Madam Chair, I know there is a reserve for supplementary operations, Madam Chair.
Thank you. Member for Frame Lake.
Thanks, Madam Chair. Yeah, I don't have anything further on general stuff but I have some questions on the detail. Thank you.
Thank you. Are there any other general comments? Seeing no further general comments, we will review the supplementary estimates by department.
Does committee agree to proceed to the detail contained in the tabled document?
Agreed.
Committee, we will begin on page 5. Supplementary Estimates (Infrastructure Expenditures), No. 3, 20222023, Department of Finance, infrastructure expenditures, management board secretariat, not previously authorized, $27,750,000. Does committee agree? Member for Frame Lake.
Sorry, they're not going to get away with this one. So I guess I'd like to get an explanation of what this $27.75 million is for. Thank you, Madam Chair.
Thank you. Minister of Finance.
Thank you, Madam Chair. Madam Chair, there had been a matter involving the other parties, what we call Project Co, the entity that was involved in building and running the Mackenzie Valley Fibre Line. They, under the project agreement, have the ability to seek compensation for what's called a supervening event. So that's an event that they may have claimed would have increased the associated costs of the project. What they were seeking was such that the GNWT entered into some discussions to try to determine if that could be settled rather than having to go all the way through a more formalized process. And in the course of doing that bought in a mediator and it was after the mediated process that a proposed settlement amount was reached, and that is the amount that is reflected here. Thank you, Madam Chair.
Thank you. Member for Frame Lake.
Thanks, Madam Chair. So this money is going to go to NorthwesTel; is that what happens here? Thanks, Madam Chair.
Thank you. Minister.
Thank you, Madam Chair. It was the Ledcor team cohort that was that is the other party. Thank you, Madam Chair.
Thank you. Member for Frame Lake.
Okay, thanks, Madam Chair. So what's the total cost of the Mackenzie Valley Fibre Link with this settlement and all the rest of it? Thanks, Madam Chair.
Thank you. Minister.
Thank you, Madam Chair. Madam Chair, I have $194 million as being the total cost now including this. Thank you.
Member for Frame Lake.
Thanks, Madam Chair. So what was the original sort of cost estimate? Thank you.
Thank you. Minister.
Thank you, Madam Chair. Madam Chair, Ms. Melanson has the detail. I'll direct it to her, please.
Thank you. Ms. Melanson.
Thank you, Madam Chair. The original procurement estimate for this project was $81.3 million.
Thank you. Member for Frame Lake.
Thanks. I think there were a few gasps in the room.
How do we get from $81 million to $194 million? Like, who provided the original cost estimate of $81.3 million? I guess I just need more of an explanation here. Thanks, Madam Chair.
Thank you. Minister.
Madam Chair, this is dating back to, I think, approximately 2013 but I'd be happy to try to locate that information and provide it to the Member.
Thank you. Member for Frame Lake.
Okay, thanks, Madam Chair. So I'm just yeah, so this was done as a P3, and was there any other way for us to I guess we could have contracted this rather than do it as a P3 or something and, you know, why did the and I know I'm putting the Minister in a difficult position because she wasn't even here when these decisions were made. But would this have been any cheaper if this had been done just as a regular procurement? You know, we contract somebody to do it rather than as a P3; like it's more than double the original cost. Thanks, Madam Chair.
Thank you. Minister.
Thank you, Madam Chair. Madam Chair, the GNWT hasn't borne the entire costs. So part of the costs here are actually being paid by this project entity, which includes Ledcor. They are the ones that were responsible for financing building and financing the line. So the costs that they've incurred are quite significant. The GNWT actually is not fully responsible for all of those because of the P3 arrangements, they undertook some of the risk, including some of the risk of cost overruns. Now so it's not so simple as to say that all of those cost overruns are entirely the GNWT's responsibility. That's that is the benefit of having the P3, is that another entity takes on risk and when matters go up in cost, they are sometimes responsible for it. And that is one of these situations.
I'm hesitating, Madam Chair, only because some of that was the subject of the matter that was settled, and I want to not run afoul of an agreement about what was settled and why it was settled upon. They were claiming obviously an increase of costs that they put under the supervening events, a discussion was had as to what amount we would agree were under the project agreement and therefore the GNWT would compensate for. But some of what they were claiming for as being cost overruns was not going to be compensated for under this process. So again, Madam Chair and I don't have all the details, neither do any of us have all the details going back to 2013 of what budgets were and what cost overruns were over that course of time. So perhaps I could, again, suggest that we'll begin by getting committee members a more detailed breakdown of the budgets and costs. And then hopefully that will help provide a bit more clarity and ensure that we are remaining on side with the settlement agreement that led to this very specific line item here. Thank you, Madam Chair.
Thank you. Member for Frame Lake.
Thanks, Madam Chair. So what other exposure do we have on this project? Are there other, you know, subcontractors out there? Is there ongoing litigation related to any other aspects of this project that we could have some exposure or liability for? Thanks, Madam Chair.
Thank you. Minister.
Thank you, Madam Chair. Madam Chair, this should be the sum total of it. At this point, there are no other outstanding claims or matters that are brought to our attention and certainly at some point, as parties would be aware, there are limitation periods that are attached, particularly to this type of matter. I am not anticipating anything further of this nature. Thank you.
Thank you. Member for Frame Lake.
