Minister, premier stand by contract decisions

Ashley Fitzpatrick
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Humber Valley Paving not the only company released before completing work in Labrador

Humber Valley Paving has not been paid by the provincial government for any work it has not completed.
That point was made in payment information provided to The Telegram and repeated to reporters Thursday by Premier Tom Marshall and Transportation and Works Minister Nick McGrath, following a CBC report noting Humber Valley Paving was granted early release from a contract for roadwork on the Trans-Labrador Highway.

A fleet of vehicles parked outside the Humber Valley Paving office on White Lane Road in the Watson’s Pond Industrial Park area Thursday.
— Photo by Geraldine Brophy/The Western Star

Response to the story included a statement issued by Liberal MP Yvonne Jones saying the company — where incoming premier Frank Coleman had a leading role until March 10 — received “a fistful of cash” for work never completed.

“While Coleman was in charge, the government contracted him to pave 80 kilometres of highway for $19 million. Instead, the company only completed 20 kilometres, but still got paid 60 per cent of its contract, or $12 million. This simply does not pass the smell test,” said Jones, adding she was disturbed by information reported on the province’s dealings with the private paving company.

Liberal MHA Lisa Dempster also called the contract decision into question.

And provincial NDP Leader Lorraine Michael said in a statement she was similarly disturbed with the information available.

“I think this decision sets a dangerous precedent for dealing with contractors in the future, and I would like to see the auditor general examine the entire matter,” she said.

The NDP statement said a $9.5-million bond posted on the road contract had been returned to the company in full.

But according to the minister responsible, nothing could be further from the truth.

“One of the perceptions that’s out there in the general public is that government gave back the bond money to Humber Valley Paving. That’s a false statement,” said McGrath.

And payment made to the company, he said, was a reflection of the level of work completed.

As part of contract information previously provided by the Department of Transportation and Works to The Telegram, it was noted Humber Valley Paving was awarded a contract in May 2012 to pave the Trans-Labrador Highway from Goose Bay towards Churchill Falls, from kilometre 172.5 to kilometre 248.5.

The company did not complete the work as scheduled, but it did finish 20 kilometres to blacktop and widened the road bed, laying the groundwork for the rest of the highway section it was contracted to pave. It was paid $11.8 million.

McGrath said the failure of Humber Valley Paving to complete the full terms of its contract, valued at about $20 million, was largely the result of forest fires in Labrador West.

In June 2013, a large fire intersected the existing road between the Quebec-Labrador border and the area where the paving company was working, meaning the feed of materials and some equipment was interrupted, he said.

“(It) wasn’t the government’s fault and it wasn’t the company’s fault. It was a forest fire. It was an act of God,” Marshall told reporters, when asked about Humber Valley Paving.

“They have not been paid a penny for the work that has not been completed.”

The decision to release the contractor without direct penalty was a considered decision, McGrath said.

“If I didn’t (release Humber Valley Paving), there was a strong possibility that I was looking at that piece of work would not be completed. And by the time you go through the bonding agency, No. 1 you’re probably shutting down a company, you’re putting Newfoundlanders and Labradorians out of work, and you still don’t have your project finished. So it was in the best interest to make the decision that I made,” he said.

With the aim of staying as close to on time and on budget as possible, he said he decided not to hold Humber Valley Paving’s feet to the fire, to avoid any legal battle and, instead, to get the work retendered for the coming construction season.

Keeping the time tight is expected to help avoid cost escalation.

Packaging the smaller piece of remaining work from Humber Valley Paving with a separate piece of work already on tap for the coming season, is also likely to result in lower any costs to the province, he said, when compared with tendering only the work remaining  from the Humber Valley Paving contract.

“These are all things I weighed out,” he said.

This past fall, the province also released Penney Paving, based in Grand Falls-Windsor, from completing a little more than two kilometres of paving work for Happy Valley-Goose Bay.

And regardless of the need to re-tender, considering their work for the province since 1997, McGrath said he would have no hesitation awarding contracts to Humber Valley Paving in future.

Calls to the company for comment were not returned. A statement posted to the company’s website notes $10 million of work from undefined contracts on tap for Humber Valley Paving in the year to come.

afitzpatrick@thetelegram.com

Organizations: Liberal MP, Department of Transportation and Works, Trans-Labrador Highway

Geographic location: Labrador West, Goose Bay, Quebec-Labrador Grand Falls-Windsor Happy Valley

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Recent comments

  • contractor
    May 06, 2014 - 16:17

    Nothing wrong...ok then get down to facts? Construction bonds are a mandatory prerequisite on most all government projects to protect against adverse events that may cause disruption in overall job completion. QUESTIONS: Coleman said he sold Humber Valley (HVP). If true why hasn't he said to who? Coleman the director removed his name from HVP. Wonder if he was paid a chuck of the holdbacks before any of the unsecured creditors got paid. Internally, the directors changed within the family to get Frank Coleman off the books. The company was never sold...correct it if wrong! Whose name is signed on the dotted line as the guarantor of the bond. This is the bond that the PC party refused to call in. What’s the rest of the supposed hardships that HVP stated in this cry of poor pitiful me? Where’s is government’s paper trail documenting the issues as they occurred since HVP won this bid in 2012? Where are the "denied" force account claims that would have been submitted from HVP to request extras on the "supposed" hardships? FACT the forest fire in question occurred on the other side of Labrador. The contract was near Goose Bay not anywhere near the fires in Lab City. I could even give a benefit of the doubt. I understand that a contractor can run into difficulties beyond their control. Due to the fire give HVP an extension to complete the work on the contract. That would have been reasonable. Instead, this PC government gave HVP a complete “get out free card” to their new potential leader. FACT: Frank Coleman's son Gene meet with Nick McGrath asking to get "his company at the that time" released from a government contract with no penalties and no bond security being called in. Not one piece of official paper trail. To say this is ridiculous is an understatement. This is millions of dollars being mis-spent and it is not acceptable. This is no longer just a government mistake. It is now a premier elect using his association with the PC party completely to his personal advantage. Furthermore, it is at the detriment of Labrador. Nick McGrath and this PC Party should have called this bond. Contractors know the risks. Bonds are a needed part of the tendering process and you have completely screwed this over.

  • Leroy Parker
    May 03, 2014 - 09:15

    Once again, Jones shows her ignorance. Good job...

  • Maxwell J.
    May 02, 2014 - 10:28

    Fine article Ashley but what it is missing are the time lines. In order to put this in context, we need to know when the decision was made not just to pay out the $12 million but to release the company from its surety. Do those decisions predate Coleman's declared interest in the leadership? You might also ask for a copy of the contract itself. Unless it specifically eliminates 'force majeure' as a basis for non-compliance, then the company would have a legal case for release from its obligations (depending on the severity of the impediment that was beyond its control). Is there an engineering explanation for the discrepancy in the amounts paid out (i.e. 60% of the price for 20% of the work)? Doubtful. More likely perhaps is that the company was paid 100% of its overhead & profit on the job. If so, that suggest a far more understanding and accommodating Works and Services department than other contractors have experienced in their dealings with government. A simple solution - one that would best serve Coleman's and the public's interest - is to ask the Auditor General to review the file. If he says it's O.K., then - speaking as one member of the public - I would be completely satisfied.

  • Torey Nomore
    May 02, 2014 - 07:40

    Tory contractors paid off by government; reason number 4,269,103 that I cannot vote Tory no-more.

  • Laughable
    May 02, 2014 - 07:24

    I can't wait for the story to come out about the Liberals, Then they won't be so quick, to tar everyone with the same brush.