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ATCON and bridge corporation face contract dispute

Herb Mathisen
Northern News Services
Published Monday, June 22, 2009

SOMBA K'E/YELLOWKNIFE - Work has stopped on the $165-million Deh Cho Bridge while the corporation responsible for the bridge and the primary contractor tasked with building the mega-project attempt to resolve a contractual dispute.

"Obviously, we cannot discuss any contractual details about the project but we can say that contract disputes are a regular part of any major construction project of this magnitude," said Dorothy Innes, spokesperson for ATCON, the bridge construction company. "The potential for contract disputes are anticipated in advance and as a result we have processes in place to work through them built into our agreements in the normal course of business."

Meanwhile, the only Northern subcontractor on the project said his company's involvement may be at stake, Thursday afternoon.

Jack Rowe of Rowe's Construction said he received an e-mail stating the bridge project may be subject to change and Rowe's may or may not be involved in the project anymore.

"The Deh Cho Bridge Corporation are in some pretty big discussions right now on some fairly significant changes and they'd be the best people to talk to," Rowe said from his office in Hay River, Thursday afternoon.

Rowe's Construction has a contract with ATCON and does not deal directly with the Deh Cho Bridge Corporation.

"I'm aware of a letter that has been sent out from the Deh Cho Bridge Corporation to the prime contractor (ATCON Construction Ltd.) that removes some of the responsibility for the bridge work off from ATCON," said Rowe, who added he is not sure what that means.

"I haven't been able to get a whole lot of answers."

The Deh Cho Bridge Corporation held meetings Wednesday night and another one Thursday afternoon to discuss the work stoppage, according to Michael Vandell, president of the Deh Cho Bridge Corporation.

"We will be talking about that at lunch time," he said, Thursday morning.

Vandell could not be reached for further comment following the latter meeting, or Friday.

Andrew Gamble, project manager with the Deh Cho Bridge Corporation, could not be reached for comment late last week.

On Wednesday, Gamble said he would not talk about the project until a few things were resolved, but he would not specify.

Earl Blacklock, spokesperson for the Department of Transportation, said the government was aware of the work stoppage. On Thursday, Blacklock said work stopped "a few days ago."

He said the department will not comment on the issue until the corporation makes a public statement.

Innes initially told News/North the stoppage was caused by ice flowing off Great Slave Lake, down the river. However, she was out of the office when contacted Thursday and later said she had not been privy to new developments.

The bridge project has already paid more than $3 million in claims, according to Transportation Minister Michael McLeod, June 2. Claims are paid out when companies incur unforeseen costs, such as wages paid to workers during delays.

When questioned in the legislative assembly last session, McLeod told Kam Lake MLA Dave Ramsay claims were not uncommon for a project of this size.

The dispute comes after an announcement last week that ATCON was approved $50 million in loan guarantees through the New Brunswick government.

In August 2007, ATCON - a company based in Miramichi, N.B. - signed a $132 million deal with the Deh Cho Bridge Corporation to build the $165-million Deh Cho Bridge.

The $50 million the company will receive in loan guarantees was broken down into three separate deals.

The company will get $10 million to upgrade a steel facility in New Brunswick, where the Deh Cho Bridge's steel girders will be manufactured.

Prior to the announcement, Innes said if the company's negotiations with the New Brunswick government fell through, the bridge project would not have been affected.

The private company has twice before received government assistance in the form of loan guarantees and contributions from the province of New Brunswick totalling more than $20 million.

"These loan guarantees are necessary because of the global financial crisis, and the current economic downturn has made it very difficult to access capital from traditional lending sources," said Innes.

On Wednesday, Vandell told News/North the Deh Cho Bridge Corporation had nothing to do with the company's deal with the provincial government.

He added the corporation has signed a contract with ATCON Construction at a set price. "Anything they are over or short, that's their problem," he said.

Blacklock said the territorial government would be available to provide "assistance to the bridge corporation in (the GNWT's) role as guarantor," although he would not elaborate on what kind of assistance it would give.

If the bridge exceeds its budget, the GNWT could up its share of collected profits from bridge tolls.

The government will contribute $4 million over the next 35 years to pay off loans taken out to construct the bridge, mostly recovered by money dedicated to running the ferry and ice bridge.