On June 30, Hue City’s Center for Information Technology (IT) announced that they are seeking approval to terminate the contract with the construction joint-venture for Package 12 of the city’s IT building. The contract was awarded to Cong Thanh Construction Investment and Development Joint Stock Company. The Center has also initiated the process to recover the advance payment and contract bond by contacting the issuing bank.
The contractor completed 44% of the contract value and received over VND 18.68 billion from the investor before opting to terminate due to financial difficulties.
Currently, the contractor is preparing the paperwork to settle the remaining work. Once the supervision consultant approves and the investor accepts it, the advance payment will be recovered.
Hue City’s IT Center is the investor for this project. Cong Thanh Construction Investment and Development Joint Stock Company (referred to as Cong Thanh Company) was the main contractor for this package, with a contract value of nearly VND 34.6 billion. However, they have requested to halt construction due to financial constraints.
The investor affirmed that Cong Thanh Company met the required capabilities at the time of bidding. According to the requirements in the Electronic Bid Dossier, the contractor must have equipment such as a hoist cage, a hoist, and a crane. However, in reality, this contractor used a hoist to lift materials to great heights instead.
According to the IT Center, Cong Thanh Company has completed approximately 44% of the contract value, including additional works. So far, the investor has disbursed 54% of the contract value, equivalent to nearly VND 18.68 billion. This includes a payment of VND 13 billion for completed work, representing 70.3% of the total, and an outstanding advance payment of VND 5.68 billion, which is 29.7% of the total and 50% of the advance payment made by the investor at the beginning of the contract.
The contractor used a hoist to lift materials instead of the required crane and hoist. Did the investor, Project Management Board, and construction supervisors turn a blind eye to this?
The performance bond provided by Cong Thanh Company is 3% of the contract value, approximately VND 1 billion, including a common reserve fund proportionate to the contract value they undertake.
The Hue City IT Building is funded by the local budget, with the Urban Development and Investment Management Board as the inviting and project management agency. Cong Thanh Company won the bid by offering a reduction of VND 6.4 billion from the invited bid price. The construction period is 600 days from the signing of the contract on December 31, 2023.
Regarding Cong Thanh Company’s qualifications, the Hue City IT Center stated that at the time of bidding for Package 12, the company met the bidding requirements and was approved for contractor selection on December 28, 2023.
Numerous subcontractors have been affected by Cong Thanh Company’s financial situation, including Quang Quyet Trading and Services Construction Company, which is owed approximately VND 1.24 billion for labor and equipment; Hue Concrete and Construction Joint Stock Company, which is owed VND 153 million; and Thuan Thien Limited Company, which is owed VND 455 million.
