Evidence
has now been uncovered showing that the “independence” expected of the
Independent Engineer for the Muskrat Falls project, on behalf of the Government
of Canada, was never established; that at the very beginning Nalcor was permitted to review, edit and redact the Reports before they became public.
The
issue of independence was always a worry for the small group of critics of the
project. Such scepticism was captured by an Uncle Gnarley Blog Post entitled
How Independent is the Independent Engineer? It raised the question following the
IE’s first Report (November 29, 2013). Material
evidence of complicity between the IE and Nalcor, which only recently came to
light, suggests that those suspicions were justified.
The
Uncle Gnarley article, written in June 2014, gives context to the latest
revelation that Nalcor was the IE’s editor and censor. At that time,
the IE was MWH Americas Inc., since sold to Stantec Inc., a major environmental
services contractor for Nalcor on the project. Following concerns over a
potential conflict of interest expressed to the Minister of Natural Resources
by David Vardy and Ron Penney — given Stantec’s long-standing relationship with
the crown corporation — the IE contract with Nalcor was reportedly sold again to
senior staff of the local office.
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To give context to the issue of independence now being raised again, this two part article will take us back to the IE's first Report and why concerns were raised at the start. Part II will expose the evidence obtained giving proof to why those concerns were well-founded.
On June 9th, 2014 the Uncle Gnarley Blog reported:
On June 9th, 2014 the Uncle Gnarley Blog reported:
“Unfortunately,
the Report lacks the robustness one would expect from an overseer with MWH
Americas' mandate. Possibly, the Firm attempted impartiality. It may have
simply missed the mark. To be fair, the
IE’s Report offers some solid information and analysis, but one cannot dismiss
its considerable limitations.”
It
continues:
“The
services of Independent Engineer (IE) services for LCP (Lower Churchill
Project) according to Nalcor's Expression of Interest document are for the
benefit of “rating agencies, lenders, guarantors, and other organizations that
may be involved in providing financing for LCP rather than on behalf of Nalcor
or its partners…”.
“Still MWH Americas Inc. was selected by Nalcor, its services are paid for by Nalcor, and it reports to Nalcor. That is at best an odd arrangement and the oddity is magnified by the absence of an arms-length relationship with its paymaster. Secondly, as in the case of any Report that puts claim to “independence”, whether that of Judge, Arbitrator or Professional Engineer, it is the level of rigorous analysis which it employs, and the conclusions which follow, that constitute the best evidence of considered and impartial counsel. On that basis, too, the Report is deficient.”
“Still MWH Americas Inc. was selected by Nalcor, its services are paid for by Nalcor, and it reports to Nalcor. That is at best an odd arrangement and the oddity is magnified by the absence of an arms-length relationship with its paymaster. Secondly, as in the case of any Report that puts claim to “independence”, whether that of Judge, Arbitrator or Professional Engineer, it is the level of rigorous analysis which it employs, and the conclusions which follow, that constitute the best evidence of considered and impartial counsel. On that basis, too, the Report is deficient.”
The question must therefore be raised: were those agencies, lenders and guarantors made aware of Nalcor's complicity in the product they received?
The
June 2014 post expressed alarm that the IE had swallowed Nalcor’s excessive
optimism (“delusion” might have been a better word) over the Water Management
Agreement, ignoring the “extreme uncertainty associated with Hydro Quebec’s
legal action”. In the same Report, it accepted what the post suggested was “at
best a preliminary analysis of the problem and possible remediation measures”
pertaining to the North Spur. It took this position without being in possession
of a full analysis, telling Nalcor to forward the additional studies
recommended by the Consultants “when available”.
The
third issue with the first IE’s Report was the conclusion reached in this
sentence: “In our opinion, and based on
past experience, the Integrated Project Team consisting of SNC-L (the
borrower’s Engineer) and Nalcor (the borrower) are qualified to design, contract,
manage, commission, operate and maintain the three projects currently under
design and construction for the LCP (Lower Churchill Project).”
The
Blog post noted that the “IE had come to its conclusion, notwithstanding the
fact that SNC-Lavalin’s capabilities are virtually non-existent on the project
management team of Muskrat Falls, that neither the President nor the VP of
Nalcor have mega project expertise, that according to one source knowledgeable
of Nalcor's management, 19 of the 20 senior Nalcor hires possess no
mega-construction expertise and the 20th person has no experience at a senior
project management level.”
Rightfully,
the post asked: “Where is this “past experience” to which the IE refers and on
what basis does the IE believe such a management deficiency is prudent or that
the interests of all the Parties to the project are protected?”
Finally,
the post zeroed in on what has been a great torment — the project schedule —
because it bears heavily on the issue of cost. The post read:
“A
fourth nugget is the IE’s concern over Nalcor’s Integrated Project Schedule
prepared by Nalcor. In its own words,
the IE found “that it is generally complete as far as listing contracts, but it
is a Gantt chart without activity linking, critical path(s), float time, etc.,
and is not suitable to the level of detail we require and had expected to view
to allow us to form opinions… we cannot express an opinion as to the likelihood
of the contracts being completed as scheduled.” (p. 174)
A
Gantt Chart, or bar chart, is a common tool used by firms to illustrate a
project’s schedule and the interdependence of certain activities, milestone
targets and schedule status.
The
IE is noting the lack of sophistication employed by Nalcor in the planning of
this large project. Yet it stated that
it “cannot express an opinion” on the project's status.
The
finding ought to have constituted proof of inexperience and an additional
signal of Nalcor's deficient project management team.
If
the post had been written only recently, flag-wavers for Nalcor might
justifiably have alluded to the benefits of hindsight. But that post was
written in June 2014; the debacle to which Nalcor was heading - even then - as plain as the
nose on your face!
Of
course, the IE exhibited no greater courage in any of its subsequent Reports on
the Muskrat Falls project. Was that because it never independent, having allowed Nalcor to soften any critical or sensitive statements that might
have called attention to the situation?
ATIPPA
information that recently came into the hands of this blogger, via the person
referred to in other posts as “citizen sleuth”, suggests that Nalcor was given
the opportunity to edit out unwelcomed truths — not that there ever existed a
government or public mindset to shut the project down.
Nalcor
was given access to the IE’s Reports for editing and redaction purposes prior
to their public release.
Those
matters will be discussed next time. But, for now, readers may want to
re-evaluate two recent Uncle Gnarley Posts dealing with the Federal
Government’s complicity in the project.
To
the issues raised in them we might now add a few more, such as: Was the choice of the Independent Engineer an
independent and objective process? What oversight, if any, did the Government
of Canada apply to the work of the Independent Engineer?
There
is grave concern that, just as former Premier Tom Marshall put a sticker called
“Oversight” on a Committee of public servants who neither had the expertise nor
the independence to carry out the job, the Federal Government also applied
“Independent” to an Office of oversight that may never have possessed any such
freedom or capacity.
The
proof?
Next
time.
