The Coast Guard Administration (CGA) yesterday announced that it had terminated a contract with Ching Fu Shipbuilding Co (慶富造船) for the construction of 28 patrol boats and would demand NT$1.2 billion (US$39.9 million) in compensation, saying that the company has repeatedly failed to deliver the boats.
The Maritime Patrol Directorate-General said it officially dissolved the contract yesterday.
Ching Fu was awarded the contract for 28 100-tonne patrol boats in 2013 and has delivered 13 boats so far. However, it failed to deliver the 14th boat.
Photo courtesy of the Coast Guard Administration
The boat was not delivered on its scheduled deadline of April 30 and the directorate-general extended the deadline to Aug. 28, but the company again failed to deliver the vessel, it said.
The directorate-general dissolved the contract 90 days after the second deadline, as the deadline for termination was reached and the agency had to procure the remaining boats through other means to meet the needs of law enforcement on the sea, it said in a statement.
Ching Fu performed poorly over the past few months, with a mere 13 percent construction execution rate last month. The rate fell to zero between Nov. 1 and Sunday last week, it said.
The directorate-general had warned the shipbuilder and its joint guarantor, Mega International Commercial Bank (兆豐銀行), about a possible contract termination five times this month, while the Ship and Ocean Industries Research and Development Center, the supervisor of the shipbuilding process, also urged improvements.
However, Ching Fu was unable to make improvements, as it failed to address shortages of construction materials and hardly any progress was made, despite sporadic construction activity, the directorate-general said.
The directorate-general has blacklisted Ching Fu as a sub-standard contractor, confiscated the deposits, ordered the bank to pay collateral and termination payments, restarted the tender process to acquire the remaining 15 patrol boats and ensure the maintenance of the 13 boats delivered by Ching Fu, and filed a lawsuit against Ching Fu for additional expenses, the statement said.
It is the first contract termination Ching Fu has faced after the company was in August embroiled in a fraud scandal regarding its contract with the navy to build six minesweepers.
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