Tuesday, May 13, 2014

Some documents relating to the Humber Valley Paving scandal

I have collected below some documents related to the Humber Valley Paving scandal for the convenience of those following the controversy.

Updated:  An ATIPP request outlining communications between Gene Coleman and Nick McGrath around the time of the deal.

The paving contract. (pdf)

The bond contracts and tender book. (pdf)  One tidbit that hasn't been reported in the media is that the bonding company was the Guarantee Company of North America.

The letter from Transportation and Works  (T&W) releasing HVP from the bonds. (pdf)

A list of all tenders since 1996 that were awarded to HVP. (link)

Here is a email sent to me from the director of comms at T&W in response to my request for all information sent to the Telegram about HVP in recent weeks.


Attached/enclosed is the requested information.

1) History of Relationship with Humber Valley Paving
The Department of Transportation and Works has had a long-standing relationship with Humber Valley Paving that dates back to 1996. In 2007, the company changed ownership and was purchased by a number of investors, which included Mr. Frank Coleman.  It is our understanding that Mr. Coleman has recently sold his shares and is no longer a shareholder.

Attached is a complete listing of all projects where Humber Valley Paving was the successful proponent.  In all cases a public tendering process was used and the company was the lowest compliant bidder.

For your reference, there has been approximately $1.2 billion invested in highway/road improvement initiatives since 2007.

2) Background Information
Enclosed is additional information on the scope of work completed by Humber Valley Paving, as well as background information on the bond.

Under the contract to construct and pave 80 kilometers of highway between Happy Valley-Goose Bay and Churchill Falls, 60 per cent of the work was completed.  The company was only paid for the work completed.  They were not paid for work remaining to be done.

Included in the $11.8 million paid to Humber Valley Paving is the following:
- 106,000 tonnes of “Class A” gravel out of a total of 146,000 tonnes
- 30,000 tonnes of “Class  A” was manufactured and ready to place
- 444,000 tonnes of “Class B” gravel out of a total of 508,000 tonnes
- 40,000 tonnes of “Class B” was manufactured and ready to place
- 15,900 tonnes of asphalt out of a total of 73,700 tonnes
- 935 tonnes of liquid asphalt out of a total of 4500 tonnes
- 3500 meters of guide rail, which exceeded the estimated 3300 meters
- 5,000 flag person hours out of a total of 10,000 hours
- 12,800 meters of guide rail adjustment out of 14,000 meters


There was no money to refund.   Bonds are in essence an insurance policy and are called when a contractor fails to meet the requirements of the contract – most often due to a bankruptcy.  In order to call on a bond, the contractor would have to be declared in default of the contract. That said, there is no guarantee that the Provincial Government would recover the entire amount of the bonds that are in place.  Also, the Provincial Government is still responsible for all costs up to the value of the original contract.

The Provincial Government could have called the bonds.  If we had, project timelines and the viability of the company may have been jeopardized.  It would have also likely led to the loss of direct and indirect jobs and potentially contribute to weakening industry and taking a competitor out of the provincial marketplace.

Instead, the Provincial Government opted to relieve Humber Valley Paving of its remaining obligations and re-tender the work as part of another major tender involving 80 kilometers of paving between Happy Valley-Goose Bay and Cartwright Junction.  By taking this approach, we are ensuring a competitive bid process and the project being completed on time and on budget.

The original tender scheduled for the completion of this road work for July 31, 2014 and that target is now August 31, 2014.


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