The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

China Construction America (CCA) has accused Baha Mar of violating their contract by “improperly forcing” it and Bahamian contractors to finance “thousands” of work changes at the $3.5 billion project themselves.

Jun Li, a CCA (Bahamas) vice-president, alleged in a July 16 affidavit that “significant delays” to Baha Mar’s completion had resulted from “performance issues’ that he blamed on the developer.

These ‘issues’ had created “multiple disputes” between CCA Bahamas and Baha Mar, with the latter allegedly “rejecting out of hand” almost 50 certified requests for time extensions from the contractor.

The extension requests, Mr Li said, stemmed from changes to the construction design or scope of works that Baha Mar wanted CCA (Bahamas) to make.

Yet he claimed that Baha Mar “has never agreed to a single extension of time” or request for extra payment to accommodate the extra work.

While CCA (Bahamas) had previously claimed Baha Mar owes it more than $140 million, Mr Li confined this sum to “over $100 million” in his affidavit.

And apart from the $72.6 million the contractor is claiming for work completed between February-May 2015, CCA (Bahamas) is also focused on the $67 million worth of retainage funds that will be due to it upon “substantial completion”.

Giving CCA (Bahamas) version of the events that led up to its failure to complete the Baha Mar project on time, and on budget, Mr Li alleged: “From the outset of the project, Baha Mar failed to provide a completed design in accordance with the schedule incorporated in the [construction] contract, leading to a delay in the awarding of Work Package Contracts.

“Baha Mar eventually terminated its original design team, hiring a replacement architect to revise and complete the project design. This caused significant delays.”

Mr Li said changes to Baha Mar’s hotel brands (from Starwood to Hyatt and Rosewood, and then the switch to SLS from Mondrian) had also forced design changes to accommodate the new operators’ requirements.

There were delays in hiring Bahamian and other contractors to perform specific work packages, and Mr Li alleged: “Baha Mar frequently extended the negotiation process with Work Package Contractors, seeking price concessions or design revisions that would lower the apparent cost of construction.

“As a result of design-related issues, thousands of Constructive Change Directives (CCDs) were issued by Baha Mar directing CCA Bahamas to perform the work differently than already designed.

“In violation of the terms of the contract, the CCDs did not contain an estimate of the cost and time associated with the change or any method for payment - meaning that CCA Bahamas or a Work Package Contractor would improperly be forced to fund the changed work until Baha Mar agreed to a Change Order.”

Mr Li’s affidavit, which rebuts a host of Baha Mar allegations about CCA Bahamas’ poor performance, effectively blames alleged project mismanagement for the woes that have led to the current impasse over the $3.5 billion development.

With CCA Bahamas clearly neither accepting, nor admitting to, any responsibility for three missed opening deadlines, Mr Li alleged that Baha Mar sometimes “forced the performance of changed or additional work” without issuing the necessary CCD.

When this occurred, the contractor responded by issuing a Change Request Form (CRF), which sought payment and time extensions due to the extra and changed construction work.

“In all, well over one thousand CCDs and CRFs were issued throughout the project,” Mr Li alleged. “For the most part, Baha Mar did not process the CCDs and CRFs in a timely manner, with many lagging for months or years.

“Even now, many CCDs and CRFs remain unresolved because Baha Mar has failed or refused to address them in a timely manner.

“Despite the many design changes and other actions by Baha Mar that impacted the time for performance, Baha Mar has never agreed to a single extension of the time for completion of the project,” Mr Li added.

“As a result of Baha Mar’s absolute refusal to grant time extensions, CCA Bahamas submitted more than three dozen certified claims for time extensions - all of which have been rejected out of hand by Baha Mar.

“Baha Mar has occupied project areas - to the exclusion of CCA Bahamas - without issuing appropriate Substantial Completion Certificates or other agreements as required by the contract, thereby refusing to address required issues as to responsibility for maintenance and release of retainage.”

Mr Li said another arbitration hearing over the two sides’ claims and counter-claims had been set for Thursday, August 6, although its occurrence may depend on whether the Supreme Court delivers a verdict on the Government’s Baha Mar winding-up petition prior to that date.

The CCA Bahamas executive said Baha Mar was claiming that the contractor should return to it the $54 million paid out in late 2014 “in partial resolution” of the CCD claims, because completion - and the March 27 opening date - had been missed.

Yet CCA Bahamas is counterclaiming by seeking a Disputes Resolution Board (DRB) verdict on the outstanding CCD and CRF claims, “as well as a ruling with respect to its entitlement to an extension of the time for performance to June 30, 2015, as a result of events occurring through October 2014”.

Mr Li alleged that Baha Mar owed “millions of dollars in subsequent progress payments” on top of the $72.6 million that the developer’s own consultants had confirmed was owing for work completed between February and May 2015.

He further claimed that Baha Mar had “refused to provide assurances that it has sufficient funds or financing to pay” the retainage fees for work completed.