NAPA is no model for design-build

16.5. Mikey Joseph, president of the TTCA, complained in his statement of projects being sent out to tender with inadequate documentation and insufficient time to submit proper bids. Specifically in the case of PK2 (superstructure) of the Brian Lara Academy, he noted that TTCA had written to Udecott on 26 January 2006 with such a complaint. Mr. Joseph commented, from the lack of response from Udecott, that the project was “designed to fail as from the start”.

16.6. The decision to award effectively the bulk of the whole project (with the exception of earthworks, piling and the pitch) to HKL continued to attract controversy, more particularly because by the time the award was made (even as a letter of intent) the original impetus for driving the project forward regardless of obstacles, to comply with the ICC deadlines, had disappeared. Those obstacles were indeed formidable.

For whatever reason, the design remained incomplete in important respects. While this might superficially be regarded as good reason for adopting a “guaranteed maximum price”, it should have been obvious to all the professionals (including the engineers and quantity surveyors on Udecott’s staff) that the terms of the proposed contract would not preclude the making of claims which would inevitably punch large holes in any concept of a guaranteed price. If Mr Calder Hart as Chairman and Mr O’Brien as CEO were under any illusion about this, their own staff should have disabused them.

16.7. So far as the paper trail is concerned, the Award to HKL had to be approved by the Board. In fact HKL’s original quote of May 13 in the sum of $397,750,000 had been recommended to the Board for acceptance in a Note for Board, undated but subsequently identified as being prepared on May 15, 2006. This recommendation noted that the proposal included a delivery date of December 31, 2006 coupled with acceleration measures to achieve this date.

16.8. HKL’s subsequent proposal of August 22, 2006 was conditionally recommended by TAL by letter of August 23, 2006 in the following terms:

“If it is truly the intent of Udecott to do what it takes to make this stadium game day ready I see no other option than to recommend the HKL proposal with the following provisions .. “

TAL’s proposed conditions for acceptance included the provision of penalties against milestone dates. The conditions were included in Udecott’s letter of acceptance, but with the proposed penalties omitted.

16.9. For the revised proposal of September 14, 2006 in the sum of $379,000,000, a further Note for Board was prepared in similar format to the earlier Note but this time including the following recommendation:

“In the light of the recommendation and analysis undertaken by the Project Manager and time constraints with respect to delivery of the stadium to the ICC by February 19, 2007 for the practice games, it is recommended that the Board accepts the proposal at a guaranteed not to exceed price of $379,000,000 VAT exclusive with a handover date to the ICC as outlined of about February 19, 2007. “The Note (still undated) is signed by Miss Rampaul (Chief Legal Officer), Ricardo O’Brien (Chief Financial Officer and Chief Executive Officer), Angela Hordatt (Executive Manager Capital Markets), Winston Chin Fong (Chief Construction Engineer) and Gerard Nina (Head of Civil Engineering). The recommendation was “noted” by the Board at its meeting on September 29, 2006 and by letter of October 2, Miss Rampaul informed HKL that their proposal (identified as that dated August 22 2006) for Packages 3, 5, 6, 7 and 8 “has been accepted”. The letter states:

“We look forward to executing a contract with your good selves, however in the interim you are instructed to commence the works as described in your proposal.”

16.10. Further light was thrown on the process of negotiation in oral evidence. Given that it was accepted and known that the design was incomplete at the time of the HKL proposal, Mr. Calder Hart was asked how HKL could put in such a proposal. He stated that his understanding was that TAL initiated conversations with HKL and later stated:

“I know there were discussions that Turner Alpha, who were the Construction Managers, were having with respect of putting in place a plan that would try and get the stadium ready for ICC.”

The HKL quotations made reference to discussions, which Mr. Calder Hart agreed would be discussions between Ricardo O’Brien (Udecott CEO) and Mr. Karamath.

16.11. It is clear that there were attempts by Udecott to secure an understanding with HKL with regard to timely performance of the outstanding works and the need to keep within the guarantee price. It seems equally clear that those involved in the discussions had failed to appreciate the effect of the contract terms combined with the incomplete design. They had also overlooked or decided to ignore the fact that, after the ICC announcement on September 21, 2006, there was no longer any deadline to be aimed at as the stadium was no longer in the running for the World Cup events.

Udecott’s staff and Board, as at October 2, 2006, remained set on pushing ahead with the project despite the potential problems which were soon to become manifest.

16.12. A major issue concermng the award of PK2 and PK3 and 5-8 to HKL is the provisions of advanced payments. Although Udecott’s letter of award was issued on October 2, 2006 HKL, in anticipation, issued an advanced payment guarantee dated September 15, 2006, having already on September 14 invoiced Udecott for the cost of the guarantee in the sum of $1.59million. Under the FIDIC Contract eventually executed HKL were entitled to ten percent mobilisation fee arnounting to $37.9million. It appears that Udecott interpreted the “accelerated payment” provision contained in the tender letter of 14 September as entitling HKL to advance payment in respect of materials, which were paid for on receipt of invoice, and in the full amount invoiced with no deduction for retention and no requirement as to custody or storage of the material in question, or even as to its existence.