$26 mil. overrun on govt building

The Nassau Guardian

$26 mil. overrun on govt building

The cost of the new government complex on John F. Kennedy Drive that was budgeted at $5.8 million when a contract was signed with Holiday Industrial Builders in 2004, skyrocketed to more than $32 million as a result of “wastage” by the Ingraham administration, Minister of Labour and National Insurance Shane Gibson said yesterday.

Gibson also said the former government’s decision to terminate a contract with Rev. Lloyd Smith, the company’s principal, “without cause” led to enormous delays.

As a result of the delays that came with the contract termination, taxpayers will also have to pay $7.8 million in additional interest, the minister said.

He said the $32.6 million figure was up to December 2013. When electrical and other repairs are factored in, the final cost will be even more, according to the minister.

Gibson revealed the information to The Nassau Guardian as a row erupted over the Christie administration’s decision to award a new $20 million contract to the same construction company.

The new building will house the Ministry of National Security. It will be constructed next to the existing one, which is where the Office of the Attorney General is now located.

Smith was advised on November 4, 2008 that the Bahamas Mortage Corporation decided to terminate the agreement for the building “effective immediately”.

In a letter to him, then Permanent Secretary in the Ministry of Works Anita Bernard invited Smith to submit claims for compensation in accordance with the agreement.

One week later, Acting Financial Secretary Colin Higgs wrote Algernon Cargill, the then National Insurance Board director, advising, “The Ministry [of Public Works] is presently in discussion with Jones Construction Company with respect to complete the building.”

In the House of Assembly weeks later, then Prime Minister Hubert Ingraham advised that the contract had skyrocketed to over $14 million due to “defective work” and material that had disappeared from the site.

The matter went to arbitration.

According to Gibson, Smith got a $700,000 payout after it was determined his contract was wrongfully terminated.

“There was no finding of sub-standard work made by the arbitrators,” Smith’s lawyer, Kelphene Cunningham, later wrote in legal correspondence.

Cunningham also advised that the material that had been held “in storage” by Holiday Industrial Builders was returned to the Bahamas Mortgage Corporation.

“Ingraham’s cessation of the contract was purely for political expediency,” she wrote.

Both the current and former administrations reported repeatedly that there were significant problems with the building, which resulted in tremendous cost to taxpayers.

Selective bidding

Gibson said the government had no problem awarding Smith a contract for a new government building next to the existing building because arbitrators found that he was wrongfully terminated.

The minister said the $20 million contract was awarded after a selective bidding process.

He said such a process is not unusual.

In the face of opposition criticisms over the recent award of a contract for the new building on John F. Kennedy Drive, Gibson said, “We did more than they (the Ingraham administration) did.

“We went out to tender. They did not go out to tender with Jones Construction for the same building they are talking about that they terminated Smith on.

“They gave a $8.6 million contract to Jones Construction.

“Lloyd Smith had a performance bond in place and he only had $4.6 million left in his contract to finish the building.

“If they had terminated him for cause, what they would have done is call in the bond. The letters of termination clearly state that it was not for cause so he was able to cash his bond back in.”

Gibson called opposition members “hypocrites” for criticizing the government over the new contract award.

Gibson said the Ingraham administration used selective bidding to award contracts for the Critical Care Block, the Ministry of Education building, the Ministry of Health building and the administrative complexes in Freeport and Abaco.

“They were all financed by NIB and all had selective tendering,” he stressed.

“They were done under the FNM administration, so I don’t understand why they want one set of rules to apply to them and another set to us. It shows hypocrisy.”

On Tuesday, former Minister of Works Neko Grant said it is regrettable that the government is replicating the John F. Kennedy Drive building.

“Only the good Lord knows why they would do that,” he said when contacted for comment.

“It’s very, very strange that a contractor who couldn’t finish a building in two and a half years would be awarded a contract to build a replica. It’s really unacceptable.”

But Gibson said the opposition is overlooking the fact that arbitrators determined there was no wrongdoing on Smith’s part.

He insisted the selective bidding process was fair and promised to soon table documents in the House of Assembly in relation to those bids.

Gibson also assured that NIB money is not being put at risk.

“NIB money is never at risk because it is always paid back by the government,” he noted.

“NIB’s returns are guaranteed. The only way NIB would be exposed is if the government goes bankrupt.”

 

 

 

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