Government has cancelled the ProActive Management?s contract to build the new senior secondary school at Berkeley.

The announcement was made in a brief press statement issued by the Department of Communication and Information last night.

?The Minister of Works and Engineering and Housing, the Hon. Ashfield DeVent, announced this evening that Government has terminated its contract with ProActive Management Systems Ltd to construct the second Senior Secondary School,? the statement reads.

It adds that Mr. DeVent will be providing more information in a press conference this week.

The decision could cost the taxpayer millions more in arbitrated settlement awards with the company and costs associated with contracting with another company to finish the job ? and brings to a head months of disputes between the company and the Works Ministry.

The Berkeley contract provides for disputes ? including contract termination ? to be settled in arbitration.

A company spokesman, who did not want to be identified, confirmed that they had received a notice of termination and that the company was considering its position and will make it public shortly. He said the company was ?not surprised and not unhappy? at the development.

?We are considering our rights. The resolution of some of our claims through arbitration is inevitable. We agreed that from the outset.?

Earlier this year ProActive had received $13 million as part settlement for claims submitted by the company ? and it is understood that the company and Government have been at loggerheads over payments since the agreement was reached.

Works Minister would not go into details of the claims when he announced the payment in February, but understands that it involved payment for extra work and additional costs incurred as a result of changing plans for the mega project.

And it is also understood that some unresolved issues were yet to go to arbitration.

Mr. DeVent said then that Government had been advised by consultants to allow an extension of the project partly because of design changes after the work had begun, and he told the public that the project would take another year to completion.

Berkeley was originally scheduled to be completed in September 2003.

Cash flow problems on the project first came to light in the fall of 2002 when workers threatened strike action after not receiving back pay from the previous June.

And in 2003 they began to publicly complain that cheques being issued by the company were bouncing.

Then Works Minister Alex Scott acknowledged that the problem was due to administrative delays on the part of the Ministry.

Sub contractors had also complained of not being paid on a timely basis - a problem which the company said was also due to late payments from Government. While Mr. Scott, and others, acted quickly to resolve the cash flow problems, he soon began to talk about bringing in a consultant management firm, H.R. Lubben, to help with the management of the project.

Mr. Scott could not be reached for comments by press-time last night.

The contract has been disputed by the Opposition United Bermuda Party since Government accepted ProActive?s bid.

The Opposition questioned why Government would overrule the advice of its technical officers and award the contract to a company which they had considered ?high risk? with little experience in projects of such magnitude, and whose bid was some $5 million higher than the lowest bidder.

BermudaTech, which offered to do the job for the least amount of money, has since gone out of business.

Yesterday the UBP?s spokesperson for the Works Ministry said she was saddened but not surprised by ProActive?s dismissal.

?We as Opposition, warned the then-Works & Engineering Minister, now the Premier, from the outset that his and his government?s over-rule was flawed when they chose to ignore the advice of their own technical officers and to make decisions for which they were not capable,? Patricia Gordon-Pamplin said in a written statement.

?Mr. Scott showed a total disregard for the public purse or just plain failed to understand the consequences of his actions.?

She added that Mr. DeVent had failed to follow through on his commitment in February to give regular project progress updates to the public.

?I now await the next politically spun statement that would inform the public what will happen with their $102 million that was committed by the PLP government to the project and Pro-Active through initial and revised contract terms,? the statement continues.

?How much has been paid out, how much is left (if any), what will it cost the taxpayer to complete the project, and when will it be completed? What will happen with the bond? Has this action just served to bankrupt the Union? How much longer does the Bermuda taxpayer have to put up with this gross incompetence of the PLP government??

ProActive had secured a $700,000 completion bond from Union Assets Holdings which is wholly owned by the Bermuda Industrial Union.

Union president Derrick Burgess said he had no immediate comment when asked his reaction yesterday.