Whereas the Plaintiff confined its claim, pursuant to the contents of its Statement of Claim and the memoranda subsequently submitted, particularly the memorandum submitted at the hearing of 13/7/1419 AH, as well as the contents of the minutes of the hearings of 11/3/1422 AH and 9/5/1422 AH, to requesting judgment in its favor as follows:
1- That its entitlements from the Ministry under the aforementioned extension contracts be calculated as follows:
A- (1,500,000) one million five hundred thousand riyals for the one-month extension period for King Abdulaziz Hospital and the Operations and Equipment Maintenance Department and Garage, from 1/1/1414 AH to 30/1/1414 AH, in accordance with the offer submitted by the Plaintiff to the Ministry.
B- (5,500,000) five million five hundred thousand riyals for the (11)-month extension period for the Operations and Equipment Maintenance Department and Garage at King Abdulaziz Hospital, for the period from 1/2/1414 AH to 2/1/1415 AH, calculated at (500,000) five hundred thousand riyals per month.
C- (7,000,000) seven million riyals for the seven-month extension period for King Faisal Hospital and the Medical Supply and Warehouses Department, for the period from 1/1/1414 AH to 30/7/1414 AH, in accordance with the offer submitted by the Plaintiff to the Ministry.
D- (2,500,000) two million five hundred thousand riyals for the (5)-month extension period for the Medical Supply and Warehouses Department at King Faisal Hospital, from 1/8/1414 AH to 2/1/1415 AH, calculated at five hundred thousand riyals per month.
Accordingly, the total entitlements that the Plaintiff claims should be calculated in consideration of its being assigned to work in the First Group and the Second Group amounts to (16,500,000) sixteen million five hundred thousand riyals. Since the amounts paid to the Plaintiff in consideration of its work in the two groups amounted to (5,049,814,95) riyals, the outstanding amount claimed by the Plaintiff in this regard is (11,450,185,05) riyals.
2- The Plaintiff also claims compensation in the amount of (1,500,000) one million five hundred thousand riyals for the losses incurred and profits lost as a result of its being assigned to work in the two groups.
3- The Plaintiff likewise claims the refund of (1,100,000) one million one hundred thousand riyals, being the amount deducted by the Ministry from the Plaintiff’s entitlements and paid by the Ministry to Company (...) in consideration of its work at King Fahd Hospital in Jeddah for one month.
Whereas the Ministry responded to the claim as previously stated and requested that the claim be dismissed.
Whereas the dispute arises from the effects of an administrative contract, the Board of Grievances has jurisdiction to hear it pursuant to Article (8/1/d) of its Law, and the procedures set out in Article Four of the Rules of Pleadings and Procedures before the Board of Grievances shall apply to its consideration and adjudication.
Whereas the subject matter of the dispute is the non-medical direct-procurement operation contracts extending from 1/1/1414 AH to 2/1/1415 AH, and the assignment of Company (...) to work at the expense of the Plaintiff from 21/4/1413 AH to 21/5/1413 AH at King Fahd Hospital in Jeddah, which had been awarded to the Plaintiff for a period of three years commencing on 21/4/1413 AH.
Since the Plaintiff brought its claim within the legally prescribed periods, the claim is therefore admissible in form.
As to the merits, with respect to the Plaintiff’s claim concerning the non-medical direct-procurement operation contracts, its request to invalidate those contracts, its request that the Ministry be ordered to pay the amounts specified by it, and its claim for compensation for the damages incurred as a result of being compelled to work:
Whereas the documents establish the following:
1- The Plaintiff entered into two contracts with the Defendant for a period of three years. The first contract covered the non-medical operation of King Abdulaziz Hospital and the Operations and Equipment Maintenance Department and Garage. The second contract covered the non-medical operation of King Faisal Hospital and the Medical Supply and Warehouses Department. The terms of both contracts expired on 30/12/1413 AH. The Ministry did not extend them during their original terms. Following the expiry of the original terms of the two contracts, the Plaintiff wrote to the Ministry by its letters No. (1094) dated 1/1/1414 AH and No. (1095) dated 1/1/1414 AH, stating that the original terms of the two contracts had expired and specifying therein the price it desired if the Ministry wished to assign it to continue working.
2- Following the expiry of the original terms of the two contracts, the Defendant assigned the Plaintiff to continue working by its letters No. (88) dated 2/1/1414 AH and No. (89) dated 3/1/1414 AH. Those letters required the Plaintiff to continue working and confirmed that it was not to leave the sites until the new contractor had taken them over. The value of the assignment was not specified at the beginning, but was determined thereafter. The Plaintiff rejected the price specified by the Ministry and also refused to sign the direct-procurement assignment contracts at the price specified by the Ministry.
