The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Water & Sewerage Corporation breached the industrial agreement with its management union by failing to give members ‘first shot’ at the contracts for three Family Island reverse osmosis plants.

The Supreme Court, in a written ruling delivered last week, found that the Corporation had violated provisions giving Water and Sewerage Management Union (WSMU) members a ‘90-day exclusivity’ period to bid on all outsourcing contracts.

Then-Acting Justice Brian Moree QC, in a January 27, 2016, verdict, held that the Government-owned water supplier had breached the two sides’ industrial agreement over reverse osmosis plant contracts for Mayaguana and Long Island.

He rejected the Corporation’s argument that Article 29, which dealt with privatisation and outsourcing opportunities, only applied in the event that it made management union members redundant.

Acting Justice Moree, though, also dismissed claims by the union’s attorneys, Obie Ferguson & Company, that the Corporation had acted in “arrogance or malice” in breaching the industrial agreement.

His ruling is significant because it confirms that the management union, and its members, must be given first notice, and then a three-month ‘exclusivity’, on all outsourcing by the Corporation.

With the Government and Corporation seeking to privatise water production, via contracts with the private sector to build/own/operate reverse osmosis plants, the industrial agreement gives the union’s members ‘first option’ on lucrative opportunities such as New Providence’s Windsor plant.

The industrial agreement thus provides a potential avenue to boost Bahamian entrepreneurship and ownership of the economy, especially where key infrastructure assets are concerned.

Some observers, though, will likely question whether giving the union members ‘first opportunity’ on all Corporation contracts, to the exclusion of any other bidders, risks losing better offers to the detriment of the Bahamian people.

The WSMU, though, will see the industrial agreement and its Article 29 as providing protection for its members during future Corporation downsizing exercises.

Detailing the background to his ruling, Acting Justice Moree said it stemmed from the Corporation’s decision to place two Family Island water supply contracts out to tender on August 30, 2013.

“This action arises out of a dispute relating principally to the construction of certain provisions of an industrial agreement in connection with the outsourcing to a third party by the [Corporation] of the supply of desalinated water to four communities in the Family Islands,” Acting Justice Moree found.

“The plaintiffs claim that the outsourcing breached the terms of the industrial agreement.”

The contracts involved the construction and maintenance of of two 20,000 gallon per day reverse osmosis plants in Mayaguana to serve the communities of Abraham’s Bay, Betsy Bay and Pirate’s Well.

A similar 20,000 gallon per day reverse osmosis plant for Simms, Long Island, was part of the same tender.

“Tenders were received, and after a lengthy process which involved e-mail communications and site visits, the Corporation sent a February 2, 2015, letter to Watermakers Inc/Staniel Cay Yacht Club of Fort Lauderdale, Florida, accepting its proposal and awarding it the contract for the project,” Acting Justice Moree found.

Watermakers received a 10-year water supply contract from the Corporation, which did not deny the union’s contention that it was neither provided with a copy of the tender and invitation to bid, nor information on the project itself.

Leslie Hutchison, one of the WSMU’s trustees, alleged that the union only became aware of the project on May 31, 2015 - almost two years after the tender was issued.

His attorneys further claimed that the union did not discover the Watermakers letter until a month later - June 18, 2015.

The industrial agreement’s Article 29 stipulates that the Corporation consult the union on all forthcoming outsourcing opportunities “at least 90 days” before they happen.

Should union members, who are “existing employees” of the Corporation, decide to bid, they have a ‘90-day exclusivity’ from the time they are informed of the opportunity. This shuts out all rival bidders.

Only members of the WSMU, or Bahamas-domiciled companies where they hold a “minimum” 70 per cent equity interest, will be allowed to bid during the exclusivity period.

Acting Justice Moree said both sides agreed that the industrial agreement was “valid and subsisting” through to end-July 2015, and was in effect when the Watermakers letter and contract were issued.

Veronique Evans, representing the Corporation, argued that Article 29 and its exclusivity provisions only took effect when it was looking to make staff redundant.

Glen Laville, the Corporation’s general manager, alleged that its 2008-2009 action plan revealed that it was “overstaffed and not operating efficiently”.

The action plan, he added, called for the Corporation to restructure its business model and outsource certain operations, with redundancies set to reduce staff levels over a three to five year period.

“Mr Laville stated in his affidavit that the union was aware of these developments (including the action plan), and maintained that Article 29 was included in the industrial agreement for the specific purpose of mitigating the effect of the redundancies, which were anticipated as a result of the implementation of the action plan,” Acting Justice Moree found.

“Miss Evans further contended that Article 29 is inextricably linked to redundancies and should be read in that context....

“She emphasised that the terms of Article 29 were not intended to restrict the ability of the Corporation to contract with third parties for specified services which had no effect or impact on the continued employment of members of the union,” he continued.

“Put succinctly, Miss Evans submitted that Article 29 only applies when the intended outsourcing is expected to result in redundancies.

Mr Laville had also alleged that the Mayaguana and Long Island contracts would not result in any redundancies, meaning the Corporation was not required to inform the union, which had no exclusivity.

Ms Evans also argued that Article 29 applied only to employees about to be made redundant by the outsourcing. But Mr Ferguson, for the union, said its provisions were “unambiguous”, a condition of employment for all its members, “and not in any way connected to redundancies”.

The latter issue was dealt with separately in the industrial agreement, and Mr Ferguson said the Corporation’s position was “tantamount to amending the industrial agreement”.

This, he added, was not allowed as the agreement had been registered in accordance with the law.

Ednel Rolle, the union’s president, also alleged that the Corporation had never sought to link Article 29 to redundancies during their negotiations over the industrial agreement.

Acting Justice Moree, in finding for the union, said previous correspondence between it and the Corporation over Article 29 had never linked outsourcing to redundancies.

“Indeed, there is no reference to the cessation of employment (through redundancy or otherwise) as a prerequisite to invoking the provisions of Article 29,” he ruled.

“I have considered the industrial agreement, and can see no basis for connecting Article 29 to the subject of redundancy.

“There is no language in the industrial agreement which would suggest such a connection, or which would limit the terms of Article 29 only to outsourcing which caused the reduction of staff.”

Acting Justice Moree also found there was “no automatic or absolute connection” between the Corporation’s action plan, and desire to reduce staff, with Article 29’s outsourcing provisions.

He also determined that Article 29 was not limited to the Corporation’s operations on the day the industrial agreement was signed, and instead included any outsourcing activities during its existence.

As a result, Acting Justice Moree found that the letter and contract issued to Watermakers Inc was an event covered by Article 29, and therefore the Corporation had breached the industrial agreement.

“The Corporation did not consult with the union prior to issuing those documents, and did not follow the process mandated under that provision,” the judge ruled.

Acting Justice Moree, though, rejected the union’s contention that the Corporation “had acted in open defiance of the industrial agreement, and was only brought to account for its high-handed conduct through this action”.

He noted that Article 29 had created a previous controversy when the Corporation issued a tender seeking bids on an Eleuthera reverse osmosis plant in 2014.

With both sides again at odds in their interpretation of the agreement, the union filed a trade dispute over the matter.

The Industrial Tribunal, when asked to rule on Article 29’s meaning, declined to act on the grounds that the industrial agreement had expired.

This was at odds with both Acting Justice Moree’s view and the positions adopted by the Corporation and union before him. The Eluethera tender, though, was ultimately cancelled by the Corporation.