To: Beha Construction

Addis Ababa

Reference: Construction of Ethiopian Civil Aviation Authority Head Quarter Building

Subject: Your submitted request for an administrative intervention over the captioned project

The contract agreement signed on the 20th day of the month of December of the Year 2018 between the
Federal Government Building Construction Project office (Employer) and your esteemed firm for the
construction and completion of the head quarter building for the Ethiopian Civil Aviation Authority for a
total contract price (15% VAT inclusive) of Birr 292,566,405.88 is to be noted.

Pursuant to the initial contract made, the project is supposed to be completed in full on the 23 rd Jan
2021. The recent reports obtained from the consultant/Engineer, on the other hand, confirmed that the
actual physical progress till date is only 32.77% while the 94.65 % of the contract time was already
elapsed, depicting an overall slippage of 61.88%.

Following to your failure to meet your contractual obligations, it was learnt that intent for contract
termination was already issued to your firm (by the Employer) through its letter reference number
FGB/606/1497 dated 26 NOV 2020

In the meantime, with the aim of bringing the project’s performance back to its right track, the joint
management meeting duly held in pursuance with clause 76 of the General conditions of contract is also
to be acknowledged, over which the major factor for your failure to perform the project, as mutually
agreed, was noted to be primarily associated with your own cash flow constraints & management
problems.

The associated huge foreign currency requirement (for importing the required materials for completing
the project) was also the other challenge to be addressed primarily on your part, in pursuance with the
terms and provisions of the contract, so that the project may be completed the soonest time possible.

To this end, we acknowledge the receipt of your recent letter reference number BEC-CAA/307/20 dated
Dec 28/2020 over which your proposal for intervening over the same was submitted.

As explicitly cited over your proposal some of the key issues raised were:-

a) A request for time extension till the End of the month of November 2021
b) A proposal to secure 2 Million USD equivalent local currency from 2 local Banks, though the
same was not officially confirmed by the said Banks themselves.
c) A request for prompt receipt of Birr 11,400,845.55 payments from your Employer though the
presence of such pending sums was not independently confirmed by both the Employer and
the Consultant/Engineer.
d) A request to collect the already approved Birr 3,498,599.13 payment as well;
e) You have also requested facilitations in connection with materials approval, right of way
issues, variation issues as well as availing hard currency from the Employer’s side;
 Nonetheless, being cognizant of the depth of the problem and taking into account of the discrepancy
between the elapsed time against the actual performance, your firm was supposed to exhibit much
more commitments but you are still in a position to impose the client to shoulder all your contractual
responsibilities. As an experienced contractor you know it very well that the role of the client doesn’t
transcend from settling all contractual payments and issuing supporting letter upon your prior request.
As we have gone through and cross check your letter with number BEC-CAA/0144/20 dated on
02/2020 we found that;

1) There was no reason (right of way related or others) that hinders the performance of at least the
main building and other important elements of the contract, the same was however not yet
completed nor performed in accordance with the contract requirements, proving that the leading
factor for your failure in performance to be solely your own management and cash flow
associated problems, not the cited external factors.

2) The end user of the project (Ethiopian Civil Aviation Authority) has also clearly confirmed that
there was no pending right of way related issues that materially hindered the performance of the
project, if there was a real commitment from your side to resume the same.

Therefore, our administrative intervention is hereby set forth in two options. The decision is left for
your sole discretion.

Option 1

Upholding the decision made by the project office. Therefore, you here by advised to settle the
contract termination amicably without undue delay.

Option 2
It was strongly hopped on our part that much more cash injection schemes and independent and
reliable alternative financing proposals would have been immediately submitted on your part which
would have proven your level of preparedness and degree of commitment to substantially uproot the
said constraint and complete the project within the length of time limit agreed upon.

Accordingly: -

1) Please be kindly informed therefore that all the quality requirements and trademarks of
the materials specified over the bidding as well as the contract phase of the said project
were deliberately stated to reflect the iconic nature & the national image of the project.
You are therefore strongly required to strictly stick to such quality standards.
2) The consultant/Engineer is also reminded herewith to promptly settle any alleged
pending variation & payment related issues as well as to propose equivalent alternative
samples for approval, in case the cited marks are hardly available.
3) In pursuance with the signed contract provisions, you are supposed to avail your own
foreign currency requirements by your own ways not necessarily through the direct
involvement of your employer. Hence; making such issues currently as a precondition to
be necessarily carried out by your employer is thus totally unacceptable and non-
contractual.
 4) While there was no reason (right of way related or others) that hinders the performance
of at least the main building and other important elements of the contract, the same was
however not yet completed nor performed in accordance with the contract
requirements, proving that the leading factor for your failure in performance to be
solely your own management and cash flow associated problems, not the cited external
factors.
5) The end user of the project (Ethiopian Civil Aviation Authority) has also clearly
confirmed that there was no pending right of way related issues that materially
hindered the performance of the project, if there was a real commitment from your side
to resume the same. You are therefore required to plan ahead and perform the project
in parallel without delay so that the timelines of the contract may be maintained.
6) You are strongly reminded to avail your own foreign currency requirements by your
own ways alone.
7) As mentioned above, the project still requires independent alternative financing, if the
project is to be completed as envisioned. Therefore, as a proof of confirmation to your
commitment, you are necessarily required to deposit ETB 60,000,000(Sixty Million)-in
our joint account number within 15 days’ time of this letter, as a prerequisite, so that
the intent letter for termination already issued by the employer may conditionally be
revoked administratively.

Option 3

Since the you did not show proactiveness on the project after notice of termination has
been granted to you rather, you are displaying an unexecuted amount of work i.e.,
11,400,845.55 ETB as if you executed and huge slippage of time will not be compensated
by the previous way, please be informed that you are not permitted to be granted
administrative time. Accordingly, the contract will be terminated after Feb 10/2021, and
you are strongly expected to cooperate the consultant for the Arrangement of the
termination as per GCC 23,24 and 25

With Kind Regards

C/C
o The Ministry Of Transport
o The Ethiopian Civil Aviation Authority
o K2N Architecture & Engineering Consultancy PLC
Addis Ababa
o The Office of H.E. The Minister
o The Office of H.E The State Minister (Construction Sector)
o The Federal Government Building Projects Office
MUDCo