Uff: Udecott broke its own rules

14.34. What is perfectly clear, however, is that when, on June 22, 2005, Udecott reissued their letter of award, now addressed to the renamed Sunway Construction Caribbean Limited, Udecott was dealing with a subsidiary company with no assets or track record whose ability to perform the contract was wholly dependent on the voluntary support of the parent company. While it is understandable that those who had supported the introduction of Suncon and its subsidiary into Trinidad should be confident of such support, it remains inexplicable that the Udecott Board should have so neglected their own resolution of November 2004 and overlooked the clear and obvious requirement for an enforceable parent company guarantee. In this regard, the explanations offered by Mr Calder Hart were nothing to the point. Neither he nor the Board could seriously have thought they were still dealing with the Sunway parent company. The fact that Sunway Construction Caribbean Limited gave a ten percent performance bond is irrelevant: this was a contractual obligation which would have applied equally to the parent company. The inescapable conclusion is that the Udecott Board knowingly exposed the public purse to a grave risk of nonperformance by the Sunway Subsidiary with no available recourse. The fact that Sunway Construction Caribbean Limited ultimately performed in relation to the Government Campus Plaza in a manner comparable to the other principal contractors engaged there, goes no way to mitigate the seriousness of this unexplained dereliction of duty.

14.35. With regard to the enumerated breaches of the Udecott tender rules pointed out by the JCC, the breaches other than those relating to the financial standing and experience of CH Construction were not unique to the MLA Tower. It appears to be the case that Udecott do not apply their own tender rules evenly and appear to have applied them or dis-applied them as occasion demanded. This is inherently unfair and ought not to occur. Such breaches do not, however, involve the degree of serious commercial risk involved in the failure to obtain a proper and enforceable guarantee of Suncon’s subsidiary company.

14.36. It is clear that a subsidiary company with no assets or experience, whether or not to be subject to a parent company guarantee, cannot comply with Udecott tender rules. There is in fact no commercial reason why a subsidiary such as CH Development should not be pre-qualified on the express understanding that they will be guaranteed and supported by a properly resourced and experienced parent company. This is, however, not presently permitted by the rules and it is again inherently unfair that other contractors in a similar position should have been disqualified on this account.

Thus, Udecott’s application of its own rules discloses a worrying lack of transparency as well as inconsistency.

14.37. With regard to the suggested relationship between Mr Calder Hart and CH Development/Sunway, the appearance of Mr Calder Hart’s fax number on the notepaper, which was no doubt hurriedly printed by CH Development, remains unexplained. While it is possible that this could be a simple error, the surrounding circumstances, particularly the acceptance by Udecott that the award letter was faxed to Mr Calder Hart’s fax machine and then faxed on from that machine to Sunway, suggests strongly that there was no such error. Likewise, the fax number remaining on the CH Development notepaper between October 2004 and April or May 2005 with no attempt to have it removed or corrected suggests strongly that Mr Calder Hart cannot have been unaware that his number had been so used.

14.38. Final submissions were provided on behalf of Mr Calder Hart which commented at length on the statutory declarations of Carl Khan pointing out that Mr Hart was “a complete stranger to all these claims which, if they took place at all, would have taken place long before Mr Hart knew or had any relationship with the ex-wife of Mr Khan”. The submissions make various allegations as to the motive of Mr Khan in coming forward to give his evidence, suggesting that he “or more probably his handlers, were desperately attempting to ambush Mr Hart” and that “the principal, if not sole, intention (was) to bring Mr, Hart’s wife into disrepute”. With regard to the use of Mr Hart’s personal fax number by CH Development, this is said to be a “red herring, opportunistically exploited to impute impropriety to the relationship between Mr Hart and Sunway”. It is suggested that this is a matter to be pursued with Sunway, not Mr Calder Hart. If Mr Hart had given permission to use his fax number, this would (although denied) only point to a willingness to facilitate the establishment of CH Development in Trinidad and would have been perfectly justifiable.

