The government has started legal proceedings against Chung’s Global Enterprise for a series of issues regarding the contract to build the new Ministry of Health’s Office at Brickdam, Georgetown.
Minister Dr Frank Anthony made the disclosure on Tuesday in the National Assembly, while responding to questions by Opposition Member of Parliament, Jermaine Figueira regarding the termination of the contract by the PPP/C Government on October 31, 2020.
He noted that the Attorney General and Legal Affairs Minister, Anil Nandlall, SC, has already taken the necessary legal steps against the contractor.
Dr Anthony said the original cost of the project was $365 million and the contract was signed on November 28, 2020.
It was intended to be completed in 12 months and should have commenced some 14 days after the contract signing.
The Minister said the contractor received an advance payment of $71.2 million which represented some 20 per cent of the contract sum.
In April 2018, the Ministry of Public Health, as it was called at the time under the APNU+AFC Administration, contracted a supervisory firm to look over the construction of the building.
Also, in 2018, two additional payments were made to Chung’s Global Enterprise.
According to Dr Anthony, the first and second payments were made in the sums of $34.5 million and $48.8 million, respectively.
However, according to the Auditor General’s report, at the end of December 2018, little work was done.
“Twenty-one months after the signing of the contract, only foundation work was completed and some work was started on the erection of steel frame, and when they visited the site there were three workers on the site, three workers were working,” Minister Anthony said.
In fact, the company contracted to supervise the work said there were “many instances” of substandard work.
Minister Anthony noted that on February 11, 2019 ground beams were found to be substandard and these defects were pointed out.
Some of the work had to be redone which also added to the cost.
“The Auditor General recommended that liquidated damages should have been instituted, but there was no evidence that the ministry liquidated any damages.
“At the end of 2019 the contractor received $304.5 million or about 85 per cent of the contract sum, and payments were made without valuation of six payment certificates, which totaled about $233.1 million, there was no valuation certificate, and works remained incomplete,” the Health Minister pointed out.
Dr Anthony added that among some of the works to be completed were the ceiling works, painting of the internal and external walls, electrical and AC unit installations, installation the lifts, tiling works, plumbing works and additional furnishing.
He noted that in 2019, the Auditor General recommended that the head of budget agency take immediate actions to activate the stipulations of the contract including termination of the contract and recovery of the sums paid.
At that point, it was estimated that for the work to be completed the contract had to be increased to about $870 million.
This represented an additional $513.3 million to be added to the $304.5 million that was already paid.
When the performance bond was checked, it was already expired one year prior.
The current administration took office in August 2020 and terminated the contract soon after and a new contract was awarded to the tune of $436 million to complete the work.
“One of the things we are discovering as work is continuing on the building is that the external wall of this facility is porous, in the last rains that we had the building was leaking, water was coming through the supposedly concrete walls, not only is water coming through, mold is now on the walls,” Minister Anthony said.
A structural analysis shows that the lifts cannot be accommodated because it could collapse, therefore a new engineering solution is needed.
“With the new contract at the 31st of October,2022, 91 per cent of the works were completed and the project is going to come to an end hopefully at the end of February, so that the staff of the Ministry can move into that building, after all that lengthy correction that we had to do” Minister Anthony said.
