State fires Route 531 builder for missing dates

It's a blow to residents of the Sharon region who had hoped for a new highway and railway line to alleviate their congested traffic. Shapir Engineering won't be carrying out the gigantic project to extend Route 531, after all. The state will likely hire the runner-up in the tender, which will lead to more delays.

Shapir was hired to build a roughly 20-kilometer segment of road linking Ra'anana Junction to the coastal highway at Rishpon and the Trans-Israel Highway. Altogether, the segment of highway would have 11 intersections.

Four kilometers of the road are a northern extension of the Ayalon Highway, from the Shivat Hakochavim intersection to Rishpon. The company was also supposed to lay a rail line, build train stations and lay pipelines for the Mekorot Water Company.

Shapir hasn't actually been informed yet that it's been fired and that its contract with the state is being canceled. The announcement is expected to be delivered in a matter of days.

The parties will presumably try to reach a settlement about the claims Shapir will inevitably file against the state, and conversely about Shapir forfeit of its deposit.

Industry observers expect that the state will now hire Danya Cebus, the infrastructure arm of the Africa Israel group, which had come second in the race.

A month ago the authority responsible for the Route 531 project, consisting of officials from the transport and finance ministries, warned Shapir that its contract was in danger of termination. They also warned the company that it would likely forfeit its bank deposit, subject to a hearing. (It is customary for companies competing in major government tenders to make bank deposits, to prove the seriousness of their intentions and to signal their financial robustness.)

The grounds for canceling the contract, the state explained to Shapir, was that it hadn't met the deadline for closing financing for the project. Nor had it met the deadlines for submitting its planning and engineering permits.

Two months ago the state seized NIS 1 million out of NIS 33 million that Shapir had deposited, after it failed to meet a milestone that had been agreed between the sides. In response, Shapir accused the state of bearing "sole responsibility" for the violation of the agreement between them regarding Route 531 and the Sharon rail line. It accused the state of sabotaging the job.

Shapir had won the contract after a protracted tender process. The road was supposed to be ready to be rolled on in 2012. However, last summer a 10-month delay was announced after the tender committee agreed to give Shapir more time to close its financing. The company won a breather until May 2010, then until mid-July. But Shapir asked for even more time, explaining that there were still obstacles in the way of sealing the deal on the financing agreement.

That leniency came with strings attached, however, including the imposition of milestones for completing the planning phases. Shapir was also told to increase its deposit. Altogether the projects were worth about NIS 2.4 billion to Shapir.

The lending consortium is supposed to be led by Bank Leumi.

Sources in the transport industry suggested last summer that the state's threats were designed to impose pressure on Shapir, which had halted work on another project entirely - the express lane into Tel Aviv.