14.39. In the view of the Commissioners, the criticism of Mr Khan’s motive should have been put to Mr Khan when attorneys for Mr Hart had the opportunity to do so. There is no evidence whatsoever that Mr Khan was motivated by anything other than a desire to place the true facts before the Commission, Mr Hart having publicly asserted contrary facts with which Mr Khan disagreed. If Mr Khan had any motive beyond that of stating what he believed to be the truth, it was not to bring Mr Hart’s wife into disrepute: it is the conduct of Mr Hart that is in issue here. It is noted, however, that Mr Hart does not, in the course of his final submission, expressly deny the alleged relationship between Mrs Hart and the two persons whose names appear as former directors of CH Development. With regard to the observations concerning CH Development the Commissioners find the purported explanation of events of no assistance.

14.40. It is appropriate at this point to summarise the matters of criticism of Udecott and Mr Calder Hart which, in the view of the Commissioners, remain without satisfactory answer:

(i) No proper explanation was given for the Letter of Award of April 28, 2005 being addressed both to Suncon and CH Development and Construction, when the tender had been submitted by CH Development and Construction.

(ii) No proper explanation was offered as to why the Udecott Board, knowing that Sunway Construction Caribbean Ltd (formerly CH Development and Construction) failed to require a parent company guarantee and, in doing so, disregarded its own resolution of November 8, 2004.

(iii) No proper explanation was given as to the basis on which Udecott had made decisions as to either applying or dis-applying their own tender rules regarding VAT Certificate, NIB Certificate and PAYE File No.

(iv) No proper explanation was given as to why Udecott chose to dis-apply its own tender rules in regard to CH Development and Construction, a company with no assets or track record.

(v) No satisfactory explanation was given as to how CH Development came to use Mr Calder Hart’s personal fax number and as to how Mr Calder Hart’s personal fax machine came to be used in the signing of the letter of Award.

(vi) No proper explanation has been given as to why Udecott issued a further Letter of Award on June 22, 2005 solely to Sunway Construction Caribbean Ltd (formerly CH Development and Construction Ltd) without ensuring that:

(a) Sunway Construction Caribbean Ltd. satisfied the pre-qualification criteria; and

(b) The Parent Company gave an enforceable guarantee of their performance.

(vii) No convincing reason was advanced for preferring the tender of CH Development over the lower tenders from HKL and Johnston International Ltd.

14.41. With regard to the further evidence of Carl Khan set out above, the Commissioners have been placed in a unique position for a non-binding inquisitorial enquiry. We have been presented with two inconsistent and contrary accounts of a matter of high importance, where one of two witnesses who have given sworn evidence cannot be telling the truth, with serious consequences under the criminal law. For reasons set out above, the Commissioners decline to give a decision that may lead to such consequences. We note, however, that Section 7 of the Validating Act passed in November 2009 provides that the evidence given by any witness during the proceedings of the Commission:

“May be ....... used in any civil or criminal proceedings in any Court.” The evidence noted above is recorded as part of the official proceedings of the Commission and the conflict between the evidence of Mr Hart and that of Mr Khan should be resolved by Court proceedings. The Commissioners accordingly include in their Recommendations, that there should be an investigation by an appropriate criminal law Authority into the award of the MLA contract to CH Development, to include the role of Mr Calder Hart and the conduct of the Board in not ensuring that an enforceable guarantee was given by the parent company of CH Development.

14.42. While the Commissioners do not intend to give any decision as to the conflict of evidence, it should be stated that a material part of Mr Khan’s declaration is not challenged and can be accepted as true, namely his former relationship with Sherrine Lee Hart.

15. National Academies for the Performing Arts and International Waterfront

15.1. It is important that these projects are reviewed in the general context of Udecott’s performance since they represent (albeit still surrounded by controversy) two projects for which Udecott can justly claim credit. Both projects are striking examples of modern architecture and contribute positively to the emerging new Port-of-Spain sky line. Issues concerning delay and cost over-run are dealt with section 23 below.

