MLA Alden McLaughlin, the former minister of education, responded in length to a statement put out by general contractor Tom Jones International last week, saying it was filled with ‘many inaccuracies and deliberate untruths’.
Tom Jones International walked off the construction sites of the Clifton Hunter and John Gray high school projects on 13 November because of a dispute with the government.
That lengthy statement, issued by Tom Jones International spokesperson David Legge last Tuesday, criticised the previous People’s Progressive Movement government for undertaking an ‘ill-conceived’ and ‘over-indulgent’ spending spree, among other things.
Mr. McLaughlin said he was astonished that Tom Jones would complain about government spending on the schools.
‘If this was a spending spree, they were the biggest beneficiaries,’ he said. ‘Why did they bid on the job if they had a philosophical difference with this kind of thing?’
Mr. McLaughlin defended the decision to build the schools because of the great need for them, not only as centres of learning, but also as community centres and hurricane shelters.
‘[The PPM administration] always knew that producing these schools, because of the money involved, was going to be a challenge to government’s budgetary process,’ he said. ‘There is only so much money you can access in any given year.’
After looking at ways of structuring the funding for the schools, Mr. McLaughlin said the team from the Education Ministry and government financial people concluded the way to fund it was over three fiscal years. He said Tom Jones International was well aware of the financial constraints of the funding and that they agreed on the schedule of payments.
‘They signed on the dotted line and everyone agreed.’
Mr. McLaughlin said the projects started off fine and that everything was going ‘swimmingly’ until just before Christmas of last year, when Tom Jones made major changes in its management structure.
‘When the new project managers came in, it was like night and day and what had been a very good relationship became acrimonious,’ he said. ‘We started getting stop orders all the time, sometimes two in one week.’
The change in demeanour, which Mr. McLaughlin said included harsh tones and vitriolic language, sent a clear message to the ministry that something was amiss.
‘It’s just not the way contractors committed to a project operate,’ he said, adding that he believes Tom Jones tried to use the possibility of bad publicity arising from a work stoppage before the then upcoming elections as leverage to ‘extract more money from government’.
‘The closer it got to the election, the worse it got,’ Mr. McLaughlin said.
Mr. McLaughlin said the Tom Jones statement issued last week contained several significant inaccuracies, one of which dealt with change orders.
The Tom Jones statement claims the Ministry of Education made more than 85 significant changes to the original plans, costing approximately $17 million.
Mr. McLaughlin said the statement was not correct.
‘Most change orders are initiated by the contractor,’ he said.
Mr. McLaughlin said the contract presumes certain reasonable conditions that a contractor will encounter and if there is something outside of what is considered reasonable – for instance if a contractor runs into hard rock when digging a foundation – they will submit a change order to cover the extra cost.
‘If the owner doesn’t agree and they can’t come to some sort of resolution… the item is put off to the side. That is what I’m told transpired [with Tom Jones International] in most instances.’
With relation to the change orders submitted, Mr. McLaughlin said the Ministry technical team concluded that ‘in the vast majority of instances… Tom Jones was vastly over-inflating the cost of these items’.
In addition, Mr. McLaughlin said Tom Jones was putting in change orders for items that had been eliminated from the plans during a value engineering process before the contract was awarded. The value engineering reduced the original tender bids from Tom Jones by $4.2 million on John Gray and $6.2 million on Clifton Hunter.
However, Mr. McLaughlin asserted that Tom Jones failed to do many of the value engineering components as they were supposed to and then put in a change order on the items.
‘So that’s why there is a big dispute over change orders,’ he said, calling claims by Tom Jones that government initiated the 85 change orders ‘complete and utter nonsense’.
‘My administration didn’t pay [for the change orders] and the current administration didn’t pay them, and there’s a good reason for that,’ he said. ‘There is going to be some money due to Tom Jones, but it is a vastly smaller sum than is being claimed.’
Lack of project manager
Mr. McLaughlin also took issue with an assertion in the Tom Jones statement that claimed the schools’ project manager left ‘before the first shovelful of dirt was scooped from the earth’.
‘That’s a total untruth,’ said Mr. McLaughlin, explaining that David Smith, who was the first project manager for the schools, left at the end of October, 2008.
‘When he left, they were pouring the roof on Clifton Hunter and John Gray was well off the ground.’
Mr. McLaughlin admitted that Smith’s leaving did cause some problems, even though David Bodden acted as interim project manager afterwards.
‘I’m not going to assert things were ideal with David Smith gone,’ he said. ‘There were some issues, but it took us a while to source a replacement.’
Another aspect of the Tom Jones statement irked Mr. McLaughlin: the claim that a wish list of non-essential items, such as a ‘four-star gourmet kitchen and a state-of-the-art recording studio suitable for producing the Beatles greatest hits’ grew as the project progressed.
Mr. McLaughlin said the recording studio was always on the plans and is in fact already built.
‘This recording studio is 94 square feet,’ he said. ‘It’s 10 [feet] by nine [feet].’
To date, the only extra cost in building the room involved special wiring needed in anticipation of recording equipment.
‘But Tom Jones in not responsible for fitting it out,’ he said. ‘If the government wants to say now that the special equipment costs too much, that is a legitimate claim, but Tom Jones wasn’t providing that.’
With regard to the kitchen, Mr. McLaughlin said it was not a gourmet kitchen, but an industrial kitchen. In addition to providing students with the ability to learn about cooking, the kitchen was necessary to provide another important function.
Both of the high schools are being built to serve as hurricane shelters as well, something Mr. McLaughlin said added 20 to 25 per cent to the cost of the building. Although he knew the schools could be built for less, he maintains that it would have been very short-sighted to build them as schools only and to ignore the well-publicised hurricane shelter problem.
‘The truth is, the country was and still will be short of hurricane shelter space,’ he said.
The industrial kitchen was necessary for the facility to serve as a hurricane shelter.
‘How do we expect to run a hurricane shelter for 1,840 people without an industrial kitchen,’ he asked.
Mr. McLaughlin was surprised that Tom Jones made an issue about the recording studio and kitchen.
‘They bid on a job that included these things, so what are they complaining about?’ he asked. ‘This is not change order stuff.’
Letter of comfort
Mr. McLaughlin also explained why Tom Jones was given a letter of comfort to help them secure a loan earlier this year.
‘In January of this year, they started to say they would have to shut the [building] sites down because they didn’t have the funds to keep it going,’ Mr. McLaughlin said. ‘This became a really big issue.’
At the time, Tom Jones had received all of its scheduled payments, but Mr. McLaughlin said they insisted they had to stay cash positive for the work they had done.
‘To their credit, they had really motored on the job,’ he said, noting that they were ahead of schedule at the time. ‘I guess they didn’t want to dig into their own pockets, and that’s fair enough.’
However, government was not in a position to pay any faster than the agreed upon schedule.
‘By this time, we were now in the throes of the global recession and there was no way we could go to Finance Committee and get more funding in the circumstances,’ he said. ‘We didn’t want the jobs to stop, so we had to think creatively for a means to keep things going.’
Cabinet agreed to give Royal Bank a letter of comfort in relation to a $10 million line of credit Tom Jones received from the bank.
‘It was in the government’s interest to get the jobs finished as quickly as possible and it didn’t cost government anything,’ he said.
Mr. McLaughlin questioned Tom Jones’ assertion that government did not have the means to pay for the schools.
‘Which contract has government ever not paid?’ he asked. ‘There might be contention and arguments and all of that, but you get paid. If they finish the job, they’ll get paid.
‘What they’re likely not going to get paid is a lot of their change orders,’ he said. ‘I suspect that is a large part of their beef.’