to meet the agreed deadline.
In fact, the AG pointed out that permanent works at the end of September 2020 was “less than 70% complete” after the contractor received $308.4 million for advanced payment/ mobilization and payments on eight Interim Payment Certificates.
The AG stated that Chung, just one day after the new People’s Progressive Party Civic (PPP/C) government took office, handed them a repriced bill of quantities for variations to the contract, containing a breakdown of outstanding works to be completed and its corresponding value.
“…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,” the Minister wrote.
In further breach of the contract, according to the AG, Chung failed to respond within the required time in submitting additional requested information of the priced bill of quantities pursuant to “Clause 28.2 of the General Conditions of Contract.”
That clause provides that at request of the employer, the contractor within seven days of the receipt of request should provide the employer with a detailed breakdown of prices of changes in the quantities indicating the rates for kinds of works and value of consumable material. It says too that the employer shall also evaluate those rates and value of consumable materials in comparison with the bill of quantities.
“In consequence of the aforesaid fundamental breaches of the said Contract, and in additional to termination, you are hereby informed that the Government of Guyana intends to institute legal proceedings against you for breach of contract and liquidated damages,” Nandlall said.
Further, the AG instructed that he stop the works immediately, make the site safe and secure and leave the site as soon as reasonably possibly “pursuant to Clause 40.5 of the Contract.”
The project was previously flagged by the Auditor General, Deodat Sharma in his 2017 report after a 2018 site visit revealed that the project was stalled but the contractor had already received an advanced payment of $71.3 million.
Sharma had said that almost nine months after the signing of the contract, only the piles of the foundation were driven at the worksite. Additionally, he said only two workers were present at the site, despite works being significantly behind schedule.
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