The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cavalier Construction yesterday said it had given “formal legal notice” to the Public Hospitals Authority (PHA) that it was taking their $5.5 million dispute to arbitration, accusing it of being “disingenuous” in demanding that the contractor ‘prove its claim’.

Accusing the PHA of employing “stalling tactics” in relation to their differences over the Princess Margaret Hospital’s Critical Care Block construction, a senior Cavalier executive said it had been provided with ample documentary evidence to support the contractor’s claim.

Steven D’Alewyn, the company’s chief financial officer, told Tribune Business in a statement: “The plain truth is that extensive information regarding this claim was provided to both the PHA and their advisors during the course of the work dating back to September last year.

“We again submitted detailed submissions and calculations in respect thereof over two months ago. We were informed to expect a professional, thorough and non-partisan response from the contract administration team to our last submission. That response has never been received.

“Accordingly, we consider it highly disingenuous for the PHA to go on public record asking us to prove our claim.”

Mr D’Alewyn was responding to Herbert Brown, the PHA’s managing director, who had previously challenged Cavalier, via Tribune Business, to provide documentary evidence to back its claim.

Alleging that the contractor had failed to do so, Mr Brown had branded Cavalier’s charges as “absolutely untrue”.

As revealed by this newspaper, the contractor is claiming $5.5 million for the ‘extension of time’ to complete the Critical Care Block and the final 5 per cent of the contract sum by the Government-owned PHA.

Cavalier is alleging that it has not been paid for work done on the Critical Care Block since November 2013, and is effectively funding ongoing work from its own pocket,

It is alleging that the PHA is simply refusing to recognise the validity of its claim, a charge repeated yesterday.

“Faced with stalling tactics, delaying tactics, and with the PHA and its consultants wrongly refusing to entertain - much less recognise - our entitlements, Cavalier has been left with no alternative but to invoke the dispute resolution provisions under the contract,” Mr D’Alewyn said.

“Cavalier some weeks ago sought mediation of the issues and extended an initial offer to agree on a mediator, which offer was met with no response at all from the PHA.

“Mediation now having failed solely because the PHA has declined to participate, Cavalier is proceeding to arbitration and has given formal legal notice thereof to the PHA requiring the PHA to concur in the appointment of an arbitrator to hear and decide the disputes.”

When contacted by Tribune Business yesterday, Mr Brown said he was in a meeting and could not comment.

He referred this newspaper to a PHA spokesperson who, despite being given extensive details on the matter and told of this newspaper’s deadline, did not respond before press time last night.

Mr D’Alewyn said Cavalier would also seek reimbursement of its dispute resolution costs, which he described as “substantial and will ultimately fall on the Bahamian taxpayer”.

He added: “The building has been completed for some time and is fit for purpose subject to ongoing design changes. This important facility was scheduled to open in 2013, and is unlikely to come fully on stream for essential health care until 2015.

“The chairman of the PHA recently proclaimed that delays were attributable to insufficient staffing and to problems in securing financing for the equipment. No mention was ever made to the structure and design remaining incomplete long after the project was due to be finished.

“Given that further important phases of this hospital are also planned for the betterment of Bahamians, one is given to wonder when these might ultimately come on stream.”

Mr D’Alewyn said the PHA’s consultants recently cited a photo of a nail sticking out from a pavement as one reason why the Critical Care Block construction could not be passed as complete.

“Can this really be a significant cause of delay by the contractor in opening this facility? Such a contention is frankly absurd,” Mr D’Alewyn said.

“It is equally absurd to suggest in the circumstances which have prevailed since the start of construction that the extensive delays are attributable to Cavalier.

“The proof is already there for all to see - provided they have a mind to recognise it. The building stands proudly on Shirley Street as a testament to the Bahamian construction industry.”

Richard Wilson, Cavalier’s managing director, told Tribune Business in a previous interview that the Critical Care Block construction was still not complete, despite the PHA having occupancy of the laboratory and administrative areas since November 2013.

Shedding new light on why the Bahamian people continue to wait for access to quality, affordable healthcare on life-saving matters, Mr Wilson said constant design changes - especially in the mechanical and electrical areas - had delayed completion.

The Critical Care Block, he added, was supposed to have been a 20-month project that was completed in June 2013. But work was still required some 15 months later, which Mr Wilson said was equivalent to a 75 per cent time “overrun”.

Hence Cavalier’s claim for an extension of time payment, with the final 5 per cent balance of the contract sum - something that is normally retained until confirmed completion - also outstanding.

That final 5 per cent sum is equivalent to $2.4 million, and represents Cavalier’s profit margin on the project. Together with the extension of time payment, the contractor is alleging that the PHA owes it some $5.5 million.

With three months having elapsed since the $5.5 million claim was calculated in May, Mr Wilson said the meter was effectively continuing to run, with Cavalier staff and sub-contractors still on-site at the Critical Care Block.

The Cavalier managing director said the “extension of time costs” and design changes had effectively increased the cost of a $52.8 million contract to closer to $60 million, imposing an extra burden on the Bahamian taxpayer and Treasury at a time they can least afford it.