Former Cabinet minister Frank McField instructed National Housing and Community Development Trust manager Roger Bodden to prepare a contract giving Staunch Limited the contract for redevelopment of the Affordable Housing Initiative site off Eastern Avenue.
The project consisted of building 72 multi-storey apartments on the AHI site were many of the single family homes were destroyed by Hurricane Ivan.
The instructions were given in the form of a letter dated 10 May, 2005, the day before the general election that removed Mr. McField from office.
Mr. Bodden confirmed when asked last Friday that he had received the letter of instruction, but said the letter had actually been written on 12 May – the day after the election – and back-dated.
The text of the letter seems to give credence to Mr. Bodden’s comments.
Mr. McField stated in the letter, ‘Since I have been behind this project from the beginning, I would like to reassure the completion before my departure from office.’
Unless Mr. McField had known beforehand he was going to lose the election, he would not have known on 10 May that he had to depart his office.
On 12 May, government ministries were instructed by the Governor not to enter into any new contracts or agreements for works or services in light of the outcome of the election and the fact a new government would come into power.
Mr. McField apparently made the decision to select Staunch without consulting the NHCDT board of directors.
‘After carefully reviewing and much consideration into this matter, I have decided that Staunch Enterprises Bid is more cost effective,’ he wrote, making no mention of the board of directors.
Staunch was, however, recommended as one of two preferred bidders for the contract to re-develop the Eastern Avenue AHI site, according to a report submitted to the NHCDT by project manager consultant Andrew Gibb.
Mr. Gibb submitted the report, which is called ‘Appraisal of Submissions Received Report #2’, on 8 May.
K-Coast Development Ltd. was the other company recommended to be designated as a preferred bidder in the report.
Mr. Gibb recommended two other bids for the project not be accepted.
Staunch has been at the centre of controversy since it was revealed it was bidding on the AHI Eastern Avenue re-development project.
The company had no previous construction experience in the Cayman Islands.
Members of the Cayman Contractors Association (CCA) suggested in March the bidding process for the project was ‘a farce’ because they believed Mr. McField always intended for Staunch to get the contract.
Staunch is 60 per cent owned by local businessman Reynard Moxam and 40 per cent owned by Dag Egeberg, a Norwegian residing in Cuba.
Sources have indicated that Staunch was going to use labour out of Cuba to construct the AHI project.
In its bid however, Staunch only listed two employees, Mr. Egeberg and Eduardo Iragorri.
The report said Mr. Egeberg ‘claims to have wide experience in construction in (the) Cayman Islands’. Mr. Gibb noted that the claim was unverifiable ‘at this stage’.
He did note, however, that Mr. Egeberg ‘was apparently directly involved with the establishment and mobilisation of Vetromeccanniche Ivest Lda when it commenced the initial phase of the Affordable Housing Initiative.’
With regard to Mr. Iragorri, the report indicated he had Business Management degree from the University of Yucatan, Mexico.
Mr. Iragorri was scheduled to meet with the Caymanian Compass and two of the other bidders on the project in April but failed to show up.
In an interview last week, Mr. Gibb elaborated on Mr. Iragorri, with whom he had met.
‘I found him extremely capable, especially with regard to logistics and labour sourcing,’ he said. ‘He also had a good track record. He’s been a successful businessman.’
In Mr. Gibb’s report, all four bids were compared on several different criteria.
The four bidders were Staunch, K-Coast/CI Precast, Royal Construction and Myles Construction.
Mr. Gibb concluded in the report that the Myles Construction bid was actually prepared by Vetromeccaniche Invest Lta, a Panama-registered entity that was connected to the company that had gotten the earlier AHI single-family homes contract in 2003.
Three of the bids received were for the construction of 72 apartments, while the K-Coast bid was for 84 apartments.
The habitable areas of the apartments ranged from a high of 1,116 square feet on the Myles Construction bid to a low of 753 square feet on the Staunch bid.
However, it was in the cost factors where Staunch was better than the other bidders.
Staunch’s total development cost on the bid was CI$4.24 million, almost exactly one million dollars lower than Royal’s bid.
Myles bid was the highest at CI$6.69 million.
When it came to cost per square foot, Staunch was still the lowest at CI $47.50. Royal was the highest at $60.79 per square foot.
Sources have indicated that Staunch was able to bid lower because it was planning to use low-cost labour out of Cuba.
Cuban labourers did much of the construction work on the original AHI single family homes. One source close to the scene said those labourers made considerably less than other construction workers here in Cayman.
Another factor Mr. Gibbs report considered was completion date.
Myles Construction said it could complete the project by 1 June, 2006; Staunch by 11 July 2006; K-Coast by 21 November 2006; and Royal by 1 January 2007.
Howard Finlason, the managing director of Royal Construction, said his company took the bid ‘very seriously.’
Mr. Gibb pointed out in his report that Royal’s bid was the most complete of the four submitted.
‘We really had to sharpen our pencils to come up with the best scenario,’ he said.
Mr. Finlason said the bid was awkward because so many of the design specifications were left open, leading to difficult ‘apples and oranges’ bid comparisons.
For instance, the bid prospectus did not address the issue of durability standards.
Mr. Finlason said the Royal Building system, even though it cost somewhat more, was a better system in the long run because it was stronger, lasted longer and required less maintenance costs.
He also noted, that while Royal’s schedule did not have the project being completed until almost 1 January, 2007, the company’s phased approach would have had 22 units completed by May 2006, and another 21 more by August 2006.
Another bidder, Gilles Langlois of K-Coast Construction, said he had heard nothing officially about his company’s status as a preferred bidder.
‘It’s a shame we have to learn about these things from the press,’ he said. ‘It used to be that we’d get some sort of acknowledgement, at least thanking us for our bid.
‘We didn’t even get a note saying they’d received our bid. This country needs to get some etiquette and protocol back into the tendering process,’ he said.
The government has stated the AHI Eastern Avenue project is on hold until the Auditor General completes the forensic audit now being conducted into the dealings of the NHCDT.
Leader of Government Business Kurt Tibbetts said last week that he hopes to present a housing plan for the whole country that would incorporate a decision on the AHI Eastern Avenue site shortly after he assumes the role of Housing minister on 1 July.
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