The Ministry of National Defense (MND) could dissolve its minesweeper contract with the scandal-prone Ching Fu Shipbuilding Co (慶富造船), which could delay delivery of the first vessel to 2023, Vice Minister of National Defense Admiral Pu Tze-chun (蒲澤春) said yesterday.
Ching Fu was awarded a contract to build six minesweepers for NT$35.8 billion (US$1.2 billion) as part of the nation’s domestic warship-building program and seeking a new contractor could lead to substantial delays to the minesweeper program, the MND said.
Last month, Ching Fu became the subject of an ongoing criminal investigation by Kaohsiung District Prosecutors’ Office on allegation of financial fraud, raising fears that the shipbuilder could go under.
Photo: Liu Hsin-de, Taipei Times
The Legislative Yuan’s Foreign Affairs and National Defense Committee yesterday asked officials from the Ministry of Finance, Financial Supervisory Commission and MND to report on the state of the minesweeper project.
The MND’s report to the legislature stated that evidence of wrongdoing by Ching Fu would constitute grounds for contract cancelation.
Should cancelation be necessary, the MND would have the option of handing the contract to another shipbuilder, returning the procurement project to the tender phase or scrapping the minesweeper project, it said.
In response to questions by Chinese Nationalist Party (KMT) Legislator Johnny Chiang (江啟臣), Pu said the defense ministry would prefer to leave the contract with Ching Fu, assuming that the shipbuilder could deliver on schedule.
Another shipbuilder had expressed interest in the assignment, he said, adding that he was not at liberty to disclose its identity.
Pu said he believes that if the contract were to be canceled, it would be because of a declaration of insolvency by Ching Fu.
MND Armaments Bureau’s head of procurement Huang Hsi-ju (黃希儒) added that should Ching Fu declare bankruptcy, the MND would be within rights to demand restitution from the shipbuilder.
Handing the contract to another shipbuilder would delay the project by one to two years, while reopening bidding on the project would cause a delay of three to four years, Huang said.
When asked by Chiang whether delivery of the first ship could be delayed to 2020 or 2023, respectively under the two scenarios, Huang replied in the affirmative.
Meanwhile, CSBC Corp Taiwan (台船) chairman Cheng Wen-lon (鄭文隆) said CSBC would be willing to take over the minesweeper project if it finds the government’s terms favorable.
Completing all six minesweepers by 2025 would be a tight schedule, as CSBC would have little time and canceling government contracts is time-consuming, an unnamed CSBC manager said.
The easiest way to move forward would be for CSBC to acquire Ching Fu and carry on with the latter’s obligations, the manager said.
“To make this happen, the government would need to give CSBC favorable terms to clean up the mess,” the manager said.
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