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Firing architect cost taxpayers over $4m

A controversial decision to sack an architect from overseeing the construction of the Dame Lois Browne-Evans court building midway through the project cost taxpayers more than $4 million, it is claimed.

And documents obtained by

The Royal Gazette show that the former Government was fully satisfied with the work of Canadian firm Carruthers, Shaw and Partners (CS&P) — but abruptly terminated its contract with the highly respected firm in December 2008 in order to employ a local project manager at far greater cost.

The decision has come to light after Attorney General Mark Pettingill last week revealed that Government had paid CS&P $700,000 to settle a breach of contract lawsuit filed by the architect. Opposition MPs claimed the settlement was too high and that Government “gave away hundreds of thousands of taxpayer dollars without a fight”.

But Mr Pettingill said the agreement represented a good deal for Bermuda. He pointed out that CS&P had sued for $1.4 million — $1.29 million the company would have earned had it been allowed to oversee the court building through to completion, and a further $118,000 for work it had completed on a separate, unrelated project.

He pointed out that Government had had “no real defence” against CS&P’s claim of breach of contract, and that the former PLP administration had paid out $5 million to the architect it brought in to replace CS&P — Bermudian firm Conyers and Associates.

“Conyers took over the contract from CS&P and Government paid them $5 million to take it over — those are the facts,” Mr Pettingill said.

The decision to switch architects halfway through the project means that taxpayers have now paid out $5.7 million in construction management fees — $5 million to Conyers and Associates, and $700,000 to CS&P to settle that company’s breach of contract claim. Had CS&P been retained right through until the project’s completion in July 2011, the management bill would have been just $1.29 million.

Mr Pettingill’s further suggestion that Government had “no real defence” against CS&P’s breach of contract lawsuit is supported by documents seen by this newspaper.

According to its contract, CS&P, which was involved with the new building from the start, was appointed project manager for the construction phase of the work in December 2007 on a 34-month contract. But that agreement was torn up by Government just 12 months later, with 22 months of the contract still left to run.

In a December 2, 2008 letter to CS&P’s Sam Spagnuolo, then-Works & Engineering Permanent Secretary Robert Horton said that then-Minister Derrick Burgess “has been carefully reviewing all arrangements in connection with this project”.

“I now have a duty to advise you that the Government of Bermuda has concluded that it would be more efficacious to engage a local firm of architects for the balance of the construction administration stage of the project,” Mr Horton continued.

“Government has determined that this team should be headed by Conyers and Associates Ltd, who will act henceforth as the Construction Administration Architects on the project.

“I say at once and without equivocation that the Government of Bermuda generally and the Ministry of Works & Engineering specifically are most grateful to you and CSP for your diligence in assisting us to date on this and other very important projects.

“From time to time during the construction administration stage of this project, it is likely that both the Ministry and the team of local consultants will wish to have the benefit of your input based on your knowledge as the Design Architects. As this speaks to a level of service that is not entirely predictable, we would ask that you consider allowing us to retain your services for this stage on an ‘as needed’ basis.”

Responding to that letter, lawyers for CS&P, which had been involved with Government projects since 1997, pointed out that Government could only terminate the contract if “our client had failed substantially to perform its services in accordance with the terms of the agreements, and this was not the case”.

Although Mr Horton’s letter did not criticise CS&P for its performance, Mr Pettingill suggested that relations between CS&P and the former Government became strained in the summer of 2008 when the architect questioned invoices submitted by the general contractor, Landmark/Lisgar Construction.

In a July 18 letter to Government’s Chief Architect, the company raised concerns about the construction company’s monthly project status report and said LLC’s approach seemed to have been formulated “with the aim to increase their profitability through the reduction of time and money at the detriment of the project”.

And a letter dated August, 2008 said: “To date payments paid out are in excess of work completed totaling $5.3 million, with current Progress Application submitted for $1.7 million. All fees currently paid out are not commensurate with the remaining project time line, and actually reflect an overpayment of the work completed to date.”

Mr Pettingill said: “The crux of the matter ran from the fact that CS&P had difficulty with what are generally described as overcharging and they refused to sign off on a certificate with regard to overcharging — that’s where the crux of it started.”

When asked if Conyers and Associates was paid $5 million for its work on the court building, former company owner Harold Conyers said he could not remember. He pointed out that he had sold the company about three years ago and could not comment without access to records.

Charlita Saltus, a current partner in the firm, also declined to give financial details of its contract.

The Royal Gazette e-mailed questions concerning the sacking of CS&P to former Works & Engineering Minister Derrick Burgess and to a spokesman for the PLP. No response to our questions was received by press time last night.

The Dame Lois Browne-Evans Building: The cost of constructing it grew by $4 million because of the sacking of an architectural firm (Photo by Mark Tatem)
<B>Change made invoice checking less stringent</B>

Cost was not the only difference in the contracts granted to Canadian architect Carruthers, Shaw and Partners and Bermudian company Conyers and Associates — the two companies were also given different remits.

When design firm CS&P began overseeing the construction phase of the project in December 2007, one of its key tasks was to approve invoices submitted by Landmark Lisgar Construction, so that the contractor could be reimbursed by Government. But when Conyers and Associates took over the role of certifying architect in December 2008, the task of invoice approval was significantly reduced.

“The Ministry employed a Canadian firm of architects (the same firm that designed the courthouse/police station) to examine and certify the reasonableness of progress payment requests submitted by the Contract Manager,” former Auditor General Larry Dennis said in a 2009 report.

“Payment requests had to be certified before they were processed for payment. By late October, work on the construction project continued to be behind schedule.

“On several occasions, the Ministry’s Project Manager and Certifying and Chief Architects expressed concerns about the legitimacy of some of the costs being claimed by Landmark Lisgar.”

In October 2008, after the Landmark Lisgar partnership had broken up, LLC changed its name and was given a new contract by Government. The new contract, which was introduced shortly before CS&P was replaced by Conyers as the certifying architect, placed less stringent checks and balances on invoices submitted by the construction company — even though CS&P was already questioning invoices submitted by LLC.

“What concerns me most as an auditor, however, is the failure of the new contract to require LLC to provide invoices with every progress payment submission,” Mr Dennis said in his report.

“Although the new contract does provide both the Ministry and the Certifying Architect with the ability to demand this sort of financial information from LLC if they wish, it does not require this supporting –evidence at the time of making the application for payment. To date, under the new contract, $6.5 million has been paid without verifying amounts to receipted invoices.

“The new contract also has brought about a change in how progress on the construction site is reported to the Permanent Secretary. Under the original contract, the Ministry’s Department of Architectural Design and Construction received copies of all correspondence, progress reports and meeting minutes to enable it to monitor the project’s progress. Since the new contract was put in place, technical control at this level has been removed and this information now goes directly to the Permanent Secretary.”

Mr Dennis also claimed that then-Work & Engineering Minister Derrick Burgess at one point refused to cooperate with an audit of the project.

“In my view, the above series of events indicates that at various stages the Minister and Permanent Secretary of Works & Engineering interrupted and compromised key internal controls designed to protect the Government’s rights and assets,” Mr Dennis said.

“The events cast doubt on the propriety of some of the payments to Landmark Lisgar/LLC.”

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Published July 24, 2013 at 9:00 am (Updated July 23, 2013 at 11:51 pm)

Firing architect cost taxpayers over $4m

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