Labrador roadwork contract release unprecedented: company

Cancelled Penney Paving contract disputed as a comparable case to Humber Valley Paving

Published on May 3, 2014

In discussing the early release of Humber Valley Paving from a provincial government contract for work on the Trans-Labrador Highway, Transportation and Works Minister Nick McGrath pointed to a contract with another company, Penney Paving — also for work in Labrador, also cancelled — as an example of why the decision to release Humber Valley Paving was not unprecedented.

McGrath maintains it is a fair case comparison, to show the need for weighted government decision-making around construction contracts and, on occasion, the need to cancel contracts for the good of the province.

Yet Penney Paving has objected to the comparison.

Humber Valley Paving — formerly led by incoming premier Frank Coleman — was awarded a contract in May 2012 for roughly 80 kilometres of paving of the Trans-Labrador Highway.

The company was paid $11.8 million, for what the Department of Transportation and Works has described as a fee reflective of the roughly 60 per cent of the contract completed.

The work was negatively affected by forest fires in Labrador West, interrupting the flow of asphalt, equipment and staff to site, McGrath has noted.

He also said he believed forcing the company to finish the contract would have ultimately come in as a cost to the province — in time and money, with the potential for lengthy litigation and work undone.

Meanwhile, in a comparison to that case, he pointed to the release of Penney Paving from work it was contracted to complete on Hamilton River Road in Happy Valley-Goose Bay.

The Penney Paving contract was awarded after a tender closed in August 2013.

Emails relevant to that roadwork were made available on the provincial government’s website, following an Access to Information request to the Department of Transportation and Works.

The documentation shows the timeline for that proposed roadwork was a consideration early on, beginning in at least mid-September 2013.

Later the same month, the assistant deputy minister sought an update on what provincial paving projects would be completed in the year, and Fred Penney of Penney Paving responded with a standing schedule for the company’s tendered work and a list of temperatures for the area from the year prior.

He stated his belief the work would not be completed before temperatures dropped too low and should be picked up in the spring.

“I understand some will be disappointed with deferring the project until early next summer, but I am confident that the quality of the project will be much better,” he said.


Prepared to complete work

In an interview Friday morning, Penney said his company was prepared to complete its work in 2014, absorbing any penalties associated with the delay.

Unlike the case of Humber Valley Paving, he said, his company requested a delay in tendered work, but not to be released from contract work already underway and without penalty.

“Usually these tenders that close late in the season, we all realize just from past history that we’re not going to get them done in the year. Most of them do get carried over. But then there’s a penalty,” he said.

“Last year, in our case, by the time we were getting ready to put things in motion to do (the roadwork in Happy Valley-Goose Bay) we were still working here in Central on a highway project and by the time I could have got my men and equipment up there, it would have been in October, and based on the temperatures that we typically have in October, I wasn’t really comfortable with it.”

He noted his company would have responsibility for a two-year warranty on the road.

Shoddy work would not only have the potential to result in a safety risk or, through esthetics, hurt the company’s reputation, it would also potentially result in the work having to be re-done at the company’s expense.

Instead of allowing the work to carry over to the next year, the province cancelled the contract.

The cancellation is noted in an Oct. 7 email within the package of information released by the department.


Comparable cases

Regardless of Penney’s position claiming the cases are not comparable, McGrath said he feels differently.

“Because the issue is it doesn’t matter who initiates the conversation as to whether or not we’re going to break the contract. In the case of Penney Paving, they could not get the work done in the time frame that it was contractually supposed to be done,” the minister said, adding he is trying to reduce and even eliminate exactly the kind of carry-overs from late-season tenders to which Penney referred.

“We had exhausted every opportunity that we saw that they would get the work done and they ran out of time,” McGrath said.

He said the result was one party approaching another and a decision being made to kill a standing contract, something he called a comparable situation to that of Humber Valley Paving.

The cancelled work for Penney Paving left the Department of Transportation and Works with a problem in Happy Valley-Goose Bay.

Hamilton River Road was deteriorating to a point where public representatives, including the town council, were expressing concern.

The road impacts were in the spotlight, given Happy Valley-Goose Bay’s position at the centre of contractor traffic for the multibillion-dollar hydroelectric project at nearby Muskrat Falls, on the lower Churchill River. Requests were being made to the government for immediate repairs to the road, before winter.

The department went looking for a company to complete a package of “emergency Goose Bay work.” And that work went directly to Humber Valley Paving.

For his part, Penney told The Telegram that company is really the only other paving contractor working in Central Labrador.

The company would have been a natural pick for the province for any emergency repair work, he said, calling Humber Valley Paving “the only other choice” to get the repairs done in that area when immediately needed.


Acting quickly

And according to government staff emails, Humber Valley Paving was in a position to quickly take on the work, with aggregate on site and — following a meeting on Oct. 4 to discuss the proposed repairs — a stated ability to complete emergency repairs in the short window of time available before temperatures dropped too low.

The emergency work cost the province about $138,000, McGrath said.

The larger work package that was to be completed by Penney Paving is being re-tendered.

Meanwhile, the new management of Humber Valley Paving, yet to be identified by The Telegram, is not speaking about any of the company’s contracting with the provincial government.

Peter Byrne, a longtime director of the company who stepped down from his position with the board April 4, taking up an undefined but leading role with the company, has responded to emails from The Telegram, stating Humber Valley Paving is a private enterprise.

“Reasons for any acts taken by our company will also not be a conversation we plan to have with the press,” he stated.

The Trans-Labrador Highway Contract

Humber Valley Paving’s Pay


According to Transportation and Works Minister Nick McGrath, there is no basis for Opposition outcry over payment to Humber Valley Paving, given the company has only been paid for work completed. In evidence, his department has provided a breakdown of elements of the roughly 60 per cent of work completed on the contract.

Included in the $11.8 million paid to Humber Valley Paving is the following:

• 106,000 tonnes of “Class A” gravel out of a total of 146,000 tonnes

• 30,000 tonnes of “Class  A” was manufactured and ready to place

• 444,000 tonnes of “Class B” gravel out of a total of 508,000 tonnes

• 40,000 tonnes of “Class B” was manufactured and ready to place

• 15,900 tonnes of asphalt out of a total of 73,700 tonnes

• 935 tonnes of liquid asphalt out of a total of 4500 tonnes

• 3500 metres of guide rail, which exceeded the estimated 3300 metres

• 5,000 flag person hours out of a total of 10,000 hours

• 12,800 metres of guide rail adjustment out of 14,000 metres


The original tender scheduled for the completion of this road work for July 31, 2014 and, with re-tendering, the target is now Aug. 31, 2014.

(Source: Department of Transportation and Works)