Gov’t spent $1.3 million to determine what it owed
Looking at it from one perspective, the Cayman Islands government spent $1.3 million to find out it owed another $3.5 million to its former high schools construction project subcontractor.
Viewed another way, that expense helped head off costly litigation over the issue that might have taken much longer to resolve and, therefore, have been even more expensive.
The end result is that government’s remaining outstanding payment issues with its former high schools subcontractor, Caribbean Mechanical (High Schools) Ltd. 2008, has been resolved for total payments of $5.5 million to the company. The additional $1.3 million payout went to firms that helped affect that resolution.
About $2 million of the $5.5 million total payment was given to Caribbean Mechanical back in 2011, prior to a final settlement amount being determined. So government’s final award determination due to Caribbean Mechanical was about $3.5 million.
In a response to an open records request from the Caymanian Compass on the issue, the Ministry of Education stated that both government and Caribbean Mechanical were left with serious issues in the wake of the firing of former schools general contractor Tom Jones International. Those issues included unresolved claims for payment to Caribbean Mechanical.
“In order to meet those challenges, [Caribbean Mechanical] and the [government] agreed a procedure for the expert determination of those claims, in order to avoid having to enter into protracted litigation against one another,” the ministry statement read. “That procedure has now produced this result, which the [government] has honoured and which is significantly lower than the original claim.”
Caribbean Mechanical chief executive Alan Roffey, however, did not necessarily subscribe to that view.
“The way that this thing has been conducted, I think court would have been a less expensive option,” Mr. Roffey said.
The settlement procedure with Caribbean Mechanical did not involve Tom Jones International’s claims against the government and vice versa, which are a separate matter.
That difficulty involved disputes over some 85 change orders in the project, which totalled more than $17 million, according to Tom Jones International. The Tom Jones contract was cancelled by government and the construction firm sued in late 2009.
Tom Jones International is seeking nearly $3 million from the government in its lawsuit for an amount the construction company said it was owed.
Costs of ‘expert determination’
An independent third-party evaluator was brought in to make a binding determination as to the costs owed to Caribbean Mechanical over the schools’ construction project.
Ben Nolan III of the Berkeley Research Group reviewed mechanical, electrical, plumbing and fire protection work for both Clifton Hunter and the new John Gray High School sites.
His firm was paid $915,668.75 for that review.
“The process was one of significant complexity,” the ministry stated, “requiring robust analysis and expert advice.”
In addition, David Benoit of Benoit Construction Management Services, who was hired in October 2009 to manage the government schools’ construction projects, also assisted the government in responding to Caribbean Mechanical’s claims for payment.
These services were provided within Mr. Benoit’s original contract agreement, the ministry said.
Additional payments during the negotiation process with Caribbean Mechanical went to the BCQS surveying firm.
BCQS had been involved in quantity surveying work on the high schools project from the start, according to the ministry’s response. Because of that role, government said they were in a “valued position to assist … in refuting claims made”.
Fees paid to BCQS related to the Caribbean Mechanical settlement issues totalled $147,488.
Attorneys from the firm Conyers, Dill and Pearman were also brought in during negotiations with the Berkley Research Group, which was a “quasi-judicial” proceeding, according to government. Their “discounted” fees totalled $243,280.97, the ministry stated.