Duguay: Port blamed in report

Auditor General Dan Duguay does not understand why Burns Conolly is so upset with the Special Report his office did on the Royal Watler Cruise Terminal.

‘Right from the start, we never saw this as negative to the Burns Conolly Group,’ he said in an interview last week. ‘We wanted to put the blame for the problem on the Port [Authority] management.’

The Burns Conolly Group acted as project manager for the construction of the Royal Watler Cruise Terminal.

Mr. Duguay’s comments came after Mr. Conolly requested Governor Stuart Jack investigate Mr. Duguay, his office and Port Director Paul Hurlston with regard to the making of the report, which was issued in January 2006. The Public Accounts Committee started its investigation into the matter last month, during which testimony was given that contradicted some of the conclusions made in the report.

Despite requests made by Mr. Conolly and Misener Marine Construction Inc. for the report to be withdrawn or changed, Mr. Duguay held firm that it wasn’t his place to change the report, and that any new evidence would be included in the PAC’s report when its investigation is completed.

The original report comes to the overall conclusion that although the project was viable, it was poorly planned and managed; that procurement activities did not secure the best value for money; and that there was strong evidence of overcharging. Mr. Duguay also stated in the report that he believed the project could have been completed for at least $4.2 million less than the final project amount and that there were significant corporate governance issues that needed to be addressed to ensure proper planning and accountability in future major capital projects.

The overall criticisms, Mr. Duguay said, are aimed at the Port Authority management, not the Burns Conolly Group.

‘I think if you read the original report now, you won’t come away thinking it was very negative of Burns Conolly,’ Mr. Duguay said. ‘We clearly put the fault on the Port Authority.’

In addition, the report never questioned the quality of the project, Mr. Duguay said.

‘[Mr. Conolly] says he did a good job; we don’t disagree,’ he said, adding that nowhere in the report are the fees paid to the Burns Conolly Group questioned as being too much.

In the press release issued last week, the Burns Conolly Group disagreed with earlier statements made by Mr. Duguay that he had made 60 or 70 changes to the draft report as result of meeting with Mr. Conolly about the matter. Mr. Conolly only believes there was one substantive change and that other changes were only grammatical or minor.

Mr. Duguay conceded that many of the changes were minor or editorial, but he believes the final report changed more significantly.

‘We substantively changed the whole approach we had, based on the contact [Burns Conolly] initiated,’ he said.

As is a matter of policy, all of the changes made in the draft report, no matter how small, were sent to Port Director Paul Hurlston to review.

‘That’s how we know how many changes there were,’ Mr. Duguay said.

Letter from Port Director

Mr. Conolly has criticised the letter written by Port Director Paul Hurlston to Deputy Auditor General Garnet Harrison about the draft Royal Watler Cruise Terminal Report.

In that letter, Mr. Hurlston stated the conclusions of the report were accurate and he offers reasons for the failure in the corporate governance system. He also offered an explanation as to why there was a lack of communication between the Port Authority and the Burns Conolly Group.

Mr. Duguay said Mr. Hurlston had the opportunity to revise his letter after the changes were made to the final report as a result of the meeting with Burns Conolly. Mr. Hurlston declined to change the letter.

‘Paul Hurlston not only had a chance to change the letter he sent, he had the right to insert a comment in the report wherever he wished,’ Mr. Duguay said. ‘He chose not to, for whatever reason.’

Since the final report came out, Mr. Duguay has never heard a word of complaint from anyone at the Port Authority saying the report was not accurate.

‘That’s one of the reasons we believe we got this right,’ Mr. Duguay said. ‘We find it interesting that the party we blamed the most for the problems hasn’t complained and the party we didn’t blame has. I think the most we criticised Burns Conolly about is that he didn’t communicate with his client very well.’

Communication breakdown

Mr. Hurlston maintained in his letter to Mr. Harrison that ‘one of the difficulties that the Royal Watler Cruise Terminal project experienced was that the project manager, due to other factors, was instructed and answerable to certain members of the Board of Directors.’ Mr. Hurlston does not identify those directors. As a result of this, Mr. Hurlston said the Port Authority was ‘circumvented from the decision-making process.’

In a written submission to the PAC, Mr. Conolly refuted the allegation that the Port Authority management had been circumvented from the process. Mr. Conolly said Mr. Hurlston was invited to all meetings held with the contractors on the project, and that he or Deputy Port Director Clement Reid only attended 13 of 23 meetings with Misener Marine concerning the marine works and only three of 66 meetings with Hurlston Ltd. concerning the upland works.

In his letter to Mr. Harrison, Mr. Hurlston did direct the auditor general to section 6.10 of the original report, which dealt with the erosion of distinction between the Port Authority and the Ministry of Tourism, Environment, Development and Commerce. Leader of the Opposition McKeeva Bush was both Chairman of the Port Authority and minister responsible for the Port Authority at the time. Mr. Hurlston suggested that was the core issue that caused the failures in the system.

One of the problems created by the breakdown in communications was compounded by not having change in scope variations properly documented.

Mr. Conolly said there was email correspondence back and forth between his company and the Port Authority, and that the Port Authority even initiated most of the changes.

However, Mr. Duguay pointed out that by Mr. Conolly’s own admission, this did not happen in every case.

‘In my opinion, this shows a clear lack of communication,’ Mr. Duguay said.

Change in scope

One of the Burns Conolly Group’s main contentions is that Mr. Duguay did not realise there had been a significant change in scope in both the marine and upland works on the project after tendering.

During the four-hour meeting – in which Mr. Conolly was accompanied by Mr. Bush – that took place to discuss the draft auditor general’s report the issue of the change in scope never came up, Mr. Duguay said adding that subsequent written submissions did not bring up the change of scope issue either.

‘He now says there was a big change in scope, but he didn’t tell us about that then.’

PAC hearing continues

PAC Chairman Osbourne Bodden said Friday he expects the rest of the testimony in the matter to occur in a PAC hearing on 27 May.

Those still scheduled to testify include architects CGMJ Ltd.; Mr. Bush, and Cabinet Minister Charles Clifford, who was Deputy Chairman of the Port Authority at the time.

Mr. Bodden said Hurlston Ltd. had been asked to testify, but it had declined. He said the decision has not been made as to whether to push the issue and require its testimony.

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