Nalcor CEO Ed Martin’s resignation announcement, April 20.
The beleaguered megaproject is behind schedule and over budget, and independent consultant EY has said that there’s a lack of adequate oversight to keep Nalcor in line.
But the section of the EY report that drew the most attention last week was a paragraph saying that performance by lead contractor Astaldi has gone off the rails based on a poorly-structured contract.
The powerhouse portion of the Muskrat Falls site is months behind schedule, and over-budget.
EY raised concerns that Nalcor payments were effectively tied to labour costs rather than performance, measured by cubic metres of concrete poured.
“This mechanism did not capture the potential for poor contract management of labour and the consequent decoupling of labour paid for from work completed,” EY wrote.
“As at December 2015, the proportion of contract value paid to the contractor is significantly greater than the proportion of the concrete that has been placed.”
On Wednesday, Martin defended the decision to tie Astaldi payments to labour, rather than concrete poured.
“There’s nothing wrong with what we did, and the reasons for it were to drive efficient use of labour, which is a critical part of the project,” Martin said.
But Martin was singing a very different tune a year ago, when he was asked about this exact topic at the company’s 2015 annual general meeting.
A citizen asked if the Astaldi contract was a fixed-price contract, and Martin replied, “The short answer is yes.”
He then went on to explain that the contract with Astaldi was a “unit-rate” contract.
“They get a unit amount for every bit of concrete that they install,” Martin said. “So it’s called a unit-rate contract. Provided we don’t change the engineering specs, it’s essentially a fixed-price contract.”
When Martin was asked about the contradiction on Wednesday, he said, “I can’t remember saying those types of things.”