3- By its letter No. (47/22) dated 8/2/1414 AH, the Ministry requested the Plaintiff to submit its price offer. The Plaintiff specified its prices in its letter No. (1214) dated 8/2/1414 AH; however, the Ministry did not adopt those prices.
4- The Plaintiff requested the Ministry to pay its entitlements in consideration of continuing to work after the expiry of the terms of the two contracts. The Ministry refused the Plaintiff’s request unless the Plaintiff signed the direct-procurement assignment contracts at the price specified by the Ministry. It further stated that if the Plaintiff was claiming an increase over the amount specified by the Ministry, it could claim such increase through the Ministry. The Plaintiff rejected this, while the Defendant insisted that the Plaintiff’s entitlements for continuing to work would not be paid unless the Plaintiff signed the direct-procurement assignment contracts. This is evidenced by the Defendant’s letters No. (1727/3981) dated 8/5/1414 AH, No. (10198) dated 23/6/1414 AH, No. (1540/3507) dated 1/5/1414 AH, No. (218/4828) dated 17/6/1414 AH, and No. (11112) dated 13/7/1414 AH.
5- Following the expiry of the assignment period, the Plaintiff refused to sign the non-medical direct-procurement operation contracts until its reservation regarding the assignment value had been approved by its letter No. (397) dated 7/1/1415 AH, which was endorsed by the Director of Health Affairs in the Holy Capital, dated 12/1/1415 AH. That Director was the person who signed all the direct-procurement assignment contracts with the Plaintiff. He also forwarded the Plaintiff’s reservation in his letters requesting the Ministry to pay the Plaintiff’s entitlements after the contracts had been signed with it, including letters Nos. (1220) through (1225) dated 11/2/1415 AH, letter No. (1231) dated 11/2/1415 AH, letter No. (1232) dated 17/2/1415 AH, letter No. (2195) dated 17/3/1415 AH, and letter No. (5174) dated 16/6/1415 AH.
Whereas the foregoing establishes that the Ministry compelled the Plaintiff to continue working and threatened it with not leaving the sites until they were handed over to the new contractor. The Ministry rejected the amount specified by the Plaintiff for continuing to work, specified an amount of its own, and refused to pay it to the Plaintiff unless the Plaintiff signed the direct-procurement assignment contracts. The Ministry submitted nothing authorizing it to impose such obligation after the expiry of the original terms of the two contracts.
Whereas withholding the Plaintiff’s entitlements for all this period constitutes a form of coercion compelling the Plaintiff to sign the contracts, because the Plaintiff had obligations toward the Ministry and third parties that made it compelled to respond to the Ministry’s request to sign the contracts in order to obtain its entitlements.
Whereas it is settled in this regard that an extension of a contract is only a right of the Ministry if made during the actual or constructive term of the contract, and the Ministry’s imposition upon the Plaintiff of the obligation to work did not occur during the term of the contract, either actually or constructively, but rather the assignment to work took place after the expiry of the contract term.
Accordingly, the Ministry’s assignment of the Plaintiff to work does not constitute an extension of the previous contracts existing between the Ministry and the Plaintiff. Therefore, the value of those contracts is not binding upon the Plaintiff so long as it did not approve them after being assigned by the Ministry.
Whereas it is likewise settled that a person coerced into performing a particular work is entitled to the customary remuneration for such work, the Plaintiff is therefore entitled to the customary remuneration for the works it performed after the expiry of the original terms of the two contracts, which is what the Panel hereby adjudicates in this regard.
This is not affected by the Ministry’s defense that the Plaintiff signed the direct-procurement assignment contracts and was consequently bound by the amounts stated therein, and so forth, because the documents establish that the Ministry refused the Plaintiff’s request to pay its entitlements for the assignment periods unless the Plaintiff signed the contracts at the price specified by the Ministry. This constitutes coercion by the Defendant of the Plaintiff to sign the contracts.
This is further confirmed by the fact that the Ministry requested the Plaintiff to sign the contracts at the price specified by the Ministry, while stating that, if it wished to claim an increase over the amounts specified by the Ministry, it could do so after signing the contracts. Furthermore, the Director General of Health Affairs in the Holy Capital, who signed the assignment contracts with the Plaintiff, approved the Plaintiff’s reservation regarding the price specified in the contracts and forwarded the reservation with the letters in which he requested payment of the Plaintiff’s entitlements after the assignment contracts had been signed.
