The B.C. Government is Going Round The Infrastructure Mulberry Bush Again

Last week the B.C. government released its short-list of three proponents each for the new Pattullo bridge and the Broadway SkyTrain extension.

Two of the six are bidding on both. Have to like those odds. Most have already had a few kicks at the can in B.C. on other projects as well. It hasn’t always been pretty.

One of the companies bidding on the Pattullo and the extension is Spanish-based Acciona, S.A.

In a case of incredible bad timing, two-days after the government had announced its status as a proponent for both projects, the World Bank barred the company from participating in World Bank-financed projects for a period of 28 months.

According to the Foreign Corrupt Practices Act blog, the company had engaged in “corrupt, collusive and fraudulent practices” in connection with the bank-financed National Roads and Airport Infrastructure Project in Bolivia.

Acciona is one of the two remaining partners in Peace River Hydro Partners (PRHP). which was awarded the first civil works contract at Site C in 2015.

There had been three partners, but just days after Hydro signed the $1.75 billion contract, the Financial Post reported that one of the three – Alberta-based Petrowest – was “living on borrowed time from its creditors.” The time ran out in August 2017.

In its 2017 report on Site C, Deloitte noted: “PRHP’s bid price $1.748 (billion) was approximately $340 million lower than the bidder with the highest technical proposal, $285 million lower than the average, and $150 million lower than the second lowest bid. PRHP may have significantly underbid the Project, by $285 million to $340 million.”

May not have been the first time the two companies have underbid.

As Global Construction Review reported in 2016, one of Samsung’s divisions – the other remaining partner in PRHP – was widely believed to have underbid on a project building a port, railway network and iron ore mine in north-west Australia. Samsung reported losses of more than US$700m on the project.

In its announcement this month, the World Bank noted that Acciona had “engaged in a collusive practice when arranging to replace a bid form following bid submission” and that its “Bolivian branch engaged in a fraudulent practice by approving certificates inflating the progress of work.”

According to BC Hydro’s accountability reports, “PRHP has demonstrated several performance issues, including: two months of delay in mobilization to the dam site, delay in obtaining permits, delays in document submittals and slow work progress.”

In August, PRHP was fined $662,000 by WorkSafeBC after a worker received an electrical shock. It’s the largest fine WorkSafeBC can levy.

Two of the other proponents with corporate overlap that are bidding on the two projects are Broadway Connect and the Flatiron-Dragados-Carlson Pattullo JV.

Broadway Connect partners include Dragados Canada Inc., ACS Infrastructure and Aecon Infrastructure.

The Flatiron-Dragados-Carlson Pattullo JV includes Flatiron Constructors Canada Ltd., Dragados Canada Inc. and Carlson Construction Group, ACS Infrastructure and Hochtieff PPP Solutions North America, LLC.

If you find that confusing, try this: who owns ACS Infrastructure? Spanish-based ACS Grupo. Who owns Dragados? ACS Grupo. Who owns Flatiron? German-based Hochtief. Who is the controlling shareholder in Hochtief? ACS Grupo.

Earlier this year, the Australian Financial Review reported that ACS subsidiary “CIMIC (had) lost $1.6 billion of value in just two days after Hong Kong’s GMT Research claimed Australia’s biggest construction group had used “accounting shenanigans” to inflate pre-tax profits by $1 billion over the past two years.”

While half way round the world, El País reported that ACS “is one of a number of firms that are currently under investigation by anti-corruption prosecutors and the Civil Guard in a case involving alleged illegal campaign donations to the Catalan political party Convergència…to secure a 20-million-euro waste management contract in Olot, Girona.”

B.C. has had some experience with ACS, most notably through Flatiron. The company was part of the proponent team awarded the Interior to Lower Mainland Transmission Line. The line had been estimated to cost $602 million. The latest tally is $828 million.

Flatiron was also part of the proponent team awarded the Port Mann Bridge and Highway 1 improvement projects, which were initially forecast to cost $1.5 billion, but came in at somewhere between $3.2 and $3.6 billion.

The other primary partner in that project was Kiewit, which is also one of the short-listed proponents for the Pattullo bridge.

In addition to being one of the construction companies working on President Donald Trump’s wall, Kiewit was charged in June with criminal negligence causing death over a 2009 rockfall that killed Sam Fitzpatrick near Toba Inlet on B.C.’s Central Coast.

All of which goes to prove that it’s easier to change government than it is to get off the merry go round of infrastructure projects that are neither on time or on budget. Taxpayers deserve better.

By Dermod Travis,

Dermod Travis is the executive director of IntegrityBC www.integritybc.ca