The Manning administration has claimed victory in another leg of arbitration proceedings between Nipdec and NH International (Caribbean) Ltd (NHIC) concerning the Scarborough Hospital project.

Health Minister Jerry Narace, in a statement to yesterday’s House of Representatives, said the issue involved the October judgment of the Government’s appeals on the issue. “This ruling is a considerable victory for the Government...this decision redirects both parties towards the Third Partial Award and reinforces and approves the arbitrator’s decision that the sum of $283 million claimed by NHIC in the arbitration was grossly inflated and that the actual cost of work completed by NHIC was only $133.2 million,” he said. Narace said Nipdec’s Tenders Committee selected NHIC in May 2002 to construct the Scarborough Hospital at the contracted price of $135.9 million for completion in just over two years. “The Scarborough Hospital project is a clear demonstration of what the Government has been saying about the unacceptable practices of some local contractors and hence our determination to change the way public construction projects are implemented,” he added.

Narace said the Government was also successful in the matter in confirming that there was no requirement for a state entity to provide a contractor with proof of Cabinet approval of financial arrangements, where the FIDIC conditions of contract apply. “This is a legal victory for the State and ensures, both for this case and future cases, that this contractor and any other like-minded contractors will be unable to claim any precedent of a need for Cabinet approval in circumstances, such as this,” he said. Narace said NHIC commenced work on the hospital project in March 2003, and from as early as November 2003, began raising issues. “As a result of the contractor’s un-cooperative approach, the project progressed slowly and the resulting delay formed the basis on which NHIC made claims for increased costs,” he said. Narace said that in 2005, NHIC submitted a revised figure of $222.2 million and in 2006, it submitted a further revised figure of $474.2 million for the project.

“NHIC’s estimate for completion of the project in 2006 was $338 million more than the initial contract sum of $135.9 million,” he added. He said NHIC, which suspended work in September 2005, claimed $283 million in the arbitration for work done on the project. Narace said NHIC’s percentage profit margin calculated at bid was twelve-and-a-half per cent.