Humber Valley Paving should've paid penalty, Lisa Dempster says
Liberal MHA upset province chose not to call in bond after paving contract left unfinished
A Liberal MHA says the provincial government let a company off the hook after it failed to complete a big paving contract in Labrador.
Humber Valley Paving had been awarded the $20-million tender last year to complete about 80 kilometres of the Trans-Labrador Highway.
But the company only completed, and was paid for, about 60 per cent of the work, or roughly $12 million.
As part of the bidding process, the company also had to secure a $9.5-million bond, or insurance, against the possibility it might not be able to finish the job. The province could have called in that amount when the contract was terminated, but chose not to.
Lisa Dempster, who represents the district of Cartwright-L'anse au Clair, said that's unacceptable.
"It seems like government is handing out taxpayers' dollars like candy," she said. "We blatantly got another huge case here of fiscal mismanagement (of the) public purse. Ten million dollars is not a small chunk of change."
Dempster said companies run into issues all the time with contracts, but she said the reputable ones suck it up and trudge on through.
Bonds serve purpose
She said bonds are in place to deter and stop companies from being able to walk away from such important contracts.
"When people are in business you have good years and you have bad years. And when you have bad years you take that bump on the nose and you move on," she said.
"In business, there's always unforeseen things that happen when you do work like this. But you have to be responsible and accountable when you bid on tenders. I'm sure other businesses would say, 'Well, gee, I wish I had the luxury a number of times to fall back on government and have them bail me out."
Humber Valley Paving cited several reasons why it couldn't finish the work, including the well-documented forest fires in Labrador last year that, it said, delayed the arrival of equipment and workers.
The company first asked the province to cover extra costs associated with that, but was turned down. Its alternative plea to be released from the contract altogether, however, was approved — with no penalties.
Dempster said she's been contacted by several small businesses in her district that are still owed money by Humber Valley Paving.
"Just like one gentleman said to me the other day: 'We're not gonna last too long if we continue to have companies like that come around to do work in our area.' "
But Dempster said that makes no sense.
"I don't know how it was done to satisfaction when only 60 per cent of it was done."
She said she's also concerned about the further delays caused by Humber Valley Paving's actions.
"We have waited far too long for this vital piece of work to be done (on the Trans-Labrador Highway). This means yet another delay, we've got to go through a tendering process again, and how much is that gonna cost? And how long of a delay does it mean?"
McGrath, meanwhile, is defending the decision to not exercise the option to call in the $9.5-million bond.
"We don't want to put a company out of business, because if you take their bonds away they could very easily be put out of business for future work," he said. "If you do that all you're doing is putting Newfoundlanders and Labradorians out of jobs and that's not what government is about."
No dealings with Coleman
Premier-in-waiting Frank Coleman was the CEO and major shareholder in Humber Valley Paving when the company ran into trouble with the contract. But McGrath said Coleman was no longer in that position when the company officially asked to be let out of the contract.
"Frank Coleman 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.
Coleman resigned his position as a director of the company three days before a request was issued to government to cancel the contract.
Dempster, meanwhile, says the $9.5 million could've done a lot for districts like hers.
"Many can't begin to understand the basic infrastructure needs that we still have in Cartwright-L'anse au Clair, like water and sewer," she said.
"Man, when I think of what we could do with $10 million, and this is the kind of stuff that's happening, it just leaves you very, very infuriated."