Thursday, 18 June 2015

GOVERNMENT REFUSES INVESTIGATION; SUPPORT NALCOR'S $ BILLION CONTRACT AWARD

Uncle Gnarley Blog received the Government's reply to my letter requesting that the Premier call an investigation into Nalcor’s award of the contract for the construction of the Labrador Island Link (LIL) transmission line.

While the letter was sent to Premier Paul Davis, it was his Natural Resources Minister, Derick Dalley, who replied.

Readers will recall that this Blogger was contacted by an anonymous person calling himself “Tender Man”. The concerned citizen had conducted extensive research into Nalcor’s handling of the contract award, having documented the process of Nalcor’s decision to first meld one tender into another, and then award the contract without competition. The documentation was gathered from Reports posted on Nalcor’s web site over several months.


Ultimately, the approximately $1 billion contract (including Nalcor purchased materials) was awarded to Vallard Construction LP.  That Company had already been awarded the contract to construct a transmission line from Muskrat Falls to the Upper Churchill, a reported $200 million contract. Nine bidders had pre-qualified for that work.

Based upon Minister Dalley’s response, the Government not only refused to commence an investigation; implicitly, it is supportive of Nalcor’s failure live up to the claim made in an email to a Member of the 2041 Group, November 28, 2011, which states that Nalcor "operates under the spirit of the PTA (Public Tender Act) in an open and transparent manner".  
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I have had an opportunity to speak with “Tender Man” who can be credited with having prepared the detailed research and with having brought the issue to light. I have also been in contact with Professional Engineers familiar with large project management, and with many aspects of the Muskrat Falls project.

The following five comments constitute their response to the Government’s position. I fully endorse those views. They are:  

1) Dalley’s letter states: "All contracts are subject to a competitive procurement process…” This is a peculiar statement, and inherently incorrect, given that the pre-qualification process was cancelled and no bids were solicited for the contract in question.

2) Dalley’s statement "Nalcor is fully responsible for contracting and government does not interfere…”  confirms that Nalcor awards contracts in whatever way they desire, insisting on no oversight from government. Neither the size nor the value of the contract seems to matter.

3) The reply states: “To date, more than 120 contracts have been successfully awarded for the Lower Churchill Project.”  What does this statement really mean?  What is a successfully awarded contract compared with a successful contract? You can award any contract but at what cost and risk?  Is Dalley saying we have 120 contracts that are on budget and schedule?  Not likely.

4) Dalley states: “eight (companies) advanced to the pre-qualification / evaluation phase…..(and that) Valard was identified as the only contractor Qualified”.  You have to ask yourself: how can this be?  With all the power lines constructed in North America, including those situated much farther North than here, why is there only one qualified bidder?  Did they just run out of time?  Did they write terms and conditions in such a way that only Vallard qualified?

5) “…a decision was taken by Nalcor to include all segments of the HVdc transmission line in the scope of work……Nalcor proceeded to negotiate a value-added contract….”

“So here we are”, comments one senior engineer: “the Nalcor procurement process "based on industry best practices" produced only one qualified company.  Instead of asking themselves how this might have happened, why no other qualified companies were interested in working with them, Nalcor decided to “sole source” this large contract with no external review. Sole source contracts are not uncommon for unique items but there is nothing unique about this contract. This is a simple labour and materials contract”.

The engineer added “if we want to talk about risks, the entire AC and DC transmission lines are both now awarded to one company; a company that has never worked in Newfoundland and Labrador before. All Nalcor’s eggs are in one basket, so to speak. Sound familiar? Astaldi…. Is there a trend?” the engineer wondered.

A final comment:

From any perspective, the letter is an indictment of the Government’s oversight practices. Contracts, large and small, can be awarded as Nalcor sees fit; based upon how it defines “best value”.

Nalcor’s practices are, at best, a corruption of an important public policy.

What follows, in most countries which fail to adhere to both transparent and competitive processes, is corruption, nepotism, and cronyism.

It happens in Newfoundland and Labrador; the practice was rife during the Smallwood years.

How would you describe the Humber Valley Paving decision under Premier Tom Marshall?

One of the first pieces of legislation which defined the Moores’ Administration was the Public Tender Act.

Truth is the Statute has been under attack since the day it was proclaimed.  It is abused every other day (subject for a later Post).

Now, imagine $8-10 billion expended by a Crown Corporation legally exempt from the Act; where Contracts worth tens and hundreds of millions are by arbitrary award.

Think you won’t hear more about corruption and the Muskrat Falls project?


Think again!

Perhaps, not this Premier and not this Government but, in time, the public will wonder how such an abuse of process could have happened.   

1 comment:

  1. This is a damming assessment on Nalcor.

    They should explain why none of the 23 companies who responded for the EOI were able to bid on the project.

    If this was a publically traded company, there would be shareholder revolt.

    ReplyDelete