Three new ships under construction called off due to false bidding by shipyard

South Korea’s Ministry of Maritime Affairs and Fisheries announced on the 24th, due to false content of the bidding documents submitted by ship enterprises, South Korea’s West Sea Fisheries Management Department in August 2021 bidding for “three new 900-ton hybrid national fisheries surveying and mapping vessel construction project” has been forced to interrupt.

Delivery of the three vessels was originally scheduled for January-February 2024, but with the disruption in ship construction, this will inevitably lead to long delays. The Korean shipbuilding community predicts that if the tender is rebid, it will be delayed by more than two years from the original schedule.

The shipbuilding project is a large-scale national project in South Korea, with a budget of KRW 24.5 billion (approximately RMB 134.5 million) per vessel and a total budget of KRW 70 billion (approximately RMB 384.3 million). The new vessels will be equipped with a hybrid power system of “electric motor/battery propulsion + diesel engine propulsion” and advanced facilities such as real-time video conferencing system and vessel safety monitoring (VMS) system, and will be utilized to establish the order of fishery fishing and protect the fishery resources of Korea in the coastal, offshore and oceanic areas after their completion and delivery.

J Shipbuilding, located in Mokpo City, Jeollanam-do, was awarded a contract for the construction of three vessels based on a bidding process. During the construction of the vessels, its competitor, Y Heavy Industries, filed a lawsuit for “direct violation of production standards”.

Subsequently, the bidding documents submitted by J Shipbuilding were re-examined by the relevant authorities and found to be indeed false. During the litigation, the construction process of the three new vessels had been completely interrupted. In September of this year, the Supreme Court of Korea finally ruled in favor of canceling J Shipbuilding’s construction contract.

The two parties are currently negotiating the dissolution of the construction contract. After the termination process has been completed, the West Sea Fisheries Management plans to issue a new tender for the remaining construction of the three vessels.

It was reported that the West Sea Fisheries Management Authority had paid J Shipbuilding approximately half of the total cost of the project. However, an official of the Fisheries Administration stated that the organization had recommended that the Korea Public Procurement Service take subsequent disciplinary measures, such as designating the company as an “offending partner” and prohibiting it from participating in future government projects on the grounds of non-compliance with the contract and submission of false documents.

Yangzijiang Shipbuilding

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