Government will ?take every possible step? to prevent an escalation of its dispute with the Bermuda Industrial Union over the new secondary school contract, Premier Alex Scott said yesterday.

And, he said, he is confident that the Government will prevail over any court action launched by the union. The country was put on alert on Friday that a general strike might be called if Government failed to meet with the union by tomorrow. But before the weekend was over, legal adviser Julian Hall reported that the union was hopeful that a meeting would be held.

Mr. Scott confirmed that Government was ?working on a formal meeting. ?I?ve spoken with the union and we are going to take every possible step to make sure things don?t escalate. And we have a few ideas on how the disappointment of the union can be addressed.?

And he did not hide his own disappointment at the turn of events since Finance Minister Paula Cox announced that the union had dropped its threat of legal action two weeks ago.

?Minister Cox had reached what we thought was a reasonable accord,? Mr. Scott said. ?When we work with the legal teams we make progress, it seems when Mr. Hall comes into the equation we run into difficulties. I hope that?s just my perception.?

But he struck an optimistic tone saying that Government had some ideas on how both the union and sacked contractor Pro-Active Management Systems can move on from the present position.

Bermuda, he said, will ?breath a sigh of relief? if Government is allowed to complete the school in a timely manner. The BIU is in a precarious position because it bankrolled Pro-Active to the tune of $4 million and, through its subsidiary Union Asset Holdings, provided a $6.8 million completion bond for the project ? making a total financial exposure of about $11 million. It has demanded that Government release equipment left on the site by Pro-Active, saying the equipment was being held as security, and effectively belonged to the union. And it is claiming the right, as surety, to complete the school. The union has also asked Government to repay the $4 million it loaned to Pro-Active saying the money was paid out because Government continually shortchanged the contractor.

Government has dismissed those arguments and is confident that it will prevail against the union in court. And Government has given the union no commitment that it will not eventually try to call in the bond ? a politically risky move which could bankrupt the union. ?We would hope we can finish the school without having to call in the bond,? the Premier said. ?Do we want to call in the bond? No. If it comes to that position, the Minister will take that decision when it arises.?