Deputy Prime Minister Chalerm Yubamrung said he will order the cancellation of 396 construction projects involving unfinished police station buildings.
The Department of Special Investigation (DSI) has found possible irregularities in the bidding process for the contracts, Mr Chalerm said.
He said the contract terms may have been improperly amended when the contract was awarded to a single company.
PCC Development and Construction Co (PCC) won the bid to build all of the 396 police stations nationwide for the Royal Thai Police Office (RTPO). The contract was worth 6.2 billion baht.
However, the firm failed to complete the buildings by the deadline of June 17 last year.
The budget was allocated from the Thai Khem Khaeng economic stimulus scheme of the previous Democrat Party-led administration.
Allowing one company to take on all of the buildings caused delays, Mr Chalerm said.
The contractor abandoned the projects, forcing police to conduct their work in shacks and at temples, Mr Chalerm said.
Jailed suspects had to be locked in washrooms, he added.
Mr Chalerm said he would order the police to cancel the contract to build the police stations.
The cancellation of the projects is not politically motivated and the DSI's investigation is justified, he said.
Meanwhile, the DSI said yesterday it will investigate possible price collusion in a contract to build eight blocks of flats for police officers.
The contract was under the jurisdiction of the Region 8 Provincial Police headquarters, DSI chief Tarit Pengdith said.
The petition was filed with the DSI by Pheu Thai Party spokesman Prompong Nopparit, who also provided evidence to back his allegation.
Mr Prompong wanted the contract probed because it involved PCC, the same company that failed to complete the police station buildings.
The DSI has launched an investigation into possible intervention in the flats contract by Suthep Thaugsuban, the former deputy premier of the previous government.
Mr Prompong said the eight blocks of flats were among 163 which were left unfinished. Total damage is estimated at almost 4 billion baht.
Mr Tarit said a preliminary investigation would start tomorrow.
Thanin Prempree, director of the DSI's corruption suppression centre, said he was gathering evidence to sue PCC for allegedly violating the terms of the police station contract.
The company must pay the costs of calling a new building contest. It should also absorb the costs of paying rent for temporary office space, he said.
Deputy national police chief Pol Gen Worapong Chiewpreecha said the RTPO might hire sub-contractors connected to the PCC to finish the stations.
PCC's sub-contractors from the Northeast met Mr Chalerm yesterday and said they wanted to finish the projects but had to stop because PCC did not pay them.
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- Writer: King-oua Laohong