The Academies

15.2. There are two Academy projects, known as the North and South Academies. TIle North Academy of the Performing Arts (“NAPA”) is a major construction project of striking design located on the Southern side of the Savannah, Port-of-Spain, in a prominent location which already forms a major feature of the skyline of Port-of-Spain.

The design, which is part of the contract package, is clearly influenced by other iconic structures such as the Sydney Opera House, but is said to be based on the form of a local flower, the Chaconia. The South Academy of the Performing Arts (“SAP A”) is located in San Fernando. This will be another significant though less iconic building complex. At the time of the Commissioners’ inspections (January 2009) NAPA was at a relatively advanced state of construction whereas SAPA had achieved only the basic elements of its construction, having been held up by the need to construct a major sewer diversion through the site.

15.3. Both Academies are being undertaken pursuant to a single design-build contract between UDECOTT and Shanghai Construction Group (General) Company Limited (“SCG”) dated May 12, 2006. The total Contract Price for both Academies is approximately TT$630m inclusive of a design fee of seven percent. The costs are further apportioned between NAPA and SAPA in the ratio 70:30. The Contract Sum is payable in accordance with agreed milestones and is funded by an Inter-Governmental Loan Agreement amounting to US$100m. Mr Calder Hart confirmed that additional funding, if necessary, would be drawn from the Infrastructure Development Fund.

15.4. In addition to the principal contract, Udecott has entered into supplemental agreements for the following:

(i) A contract with SCG for construction of public tennis courts and other facilities at King George V Park to replace tennis courts displaced by the NAPA construction works, the Contract Sum being $17,772,012.

(ii) A contract with SCG for construction of a retaining wall at the Northern end of the SAPA site as recommended by Genivar, in the sum of $8,250,000.

(iii) A contract with Trinidad Contractors Limited for sewer diversion work at SAP A in the sum of $6,352,280 plus a 20 percent Management Fee payable to SCG.

15.5. An issue arising out of the design of NAPA, is the inclusion within the building envelope of a 59 room hotel. Dr Rowley contended that the hotel element had not been approved by cabinet. In cross-examination Dr Rowley accepted that at least from November 2006 proposals for NAPA did include the hotel element and that the hotel was included within the proposal laid before Parliament as part of the budget debate. Dr Rowley explained that his concern was with oversight or lack of oversight.

15.6. Various concerns have been addressed in relation to the Academies. Those relating to the use of a foreign contractor have been reviewed in section 6 above; and those relating to the design, particularly of NAPA, are reviewed in section 7 above.

Udecott is criticised for placing the projects with SGC on a sole selective basis.

Udecott in its Final Submissions248 reject such criticism on the basis the project was funded by Government-to-Government Agreement which constitutes “special circumstances” for the purposes of Clause 6.01(ii) of Udecott’s procurement rules; and in any event the decision to employ SGC was that of the Government. The same criticism and response applies in the case of the Prime Minister’s residence. In both cases we accept that the decision to employ SGC cannot be a matter of criticism of Udecott and must be addressed to the Government.

15.7. The design of NAPA was the subject of particular criticism by the Artists’ Coalition of Trinidad and Tobago who complained that consultation on the design and intended use of the building had been inadequate. Such considerations are strictly outside the Terms of Reference of the Commission, as are concerns about the proper use of public money. The concerns of the Artists’ Coalition were, however, accepted by Minister Imbert who participated in the debate on issue (V)250. Further criticism of Udecott arising from the take-over of the Colonial Tennis Club is set out in Section 23 below.

15.8. SAPA has been delayed some 18 months as a result of the sewer diversion. NAPA was similarly delayed at the outset by inability to obtain full access to the site until existing tennis courts had been relocated. These issues are dealt with more fully under Part III below where issues of potential cost over-run are also reviewed.

International Waterfront Project

15.9. This project now forms a striking feature of the Port of Spain skyline and comprises two 26 storey office blocks and the Hyatt International Hotel with a lower profile than the office blocks. Genivar was appointed as Development Manager in about May 2004 in competition with other Consultancies and managed the design-build tender process which culminated in execution of a Contract dated July 28, 2005 with Bouygues Batiment Trinidad and Tobago Construction Co Ltd (Bouygues). The original concept was to construct one office block plus the hotel, but during the course of the design process, a second office building was added, of identical design but different orientation. The site on which the works stand was previously occupied by various Port facilities. These included the famous Breakfast Shed, which was reconstructed to the south of the site.

