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”.  
__________________________________________________________

________________________________________________________________

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.   

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.

TEN YEARS AFTER MUSKRAT FALLS SANCTION – We will have to think abandonment of the Labrador Island Link

Put simply, whether Muskrat Falls come online or not, it cannot be relied upon. Without admitting their gross negligence at the start, Hydro is essentially saying that that we should try to salvage Muskrat Falls at an undefined cost and for for however short the duration it might operate.

THE PROOF MUSKRAT FALLS IS NOVA SCOTIA’S PROJECT

The substance of Hydro’s mission is to satisfy the contracts with Emera to get large amounts of power flowing into Nova Scotia for the betterment of that province and its ratepayers.  The Island could easily live without the Muskrat Fals project and in fact, other than for the onerous Emera contracts, NL ratepayers would be best off if it was abandoned and left to rust.

FIRST YEAR OF OFFICIAL ENERGY DELIVERY NOT QUITE WHAT EMERA BARGAINED FOR

PlanetNL52: Happy Anniversary Emera on 1 Year of Official Energy Delivery Not Quite What Emera Bargained For Despite all the bad news related to Labrador Island...

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.