With respect to assessing the customary remuneration due to the Plaintiff for the works it performed in the two groups after the expiry of the original terms of the two contracts, the Panel reviewed the value of the two contracts and the monthly cost during their original terms, as well as the value of the works covered by the two contracts after their award to the new contractor. The Panel also reviewed the direct-procurement assignment contracts, and found the following:
1- The basic contract for the First Group covered the non-medical maintenance and operation works of King Abdulaziz Hospital and the Operations and Equipment Maintenance Department and Garage. Its value was (21,658,452) riyals for three years, with a monthly installment of (601,623) riyals.
2- The Plaintiff was assigned to perform all works under the First Group contract for one month, commencing at the end of the original contract term on 1/1/1414 AH and ending on 30/1/1414 AH. The Ministry set the value of the assignment at (601,623,66) riyals, based on the monthly installment stated in the contract. Thereafter, part of the First Group contract, namely King Abdulaziz Hospital only, was awarded to Company (...) for (16,377,968) riyals for three years. As for the remaining works under the First Group contract, the Plaintiff was assigned to perform them for (11) months, commencing on 1/2/1414 AH and ending on 2/1/1415 AH. The Ministry set the value of the assignment at (75,935,82) riyals per month.
3- The basic contract for the Second Group covered the non-medical maintenance and operation of King Faisal Hospital and the Medical Supply and Warehouses Department. Its value was (16,622,747) riyals for three years, with a monthly installment of (461,742,97) riyals.
4- The Plaintiff was assigned to perform all works under the Second Group contract for (7) months, and the Ministry set the value of the assignment at (468,392,9) riyals per month. Thereafter, the Ministry awarded part of the Second Group contract, namely the non-medical operation of King Faisal Hospital only, to Company (...) for (14,499,955) riyals for three years. As for the remaining works under the Second Group contract, namely the Medical Supply and Warehouses Department, the Plaintiff was assigned to perform them for (5) months, commencing on 1/8/1414 AH and ending on 2/1/1415 AH. The Ministry set the value of the assignment at (73,487,37) riyals per month.
5- The Ministry awarded the remaining works of the First Group, namely the Operations and Equipment Maintenance Department and Garage, and the remaining works of the Second Group, namely the Medical Supply and Warehouses Department, together with certain other works not included in the contracts for the two groups, to Company (...).
6- The First Group contract and the Second Group contract did not specify the value of each work separately, nor the value of each item or its percentage of the contract. In addition, each group contract contained specific items and items common to the various parts of the contract covering several sites.
As for the comments made by the Honorable Audit Panel concerning the division of the contract works’ value mentioned by the Plaintiff in its Statement of Claim, it became clear to the Panel that this division was specific to the Plaintiff and did not appear in the price offer submitted by it or in the contracts for the two groups.
Accordingly, the Panel considered that the customary remuneration consists of the value of each group contract plus (5%) in consideration of the initially short assignment period and the Ministry’s subsequent division of each group contract. This undoubtedly increases the cost of performing the contract, because the cost of any work is inversely proportional to the quantity and duration of the work performed. The greater the quantity and duration of the work performed under maintenance and operation contracts, the lower the cost, and vice versa.
This is not affected by the Honorable Audit Panel’s statement that the effect of duration on the value of a contract applies to contracts being established and not to contracts under which the contractor is already working, and so forth. This is because the contractor under the contract at issue had completed its contract before the Administrative Agency notified it of its desire to extend the contract term. Moreover, when the Administrative Agency notified it of the extension, it did not specify the duration of that extension. It subsequently divided the two contracts, requiring the contractor to perform part of the two contracts and assigning other contractors to perform the remaining parts.
All of this causes uncertainty for the contractor at the commencement of performing the work assigned to it by the Administrative Agency, because it does not know the duration of the new contract or the volume of work that it will be entrusted to perform. This affects the contractor’s contracts with its employees and subcontractors, labor housing leases, and its numerous other commitments relating to the contract.
It is therefore evident that extending the contract in the manner adopted by the Ministry with the contractor causes harm to the contractor. The position adopted by the Honorable Audit Panel could be accepted if the Ministry had notified the contractor one or two months before the expiry of the contract term of its desire to extend the contract for a specified period, had specified that period, and had identified the amount of work it would assign to the contractor during the extension period. In that event, the contractor would have had sufficient time to arrange its affairs and commence the new work knowing its volume and duration.
However, since the Ministry adopted this ambiguous approach with the contractor, the contractor is entitled to compensation that remedies the harm caused to it by the Ministry’s aforementioned conduct.