15.10. The bidding process involved soliciting expressions of interest from experienced contracting firms in terms of a request for proposals. This was issued to eleven companies and resulted in proposals being received from three companies or consortia:

(i) Bouygues International (France);

(ii) Carillion/Johnson International Consortium;

(iii) Hafeez Karamath Ltd (TT with US architects and engineers);

Each of the bidders proposed a different international hotel group as operator/financier of the hotel element. The bids were analysed by Genivar on a points system, on which basis Bouygues emerged as preferred bidder, with Carillion/Johnson as reserve bidder. Final negotiations were conducted with Bouygues alone with the reserve bidder available if agreement was not reached. The Contract was signed with Bouygues at a Contract Amount of $1,663,579,300 on the basis of the FIDIC Conditions of Contract for Plant and Design-Build (1999 Edition) and subject to particular conditions amending Clauses 1-20 and additional Conditions 21-28. Under Clause 20.6 the provision for arbitration under the ICC Rules was retained but the place of arbitration specified as Miami, Florida.

15.11. The project thus comprised the following:

(a) Hotel, Ballroom, Conference Centre, Car Park;

(b) Office Building C;

(c) Office Building D, stand alone Retail Building and external works.

There were negligible variations amounting to less than one percent of the Contract Sum.

However, Udecott subsequently entered into two Supplemental Agreements to undertake further work as follows:

(d) Fitting-Out works for Office Buildings C and D;

(e) Supply and installation of office furniture for Office Buildings C and D.

But for the additional scope of works (fitting out and office furniture) it is accepted that the Project would have been completed on time and budget. The very low level of variations was noted by Mr McCaffrey in his first report as “an exceptionally positive observation”.

15.12. For the construction works, Bouygues produced a comprehensive detailed programme very early in the Project. This was used to control time and additionally 5,000 activities which were costed and used to regulate payments to the Contractor. The Programme also enabled Genivar to control events on site which might have generated delay and claims, being ultimately successful in avoiding both. Genivar undertook a comparative cost analysis to satisfy themselves that the Project represented value for money. Tins analysis was not ultimately produced to Mr McCaffery but the costs are said to compare favourably with those applying in the United States.

15.13. Mr McCaffrey expressed the view that the sound financial standing of Bouygues was a factor in achieving a favourable outturn. He reports that the Project was potentially hampered by Government bureaucracy, particularly regarding permits, approvals and consents. It appears Mr Shenker of Genivar took a personal hand in steering the Project through such difficulties and there is little doubt that Genivar also proved a decisive element in the success of the Project. Udecott, whose actual “hands on” contribution appears to have been minimal, certainly deserved credit for having placed the Project in capable hands.

15.14. Questions were raised as to the extent to which technology and skills transfers were achieved by the Project. We were told that out of the work-force, which peaked at around 1800, 75 percent to 80 percent were loca1.252 There were also training programmes: the

Commissioners were provided with evidence of the training of tower crane operators.

We were told that Genivar maintains a significant proportion oflocal staff. However,

we were not told that any of the key management staff were locals and it is

qnestionable whether any relevant skill transfer occnned in relation to the

management and performance of a high profile design-build project such as the

Waterfront development.

Initial Conclusions

15.15. Both the International Waterfl-ont project and the Performing his Academies have

demonstrated that design-build can be made to work for specific high-profile projects

in Trinidad. The questions to be addressed are, how far tIus is dependent on the

pru.iicular circumstances of these projects, what role did Udecott play and what

lessons are to be learned.

