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”.  


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
“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
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
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”.
practices are, at best, a corruption of an important public policy.
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.   

Des Sullivan
Des Sullivan
St. John's, Newfoundland and Labrador, Canada Uncle Gnarley is hosted by Des Sullivan, of St. John's. He is a businessman engaged over three decades in real estate management and development companies and in retail. He is currently a Director of Dorset Investments Limited and Donovan Holdings Limited. During his early career he served as Executive Assistant to Premier's Frank D. Moores (1975-1979) and Brian Peckford (1979-1985). He also served as a Part-Time Board Member on the Canada-Newfoundland Labrador Offshore Petroleum Board (C-NLOPB). Uncle Gnarley appears on the masthead representing serious and unambiguous positions on NL politics and public policy. Uncle Gnarley is a fiscal conservative possessing distinctly liberal values and a non-partisan persusasion. Those values and opinions underlie this writer's views on NL's politics, economy and society. Uncle Gnarley publishes Monday mornings and more often when events warrant.


Bill left public life shortly after the signing of the Atlantic Accord and became a member of the Court of Appeal until his retirement in 2003. During his time on the court he was involved in a number of successful appeals which overturned wrongful convictions, for which he was recognized by Innocence Canada. Bill had a special place in his heart for the underdog.

Churchill Falls Explainer (Coles Notes version)

If CFLCo is required to maximize its profit, then CFLCo should sell its electricity to the highest bidder(s) on the most advantageous terms available.


This is the most important set of negotiations we have engaged in since the Atlantic Accord and Hibernia. Despite being a small jurisdiction we proved to be smart and nimble enough to negotiate good deals on both. They have stood the test of time and have resulted in billions of dollars in royalties and created an industry which represents over a quarter of our economy. Will we prove to be smart and nimble enough to do the same with the Upper Churchill?


  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.