As for the Honorable Audit Panel’s statement that the approach adopted by the Panel in its previous judgment to determine the value of the works that the Plaintiff continued to perform leads to inconsistency, and so forth, the Panel, when assessing the customary remuneration, considered that such remuneration consists of the value of each group contract plus (5%) of the value of the original contract, as follows:
(21,658,452) + ( 5 / 100 × 21,658,452) = (22,741,374,60) riyals
The customary remuneration per month is (22,741,374,60) ÷ (36) = (631,704,85) riyals.
The customary remuneration for all works of the Second Group is:
(16,622,747) + ( 5 / 100 × 16,622,747) = (17,453,884,35) riyals
The customary remuneration per month is (17,453,884,35) ÷ (36) = (484,830) riyals.
On this basis, the Plaintiff is entitled, in consideration of the works assigned to it by the Ministry after the expiry of the original terms of the two contracts, to the following amounts:
First: Assignment under the First Group contract:
A- Assignment to perform all works under the First Group contract:
The documents establish that the Ministry assigned the Plaintiff for one month to perform all works under the First Group contract. Since the Panel considers that the customary remuneration per month for all works under the First Group contract is (631,704,85) riyals, this is the amount to which the Plaintiff is entitled for that assignment.
B- Assignment to perform part of the works under the First Group contract:
The documents establish that the Ministry assigned the Plaintiff for (11) eleven months to perform part of the works under the First Group contract. Those works included the Operations and Equipment Maintenance Department and Garage. The Ministry awarded the remaining part, comprising the non-medical operation of King Abdulaziz Hospital, to one of the contractors for (16,377,968) riyals for three years.
Since the Panel concluded that the customary remuneration for the entire First Group contract is (22,741,374,60) riyals, the customary remuneration for the Operations and Equipment Maintenance Department and Garage for three years is:
(22,741,374,60) - (16,377,968) = (6,363,406,60) riyals
The monthly installment is:
(6,363,406,60) ÷ (36) = (176,761,29) riyals.
Accordingly, the amount due to the Plaintiff for that assignment is:
(176,761,29) × (11) = (1,944,374,19) riyals.
Therefore, the amount due to the Plaintiff for the First Group works is:
(631,704,85) + (1,944,374,19) = (2,576,079) riyals.
The Plaintiff stated in the minutes of the hearing of 10/7/1420 AH that the Ministry had paid it (1,511,382,77) riyals for its assignment to perform the First Group works. The Ministry confirmed this, as recorded in the minutes of the hearing of 11/3/1422 AH.
Accordingly, the amount remaining due to the Plaintiff from the Ministry for the assignment period under the First Group contract is:
(2,576,079) - (1,511,382,77) = (1,064,696,23) riyals,
which is what the Panel hereby adjudicates in this regard.
Second: Assignment to perform the works under the Second Group contract:
A- Assignment to perform all works under the Second Group contract:
The documents establish that the Ministry assigned the Plaintiff for (7) months to perform all works under the Second Group contract. Since the Panel concluded that the customary remuneration per month for the entire Second Group contract is (484,830) riyals, the amount due to the Plaintiff for that period is:
(484,830) × (7) = (3,393,810) riyals.
B- Assignment to perform part of the works under the Second Group contract:
The documents establish that the Ministry assigned the Plaintiff to perform only part of the works under the Second Group contract, namely the Medical Supply and Warehouses Department, for (5) months, while the Ministry awarded the other part of the Second Group works, namely King Faisal Hospital, to Company (...) for (14,499,955) riyals.
Since the customary remuneration for the entire Second Group contract is (17,453,884,35) riyals, the customary remuneration for the part assigned to the Plaintiff is:
(17,453,884,35) - (14,499,955) = (2,953,929,35) riyals.
Accordingly, the customary remuneration per month is:
(2,953,929,35) ÷ (36) = (82,053,59) riyals.
Thus, the amount due to the Plaintiff for that assignment is:
(82,053,59) × (5) = (410,267,95) riyals.
Based on the foregoing, the amount due to the Plaintiff for the assignment period under the Second Group contract is:
(3,393,810) + (410,267,95) = (3,804,077,95) riyals.
The Plaintiff stated in the minutes of the hearing of 11/3/1422 AH that the amount paid to it for the assignment period under the Second Group contract after the expiry of the original contract term was (3,538,432,18) riyals. The Ministry agreed with this, as recorded in the minutes of that hearing.