15.16. For both the International Waterfront project ru.ld the Acadenlies, the appointed

contractor/designer was a renowned international company, able to call on substantial

resources of finru.lce, skill and experience. There is, as yet, no comparable project

procured by design-build in wluch the contractor/designer was a local company or

consortium. These projects are, therefore, one-off projects which demonstrate that

international contractors can operate successfully in Truudad, with the benefit of

reforms introduced as a result of the Ballah RepOli253

. The projects do not yet

provide convincing proof of the general merits of the design-build system in Trinidad

and Tobago. The key factor in the success of these projects may equally lie in the

competence and experience of the pru.iiculru. pru.iies involved.

15.17. It is to be noted that Genivar have played a significant, possibly crucial, role in each

project in terms of management of the project at significant stages. Their expeliise is

undoubted as well as their understanding of the role requued. The corollary is that

Udecott have played a minor role in the management of both projects, being

concerned prllnru.i1y with the financing of the projects. That role is not to be

252 Evidence of Mr Shenker, Transcript 25 March 2009, p 156

253 See para 3.20 above.

140

understated, but these proj ects are not to be seen as demonstrating Udecott’s

project management skills.

15.18. It is also to be noted that Udecott’s tender rules, if properly applied, do not pelmit

one firm such as Genivar to dominate the market for project management in the way

seen in these two major projects. Thus, while their contributions to both projects have

been creditable and possibly crucial, their regular employment by Udecott raises

issues of fair competition and openness as well as the obvious need for effective

competition.

15.19. What neither the National Academies nor the Intemationa1 Waterfront provides is a

model for the adoption of Design-Build by local contractors and consultants in

Trinidad and Tobago. This will require a more gradual approach, involving initially

more modest projects and talung into account the contributions, opinions and

conclusions set forth in section 7 above.

16. Brian Lara Cricket Academy

16.1. The Brian Lam Stadiunl and its associated facilities were commissioned in 2004 by

the Govemment of the Republic of Trinidad and Tobago (GORTT) in order to provide

a high class sporting facility and with the shorter term aim of being available as a

venue for the ICC Cricket World Cup Tournament in 2007. For this latter purpose the

Stadium had to be completed by 19 February 2007 and in a “game day ready

condition” by 4 March 2007. Tumer Construction Intemational LLC (Turner) of New

York had been approached in the early months of 2004 when a meeting took place in

Trinidad at Chairman level, between Udecott, Turner and the Ministry of Sport

and Youth Affairs with the Prime Minister also in attendance. Tumer was

subsequently engaged as Project Managers through a local company, Tumer Alpha

Ltd. For simplicity they are refened to herein as TAL

141

16.2. Udecott’s commission to carry out the project on behalf of GORTT was

f01TI1alised by a Standard Form of Contract dated 19 December 2005254

. By this date,

however, a number of significant events had already occurred in relation to the

project, notably:

(i) In November 2004 it was decided to move the stadium from Marabella to

Tarouba which involved further detailed decisions as to the precise location

which had a major impact on the earthworks then required.

(ii) Negotiations between Udecott and TAL, which continued during the latter

part of 2004, were formalised in a letter of intent dated 27 October 2005

appointing TAL to carry out design and project management services.

(iii) For the design work HOK Architects (based in Los Angeles) were appointed

as architects and Buro Happold (based in New York) as engineers, both as

sub-consultants to TAL.

(iv) The project was divided into five (and subsequently more) packages which

were to be the subject of separate tendering and contracts. The packages are

referred to as PKI etc.

16.3. The plmming of the project was based on a “fast track” approach. However, as it

transpired, the evolution of the design coupled with attempts to keep the project

within budget, proved to be anything but fast track and major problems persisted

throughout most of2006 to the extent that by September, when Udecott had finally

put together a full package for the project, the ICC announced that the World Cup

would not take place at the Tarouba Stadium. In addition, major problems of design

m1d construction were progressively to appear, resulting in massive fiuiher delay.

16.4. The evolution of the project dUling 2005 and 2006 can be sUll11J1arised as follows:

(i) In February 2005 TAL submitted an estimate of cost for the Stadium in the

sum of $272m plus $54m for fees. The construction costs included $38m for

earthworks. The costs were later to escalate drmnatically, such that

Udecott contended that, had an accurate indication of cost been given at

this stage, the project would have been cancelled or radically altered.