Yeah, okay, how do we how do, like, even us as Regular MLAs do we is any of this sort of exposure or potential for risk ever disclosed to us? Like, this comes as a total surprise. I know that the public accounts has this global figure, massive figure of, like I think the last time it was over $200 million or something of potential exposure or litigation or something that and it's grown exponentially over time. But how does this sort of exposure or potential liability ever get conveyed to even us as Regular MLAs? Thanks, Madam Chair.
Thank you. Minister.
Thank you, Madam Chair. Madam Chair, the Member's quite right. This is within what is termed the contingent liabilities that are budgeted for and that are reported upon. It's a larger sum initially. It comes it's in the public accounts. It's a larger sum. It's reported as an aggregate precisely because there's often either the discussions towards resolution aren't advanced enough to know whether they should be within contingent liabilities or they're at a stage where it would not be strategically wise for the GNWT to put itself out and say well, we think a matter should settle at X dollars. That would really impede the ability to settle claims and may well actually create an incentive to bring claims if those kind of numbers were put out publicly. So that is a challenge. It makes it that we can't say last year when this was already in process and we knew there was likely to be a settlement in the life of our government to be able to go forward and say well, we know there's going to be a settlement and we're hoping, and we're aiming, for a range because that would really undermine the settlement negotiations, the mediation process that was underway in this particular example, but as in any other as well. But so that's the contingent liabilities, though, overall in public accounts is where you would find the amount that we are we're expecting or having to report on for matters of this nature. Thank you, Madam Chair.
Thank you. Member for Frame Lake.
Yeah, thanks for that. And that's why the Standing Committee on Government Operations in its I think most recent review of the public accounts has asked for greater transparency of those contingent liability amounts, as is done in some other jurisdictions. And I just don't know why that kind of information can't be disclosed to us as Regular MLAs. But I'm going to run out of time here, Madam Chair. But I'm going to be voting against the supplementary appropriation, particularly for this amount, because I think this is just extremely poor project management and not the kind of thing that we should be doing and just come to the House and get a bail out on it. I'm just not prepared to do that, Madam Chair.
But I do have one other question, and that's whether there's any revenue coming in from this project and whether we could ever recover enough money on the revenue side to help offset some of these costs? And, of course, in offsetting revenue, that means our citizens probably have to pay more for their internet and phone services which is already outrageously expensive, so. But I'd be happy to hear what the Minister has to say about revenues on this project. Thanks, Madam Chair.
Thank you, Minister.
Thank you, Madam Chair. We're just looking to see if we had looked for a revenue number earlier. I just don't know if I had received it in. Let me see if we can find it quickly and if not perhaps provide it we'll have to I don't know that we'll have it here today, Madam Chair. Sorry.
All right. Well, we'll wait for thank you for that commitment that you'll provide that. Are there any further questions? Member for Thebacha.
Thank you, Madam Chair. I too am questioning some of the transactions. I know this is inherited; it's not with this Cabinet because it goes back to 2013. There's no Indigenous partners in this. There's another company that's called Ledcor. And it's an international company with NorthwesTel, in a P3, and we're giving them a settlement of $27,750,000. And it's questionable as to how these kind of agreements are done. I'm all for P3s if it's done properly and the Is are dotted and the Ts are crossed. And, you know, onus goes back to the legal teams that put these kind of things together. And I want to see how could this happen, first of all, is my first question. Thank you, Madam Chair.
Thank you. Minister.
Thank you, Madam Chair. So, Madam Chair, again, the total project cost isn't the total necessarily that the GNWT's paid for it. I am providing the total project cost as an estimate. But, again, I'm somewhat constrained because it wasn't a total project cost by the GNWT. It was paid for by this other entity. That's the nature of having a P3 partner design and build a project and deliver it. And they ran into some significant issues in the course of that project, which we didn't then have to have the risk for. So the claim that was made and the settlement that was reached, as in the case of many claims and settlements, started at a different point and had to go to a mediated process in order to reach a conclusion, which is what brings me here at $27 million on almost $200 million project is the resolution that is before committee right now. But, again, it is not the total cost of the project, nor is it reflective necessarily of what the GNWT's portion would have been.
The ability to undertake a fairly technical delivery and a very technical procurement and project delivery on a fibre line running up the value is not one that I would suggest, frankly, and with respect that the GNWT has the technical expertise to deliver upon. So it's a matter of paying upfront to have a third party come and do it or having them engage in some risk to deliver on it. Thank you, Madam Chair.
Thank you. Member for Thebacha.
Madam Chair, I would like very specific and precise answers and not waste my time for my questions. So I would appreciate that very much.
The other question I want to ask is, you know, we have NorthwesTel here as the main proponent in this settlement. And, you know, I've always been against monopolies because when you have a monopoly in business, you never try to give the best service. And that's usually what happens in business. And I think it's extremely important that we as a government start being more accountable and more transparent. And that's what we were trying to do.
You know, there's another part of a whole situation that I'm in with Fort Smith with the fire centre. There we have the fire centre who we're going to put out now to a different process and yet we pay out an international company and NorthwesTel, who is stationed in the Yukon, and we're paying all this extra money for to make sure we agree on a settlement outside the premises of the agreement and that to me is very alarming. And I'd like to know if that's okay for the Minister of Finance to say that's okay, and how did this settlement come about? Thank you, Madam Chair.
Thank you. Minister.