Accordingly, the amount remaining due to the Plaintiff from the Defendant in respect of the assignment to perform the works under the Second Group contract is:
(3,804,077,95) - (3,538,432,18) = (265,645,77) riyals,
which is what the Panel hereby adjudicates in this regard.
As for the Plaintiff’s claim for compensation in the amount of (1,500,000) riyals for the losses incurred and profits lost as a result of being assigned to work in the First and Second Groups, a claim for compensation requires the existence of the three elements of liability: fault, damage, and a causal relationship between them. Once those elements are established, liability arises against the Defendant and the Plaintiff must be compensated. If any one of those elements is absent, liability is negated and the Plaintiff’s right to claim is extinguished.
The Plaintiff did not submit, during the consideration of the case, evidence establishing that it suffered damage as a result of being assigned to work. Compensation may only be awarded for actual damage, not for potential damage or anticipated profit from work for which no contract was concluded, because profit and loss are matters that may or may not occur. In addition, the Panel concluded that the Plaintiff was entitled to the customary remuneration for being assigned to work in the two groups, which negates the occurrence of damage to it.
Since failure to establish damage extinguishes the Plaintiff’s right to claim compensation, its claim is unsubstantiated and should be dismissed. This is what the Panel hereby adjudicates with respect to this claim.
As for the Plaintiff’s claim for the refund of part of the amount paid by the Ministry to Company (...) for its work at King Fahd Hospital in Jeddah for one month at the Plaintiff’s expense, in the amount of (1,100,000) riyals, and so forth:
The documents establish that the non-medical maintenance and operation work at King Fahd Hospital in Jeddah and its annexes was awarded to the Plaintiff, with the site handover to commence on 21/4/1413 AH. The Plaintiff failed to take over the site on the specified date, and Company (...), the project’s previous contractor, was assigned to continue working at the Plaintiff’s expense.
The documents further establish that the Handover and Takeover Committee formed by the Ministry, the hospital, the director of the Plaintiff company, and the director of Company (...) determined, in the minutes signed by all parties on 21/4/1413 AH, that it was impossible for the new contractor—the Plaintiff—to take over the site, and that the current contractor—Company (...)—must continue operating the site in accordance with the terms and specifications contained in its contract. The Committee also recommended submitting the minutes to the Ministry of Health for approval and setting a new handover date.
The Ministry decided, by letter No. (40/3/5588) dated 24/4/1413 AH, which referred to the aforementioned meeting minutes dated 21/4/1413 AH, that Company (...) should continue working at King Fahd Hospital in Jeddah at the Plaintiff’s expense.
The three parties—the Plaintiff, Company (...), and the Ministry—considered it necessary for Company (...) to continue operating the site in accordance with the terms and specifications contained in Company (...)’s contract with the Ministry, and signed accordingly without reservation by any of them. The Ministry endorsed this arrangement and assigned Company (...) to work at the Plaintiff’s expense.
One of the terms of Company (...)’s contract with the Ministry was that the value of the monthly statement would be (1,500,000), as stated in the Ministry’s letter No. (12217) dated 7/9/1413 AH.
Accordingly, the Ministry was entitled to deduct (1,500,000) riyals from the Plaintiff’s entitlements held by it, in consideration of the work being performed at the Plaintiff’s expense for one month, pursuant to the agreement concluded among the three parties.
The documents establish that the Ministry deducted (2,600,000) riyals from the Plaintiff’s entitlements and paid it to Company (...) for its work at King Fahd Hospital in Jeddah for one month at the Plaintiff’s expense, pursuant to Payment Order No. (19173) dated 1/6/1414 AH.
Therefore, the action taken by the Ministry contravened the agreement concluded among the three parties pursuant to the minutes dated 21/4/1413 AH. The Ministry must consequently be ordered to return to the Plaintiff the amount exceeding the amount agreed upon among the three parties, namely:
(2,600,000) - (1,500,000) = (1,100,000) riyals,
which is what the Panel hereby adjudicates in this regard.
Accordingly, the Panel adjudged:
To order the Ministry of Health—the Defendant—to pay the Plaintiff, (...) Contracting Group, the amount of (2,430,342) two million four hundred thirty thousand three hundred forty-two riyals, representing the amount remaining due to the Plaintiff from the Defendant for its assignment to work in the First Group and the Second Group, together with the excess amount deducted from the Plaintiff’s entitlements in consideration of work performed at its expense at King Fahd Hospital in Jeddah for one month, and to dismiss all other claims, for the reasons set forth above.
May God grant success, and may God’s blessings and peace be upon our Prophet Muhammad and upon all his family and companions.