Part one: Haste, politics and intrigue: The perfect B.C. storm
By Dermod Travis
In 2009 – with the B.C. election fast approaching – the B.C. government went on a full-court press to get the Port Mann / Highway 1 improvement project deal signed and past the point of no return.
Their haste may have contributed to at least one bad judgment call that ended up costing taxpayers hundreds of millions of dollars.
Now, with the 2017 election on the horizon, history is repeating itself, but this time with two megaprojects: Site C and the Massey Tunnel replacement project. And with many of the same Port Mann players in recurring roles.
Yet, there’s one aspect to these multi-billion dollar projects that remains shrouded in mystery for most British Columbians: who’s in charge?
Who calls the shots on virtually every decision – from design changes to cost overruns – once the shovel hits the ground? The taxpayer’s foreman, if you will.
Is it the minister responsible? A deputy or assistant deputy minister?
Not necessarily.
On major projects more often than not, the government assigns the job to someone in the private sector.
How did B.C. end up in the peculiar situation of having to rely on the private sector to oversee construction companies working on public sector infrastructure projects, potentially signing off on billions of tax dollars in cost overruns along the way?
Public Safety Canada’s 2012 report “Economic Sectors Vulnerable to Organized Crime: Commercial Construction” offers a clue.
“In 2001, public agencies in B.C. assumed responsibility for their own procurement.
Our sources in B.C. indicate that government officials responsible for procurement lack the requisite expertise in relation to commercial construction projects.
Many of those who formerly had the expertise have retired or moved on to the private sector.”
It’s one reason why the public doesn’t always get to hear about the backroom wheeling and dealing that comes with some of the projects.
Case in point: that mad dash to wrap up the Port Mann Bridge / Highway 1 deal before the 2009 election.
It was the perfect storm of haste, politics and intrigue.
Consider the 53-days from January 23 to March 17, 2009.
The we have a public-private partnership (P3) deal announcement cancelled with 18-minutes to spare. We really have a deal this time redux on January 28. We hold a pile-driving photo-op to show we mean it on February 4. P3 deal falls apart on February 24.
We announce a new deal on February 27 and put it all to bed with everyone’s John Hancock on a design-build contract on March 17.
This wasn’t a toaster the government was buying.
The Port Mann project is called “the largest transportation infrastructure project in B.C. history.”
The $2.398 billion fixed-price contract with the construction team Kiewit & Sons/Flatiron General Partnership runs more than 1,000 pages and should be materially different than the intended P3 deal.
One would have expected lawyers from the Crown corporation responsible for the bridge – the Transportation Investment Corporation (TIC) – and Keiwit/Flatiron to pore over the details, clause by clause.
And it wasn’t just the contract that was of concern back then.
According to TIC’s 2008/09 audited financial statements – statements that are not posted to its website – the Crown corporation’s accounts payable stood at $104.2 million for the fiscal year ending March 31, 2009.
The bill for capital costs totalled $97.8 million – “mainly for work done under the design-build contract.”
It’s a hefty sum given that not much of anything had taken place over the previous 14-days.
While work was underway later in 2009, ground wasn’t broken on the site until February 2010, according to the 2013 third quarter edition of Kieways, a Kiewit corporate magazine.
By that point Kiewit/Flatiron had been paid close to $482.7 million.
The 2009 payables also included a $6 million cancellation fee for the P3 team, “when the P3 agreement was not reached.”
The team – Connect B.C. – was comprised of Kiewit, Flatiron, Transtoll and the Australia-based Macquarie Group.
Something about those 2009 statements set-off alarm bells for someone in government, though, and that someone was in a position to demand an explanation.
Dermod Travis is the executive director of IntegrityBC.
