Taipei-The Coast Guard Administration (CGA) will terminate its contract with Ching Fu Shipbuilding Co. (CFS) and demand roughly NT$1.5 billion (US$50 million) in compensation if the company is unable to meet the Nov. 26 deadline for the next of the 28 search and rescue boats it has been contracted to build.
CGA Minister Lee Chung-wei (???) responded to questions at the Legislative Yuan on Wednesday regarding the contract it awarded CFS and said that the contract would be terminated if the company is unable to deliver the 14th boat of the 28 it has been contracted to build by Nov. 26.
In light of CFS's troubled financial situation, lawmakers are concerned about whether CFS will be able to deliver on its contracted work.
CFS, which is currently under investigation for its alleged role in a fraudulent bank loan case, won the CGA contract to build 28 search and rescue boats on May 30, 2013.
Thus far, it has completed and delivered 13 boats. With 15 more to complete the contract, the company is in the process of building eight more.
According to Lee, the original deadline for the 14th boat was on Nov. 10, but CFS asked for a 16-day extension claiming that the "one fixed, one flexible" workweek rule reduced available manpower. The new deadline is Nov. 26.
The minister, who does not expect CFS to meet the deadline, said that "once the time is up, we will proceed according to the terms of the contract and terminate."
CGA will be asking for NT$1.527 billion in compensation should it have to terminate the contract, a sum that includes the difference between the original value of the contract and the cost of having to find another shipbuilder as well as damages from defaulting.
If CGA has to find a new contractor to build the ships, it will take three or four more years to complete the project, Lee noted.
Source: Focus Taiwan News Channel