THE dispute between Government and sacked Berkeley school project contractor Pro-Active Management Systems will be settled in court next month, the Mid-Ocean News has learned.

A full hearing between the two sides will take place at the start of September, and is expected to last several weeks.

In March, this newspaper reported that the two sides were close to signing an agreement awarding Pro-Active more than $9 million in compensation for what it claimed was wrongful dismissal.

But sources close to the dispute claim Government pulled out of that deal after the secret negotiations were made public.

It is understood that Pro-Active will now be seeking damages of around $15 million during next month's hearing, which is expected to take place behind closed doors.

The construction company was awarded the contract to build the $68-million school in 2001 by then Works & Engineering Minister Alex Scott, against the advice of the Ministry's technical staff who considered Pro-Active's bid to be "high risk".

Although the contract stipulated a completion date of September 2003, the project fell behind schedule, while Pro-Active also lagged with payments to subcontractors, several of whom took out writs to recoup what they were owed.

In 2003, the Bermuda Industrial Union came to the rescue with an undisclosed amount of financial support and in early 2004, representatives of Pro-Active and the Government met to deal with a $20-million claim by the construction company.

As a result, Pro-Active was given a year's extension on the completion date and an extra $13 million from the Government.

However, the project continued to encounter difficulties and the contractor was sacked in August that year.

At that time, inspectors representing Pro-Active and Government agreed that the building was more than 80 per cent complete. Following Pro-Active's termination, rival contractor Somers Construction was drafted in as the new project manager and the school was finally completed this summer, three years behind schedule.

Late last year, Works & Engineering Minister David Burch announced another hefty increase in the cost of the project, saying that the new school would now cost $121.7 million. That figure could rise significantly as a result of any arbitration settlement.

The budget for the school project was initially set at $71.2 million by the late former Finance Minister Eugene Cox in his Budget statement of 2000.