“How much has been paid out, how much is left (if any), what will it cost the taxpayer to complete the project, and when will it be completed? What will happen with the bond? Has this action just served to bankrupt the Union? How much longer does the Bermuda taxpayer have to put up with this gross incompetence of the PLP government?” Patricia Gordon-Pamplin
The above statement in yesterday's RG quite succinctly sums up what lays ahead of us after the Berkeley contract was cancelled.
This decision - probably the only one the Government could make, but shouldn't have put itself into the position to have to make - is going to have financial, legal, political and reputational impacts - and they’re not exclusive of each other. The implications of this are going to play out for years to come in the courts, arbitration and at election time - whenever that is.
The cost is now going to skyrocket as any new contractor is going to demand a premium price to finish the job on short notice, and also will want to go back and check the work that has been completed – adding more time and money to the current bill of over $100M. The new contractor surely won't want to be liable for Pro Active's work. Any contractor who comes in to bail out the Government is going to demand the world. Government put themselves in the weakest of positions but we’re the ones who are going to pay.
Derrick Burgess may have preferred not to comment so far but he'd better be preparing his comments for the BIU's membership. When the union head and PLP MP decided to expose the union to $6.8M in claims he made a decision to support his party's interests over that of his members - a prime example of the conflict inherent in his role as both an MP and head of the island's largest union.
One of the biggest questions remains - and there’s a lot of them - what the legal status and validity of the bond is? Whatever the answer, there’s a problem for not only Mr. Burgess, but also the Premier.
There’s two possible scenarios…but only one course of action the Government will take:
Scenario 1 - An invalid bond
If the bond doesn't exist, then the Premier has some serious explaining to do about why $700,000 was reimbursed to Pro Active and why he authorised that. Mr. Scott, as the Minister or W&E at the time has to answer that question. He also has to be accountable for violating the policy (put in place by the previous Government) to protect the taxpayer from cost overruns. Maybe he’ll start talking about ethics as being distinct from legality.
Scenario 2 – A valid bond
If the bond is valid it almost certainly has to be called in now that the contract has been terminated due to underperformance and cost overruns, although Pro Active will surely be pointing the finger at the Government as the cause of their problems. Without seeing the specific policy wording, it is reasonable to assume that this scenario is exactly what a performance bond was required to protect - the downside for taxpayers.
The Course of Action
If the bond is called in the union’s membership are going to have to pony up $6.8M. Let's say that again. If the bond is called in the union’s membership are going to have to pony up $6.8M
There is no way that a Progressive Labour Party Government will call in a valid bond and remove $6.8M in assets from the union, the backbone of PLP support. Not a chance. Zero. No way. That would be the end of the political futures of this whole crop of PLP MPs. The membership would be looking for blood and you'd have all out war between the PLP and its base.
Government are surely frantically devising a way, if the bond is indeed valid – which is far from certain – to justify not calling it in. Anyone who ever thought that this bond would ever be invoked is more of a dreamer than our Premier. The quid pro quo seems to have been:
Government policy (inherited UBP policy) mandated a bond, so the Government asked their backbencher head of the union to put together a company to provide the bond, knowing full well that it will never be invoked and the union’s assets were not really at risk, and give a gift of $700,000 to Pro Active. Everybody wins…except the taxpayer that is.
If Government had listened to the W&E technical advisors at the beginning, the Opposition two years ago, the general public, anyone except their spin doctors, this whole situation could have been prevented from the current disaster that it is.
Instead two PLP Governments treated the issues at the Berkeley construction site as a political problem, trying to manage it from a public relations perspective…creating a much harder problem to resolve today.
Projects run over budget and delays etc. happen. That’s not unexpected. How you react to this is what separates leaders from the pretenders.