254 Second statement of Neelana Rampaul 8 May 2009 EM 55

142

(ii) PIG (Earthworks) was offered for tender to five local contractors dming April

and May 2005. The Package was awarded on 5 July 2005 to Seereeram Bros.

(SBL) in the sum of $57,817,517.255 The final sum due to SBL is currently

estimated as $154,767,863 which Udecott attribute to defects in TAL’s

design by reason of the omission of impOliant elements and failme to include

any technical specification. PIG was let 3 months late and completed 7

months late.

(iii) In May 2005 bids were invited for PK2 (Piling). Due to lack of response it was

decided to re-tender with a revised packaging strategy combining piling with

the stmctme (formerly PK3). However, Udecott in November 2005

decided to re-tender piling as revised PK2A. This Package was awarded to

GWL in December 2005 in the sum of $23,132,418. PK2A stmied 7 months

late and finished 12 months late at a cost of over $28m.

(iv) In November 2005 Invitations to Tender were issued for PK5 (Pitch and Field)

which subsequently became PK4. A Contract was awarded in December 2005

to Terra Forma Ltd in the Contract Sum of $8,278,663.

(v) In January 2006 tender documents were issued to local and foreign contractors

for re-designated PK2 (Building Structme). The Package was to include the

canopy roof, but this was subsequently omitted. The Package was awmded to

Hafeez Km’mnath Ltd (HKL) in Mmch 2006 in the Contract Sum of

$166,359,327, altll0ugh no contract document was signed until September

2006. By Mmch 2006 concern was being expressed as to the ability of HKL

to meet the tight schedule required for completion of the Stadium by March

2007. PK2 was to start 10 months late and finish 24 months late at a cost of

over $206m.

(vi) In Mmch 2006 TAL gave a revised estimate of construction costs of $417m,

explaining tlmt the em’lier estimate of $272m had been based on schematic

designs and typical costings.

(vii) In April 2006 Bid Packages were sent out in respect ofPK3 (FF and E Works)

and PK3A (MEP and Lighting). Only HKL collected the Tender Documents

and it was later decided to re-allocate all the remaining Packages with revised

numbers. Thus, in May 2006 tenders were invited for all the remaining

255 Udecott, para. 10, quote the figure as $52,738,780).

143

Packages, namely 3 and 5-8 (including roof canopy) from fOUT firms, Sunway,

Carillion, HKL and NHI. None of these firms submitted tenders256

. HKL,

however, submitted a proposal dated 13 May 2006 to carry out the works

(including Package 2 already awarded to HKL) for the “guaranteed maximum

price” of $397,750,000 and with a Practical Handover date of 31 December

2006.

(viii) TAL initially recommended acceptance of HKL’ s proposal. In June 2006,

however, TAL recommended a different approach by which TAL would itself

undertal<e the balance of the project as Construction Managers with a budget

cost for the project of $542m. TAL say the withdrawal of their earlier

recommendation was due to non-performance by HKL on PIG.

(ix) Between June and September 2006 Udecott and TAL considered a number

of alternatives including inviting further quotations from Times Construction,

Sunway and Johnston. Only Johnston submitted a bid which was considered

inferior to that ofHKL, with whom Udecott decided to negotiate further.

(x) On 17 August 2006 a revised proposal for PK3 and 5-8 was received from

HIZL in the sum of $379,750,000, offering partial handover on 19 February

and useable completion on 2 March 2007, in accordance with the ICC

requirements. This tender was resubmitted on 14 September 2006 including

terms as to accelerated payment. Whilst negotiations continued, however, the

ICC announced on 21 September, as a result of continuing delays, that the

World Cup event would not take place at the Taruba Stadiunl. Udecott

finally issued a letter of intent to HKL dated 2 October 2006. Udecott

stated that the Agreement “bought off’ the risk of a claim aTising from

changes to the design of the columns, which had become a potential issue.