The Report by CBC, last week, that “the provincial government
allowed Humber Valley Paving to walk away from a contract to pave the highway
in Labrador…” and return the Company’s
Performance Bond has all the makings of a scandal at the highest level.
raises questions whether the Marshall Government acted improperly by awarding Humber
Valley Paving special favours. Coleman
was a major shareholder and Director of Humber Valley Paving (HVP) until just
three days before the Government was asked to cancel the contract and release
the bond (according to the Minister of Transportation and Works).
it is unprecedented.
that it was done to spare HVP from bankruptcy, though the reason for doing so seems to entirely lack legitimacy.
It invokes questions of abuse of the Public Tendering Act and
destroys the level playing field the Act
provides for Bidders on
Evidently, the Government performed the same service to
Penney Paving, though the Owner of that Company argued, in a Weekend Telegram piece entitled “Roadwork contract release unprecedented: company” by Reporter Ashley Fitzpatrick the
two cases “are not comparable”.
possibly in the millions.
of the Performance Bond are matters of such magnitude that they ought to
prevent Frank Coleman from being sworn in, as Premier, until he, his family and
business associates are cleared from any involvement in the decision by an
is the Auditor General though a Judge or retired Judge of the Supreme Court,
given the legal implications of the matter, may be a more suitable adjudicator.
they are the only ones of that kind taken since the Public Tendering Act came
into law in the early 1970s.
politicians in the Moores/Peckford Governments, with senior public servants spanning
several Administrations including one public servant who had spent many years
in the Provincial office responsible for Tendering and Contracts.
Contract and free release of a Performance Bond had ever been permitted. The former Contracts administrator noted that
requests for contract relief never made it to the political level. They were always refused.
by an insurance company or a bank to guarantee satisfactory completion of contracted
work by a contractor.
and often large personal assets as security.
or even bankruptcy. Often the owner
risks personal loss, too.
are the rules of the game. The
Contractors understand the rules. They apply to everyone equally”.
“the rules of the game” were changed.
over the HVP Contract, Premier Marshall took to the airwaves. He told VOCM on May 1st:
wanted to get the work done on time and they wanted to get the work done at the
best possible price for the taxpayers and they made this arrangement to
accomplish that objective”.
The Government had a fixed priced contract. It had a $9.5 million Bond (the equivalent of
cash) for the purpose of securing performance. The Minister acknowledged the
Government could have taken it.
square with the assertion of “best possible price for the taxpayer”?
The CBC quoted him as saying: “Humber Valley Paving
didn’t want to follow through with the contract because it would lose money; Government said problems started last fall after forest fires ripped through
western Labrador. Roads in the area were closed due to the flames, and supplies
couldn’t be shipped over the road, causing delays in work.”
HVP put up a $9.5-million bond as a guarantee it would
finish the work. The Minister stated that the Government could have kept this
money when the contract was terminated, but did not call the bond.
Quoting from the CBC story, “McGrath said government
made the decision in the best interests of both government, as well as the company
and its employees.”
to McGrath: “…the
contractor lost money on the contract due to that (the forest fires) — and
nobody’s fault why they lost money, but then to continue with the contract they
felt they would lose a lot more money so it just wasn’t worthwhile.
Stated McGrath “We don’t want to put a company
out of business because…” He said they didn’t want the Company to go bankrupt.
“worthwhile” only if the Contractor made money; he offers no evidence whatsoever as to how
the public might have benefited from the decision.
days, but that’s all.
The forest fires occurred in late June, 2013. Coleman stepped down as a Director of HVP on March 10th, 2014 and entered the P.C. Leadership race on March 14. That’s a period of eight and one-half months in which the Minister wants us to believe nothing happened between the Government and HVP on this Contract. But the new owner of HVP needed only three days, following the purchase of the Company, to get the Minister’s attention and have him begin the Contract cancellation process.
How dumb does the Minister think we are?
clause permits the Contractor to cancel the work due to an “act of god” or on
account of extraordinary, extreme and unforeseen circumstances. Evidently, the fires were not serious enough to justify “Force Majeure”, otherwise this matter would have been disposed of last Fall.
Is it not simply the case that the Company was in breach of Contract, was faced with having its Bond called and only a political solution could save it?
Why don’t the Minister just come clean?
Revised Tender will have the effect of covering up exactly the final cost to the public Treasury of the
Government’s HVP decision.
servant who spent 15 years in the Government’s Office of Contracts and
Certified Cheques cashed by Government (Certified Cheques are a substitute for
Performance Bonds on small jobs) or had their Bonds called. “Yes”, said he, in my 15 or so years with
Tendering and Contracts, we took many Bonds and did force companies out of
The Minister and the Premier wants us to believe that HVP is somehow different. A paving company needs to be saved from bankruptcy, one that
ostensibly had invoked no legal action under the Contract to protect itself,
one that very likely had no right to be favoured in the first place. And the whole Government goes into overdrive
to save it?
of its former Owners, the politically influential Premier-in-Waiting, Frank Coleman?
officially asked to be let out of the contract, Coleman was no longer CEO.
was neither a CEO nor a director of the company, and we didn’t have any
dealings with him whatsoever, we were dealing with the contract company
themselves,” he said.
underwriter of the Bond by Frank Coleman, his
family or business associates following the sale of the Company shares were the same assets which securitized the Bond at the time it was returned. That is just one of the many important pieces
of information an independent arbiter would confirm.
the Government was prepared to undercut the Public Tendering Act to see it
yet, they were prepared to risk allegations of conflict-of-interest?
Was the Government’s decision completely above board?
odour of favouritism at the highest levels of the Government. The Premier and the Minister, rather than
allay our fears, have fuelled the issue with arguments that make no sense. They have placed the prospect of scandal in
full public view.
all due haste by a credible and independent third party possessed of the powers
a cloud of suspicion is unthinkable. It is inconceivable that Mr. Coleman,
himself, would want to be sworn in until the cloud has been removed.
damaged trust in the Premier and in his Administration.
a Supreme Court Justice can that trust begin to be repaired.