Hospital City: Request to Cancel Contract

Arguing reasons of force majeure, the construction company Fomento de Construcciones y Contratas requested the Panamanian Social Security Fund to unilaterally cancel the contract for the construction of the hospital complex.

Friday, August 28, 2020

This mega-project has been delayed for several years. Initially the contract for the design, construction and financing of the Hospital City was awarded in 2011 to the business group Fomento de Construcciones y Contratas S.A. (FCC) which submitted a proposal amounting to $587 million. However, the work has faced dozens of irregularities and so far remains unfinished.

After multiple delays and irregularities pointed out, authorities of the Social Security Fund (CSS) informed that on August 27, 2020 they received a letter from FCC with the request to dilute the contract.

You may be interested in "Hospital Infrastructure: $340 Million Investment"

For Roberto Ruiz Diaz, former Director of Public Contracting (2001-2003), this context "... gives (FCC) options to claim damages, lost profits and any other, because unilaterally the contract is being broken'. The best way is the dissolution of this contractual relationship through negotiation, or the assignment of the contract by the company."

Ruiz Diaz explained to Laestrella.com.pa that "... just as the company has failed to comply, the State has also failed to comply with the measure of suspension of the work during the past administration of Juan Carlos Varela."

The SSC will have to give an answer to the company about its request. The authorities have anticipated that their decision will be based on the national interest.

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More on this topic

Panama: Works Resumed on Hospital City

October 2015

The Social Security Department has made a partial payment of $40 million to the contractor of the project to resume work and complete the complex, valued at $517 million.

The project which was awarded to the company Fomento de Construcciones y Contratas (FCC) during the Martinelli administration is only 45% complete, and it should be completed in 2017.

Panama: Cancelation of Another Contract Signed by Previous Government

May 2015

Pointing to overruns the Varela administration has annulled a $22 million contract for support to the system for mobile equipment and back office staff at the Maritime Authority of Panama.

From a statement issued by presidency of Panama:

The Cabinet Council has approved a resolution which issued a favorable opinion to the unilateral termination of the contract for monthly support services to the Pele Marine system for mobile devices and back office administrative staff at the Panama Maritime Authority (AMP).

Tocumen Cancels Contract for Moving Walkways

August 2013

Now new suppliers are being sought for the installation of moving walkways at the North Terminal of the International Airport.

South Korea's Hyundai is nine months behind on the installation of the moving sidewalks at the north terminal of Tocumen International Airport.

According to Juan Carlos Pino, general manager of the state run company, Hyundai's local representative, Elevadores del Istmo, "is not able to install the conveyor belts."

State May Cancel Contracts with Electricity Distributors

January 2013

The new model contract submitted by the National Authority of Public Services of Panama includes a unilateral termination clause.

Reasons of "public interest" could be invoked by the Panamanian government to unilaterally terminate a concession contract for the distribution and sale of electricity.

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