Contractor kerfuffle
Premier, Nalcor board in tug-of-war over Muskrat Falls disclosure
Premier Dwight Ball said in the legislature Monday he is willing to change the Energy Corporation Act to force Nalcor Energy to be more transparent, and behind the scenes he’s been pushing for the company’s board of directors to provide more information about the Muskrat Falls project.
Question period in the House of Assembly Monday was dominated by discussion about Muskrat Falls and the impending public inquiry into the wildly over-budget hydroelectric project.
And behind the scenes, Ball has been involved in a tug-ofwar with the Nalcor board of directors over what information about the project can be publicly released.
In September, The Telegram reported that the overwhelming majority of the management team on the Muskrat Falls project is made up of “embedded” consultants who charge anywhere from $100 per hour up to more than $200 per hour. In many cases these individuals work full-time hours and are indistinguishable from regular Nalcor employees, except that they get paid far more, and their remuneration isn’t disclosed, because technically they’re consultants.
In the wake of The Telegram’s report, Ball sent a letter to the Nalcor board of directors asking why the company adopted this management structure, and how Nalcor could justify blocking disclosure of contractors’ billing rates as “commercially sensitive.”
In a nine-page response, board chairman Brendan Paddick argued that leaning heavily on hourly contractors for megaproject construction management is standard within the industry.
Ball pointedly asked whether the use of so many embedded contractors provided best value for the people of the province, and in response to that question, Paddick wrote, “There is no simple or straightforward way to measure the value which management structure brings to a project.”
Paddick’s letter also went into quite a lot of detail about the legal provisions in the Energy Corporation Act which allow Nalcor to refuse to disclose information which is deemed to be commercially sensitive, and Paddick argued that in some cases Nalcor is legally obligated to protect information that may damage the competitive position of contractors.
In a two-page response that Ball sent back to the Nalcor board Friday, he pushed back.
“I must disagree with you on the matter of public disclosure of billing rates for embedded contractors,” Ball wrote. “While I concede there may be some instances where the requested information is commercially sensitive, I question the full denial in these circumstances, especially in the context of individuals who incorporate themselves.”
Ball suggested Nalcor should be able to provide information in aggregate which gives the public a clearer picture about how much money is being spent on embedded contractors, without harming anybody’s competitive position.
Ball went even farther in the legislature Monday. Responding to a question about embedded contractors from NDP interim-leader Lorraine Michael, he said the government is willing to strip the special exemption to access to information legislation that Nalcor currently has.
“We will take whatever measures that are required to get the information so that Nalcor is as open and transparent as any other department within government,” Ball said.
Michael said she is disappointed by the lack of information when it comes to formal government oversight.
“We have an oversight committee that, why weren’t they picking up on this stuff? Why weren’t we hearing about the embedded contractors from them?” she said.
Also in question period, both the Tories and the NDP asked about the upcoming inquiry into the Muskrat Falls project, which Ball has said will be called this fall.
The Tories wanted to know that the inquiry would look at everything — not just the early stages of the project when the Tories were in control. Leader Paul Davis also said he wants to see a forensic audit as part of the inquiry.
“I don’t want to see a process that’s politicized,” Davis told reporters. “I’m afraid they might be going that direction.”
Ball said the terms of reference for the inquiry are still being drafted, but they will be as broad as possible, to allow for a full examination of whatever aspects of the project are deemed to be important.