Lawsuit raises questions about hospital tender flip-flop

RECORD PHOTO BY AUSTIN GRABISH

Construction on the new hospital in Selkirk has begun, but questions about a lawsuit between the construction company originally slated to complete the project, and the Interlake-Eastern Regional Health Authority remain.

Construction company, IERHA settle out of court, both silent on details

By Austin Grabish, The Selkirk Record

A construction company that was originally awarded the tender for a new hospital in Selkirk filed a lawsuit against the Interlake-Eastern Regional Health Authority after it was dumped from the development less than a month after being named the lowest bidder for the project in 2013.

And new documents obtained by the Selkirk Record suggest the reason the tender was cancelled was not because of an expansion to the project as has been repeatedly reported by the RHA.

A 2013 statement of claim filed by PCL Constructors against the Interlake-Eastern RHA alleges the original tender was cancelled because of a complaint made by an unsuccessful bidder on the project.

The tender in question dates back to February 2013 when PCL submitted its bid for the project.

PCL was named the lowest bidder after coming in $40,856 less than other bids on the multimillion-dollar project, court documents say.

But on April 12, 2013, less than a month after it was named the successful bidder, the RHA advised PCL it was cancelling the tender.

The RHA said “an opportunity for significant and efficient change to the project” had come to its attention, and it would later publicly say the original tender did not include plans for an MRI lab.

But PCL disputed the RHA’s claim in court documents, alleging representatives at Manitoba Health informed the company at an April 23 meeting the reason the tender was quashed was because of a complaint made by an unsuccessful bidder.

A letter that was obtained by the Record through a freedom-of-information (FIPPA) request shows in May, the RHA contacted PCL again, this time claiming the tender was being cancelled because of flaws in the RHA’s tender documents.

Former Interlake-Eastern RHA CEO John Stinson told PCL the RHA determined its original bidding documents contained flaws that did not permit it to evaluate all bids fairly.

“Further, I acknowledge that my correspondence of April 12, 2013 did not disclose all of the issues surrounding Interlake-Eastern RHA’s decision to cancel the tender,” Stinson wrote in the letter dated May 3, 2013.

PCL then asked the RHA to see the flaws but the request was refused, court documents allege. 

A request made by the Record to obtain the alleged flaws was also denied by the RHA. 

“The Interlake-Eastern RHA has not received any other written complaints from bidders on this project and therefore, these records do not exist,” a letter said.

The construction company went on to sue the Health Authority for undisclosed damages, alleging the RHA caused a loss of profit for the company.

It also alleged the RHA breached an obligation by cancelling the tender on false and misleading grounds.

It said the RHA utilized the tender process to conduct a reverse auction and engage in a bid-shopping process by obtaining information from all bidders and then re-tendering without a valid cause.

The new hospital is reported to be one of the biggest health capital projects in the province. It has a construction budget of $111 million alone, and with equipment and furnishings the final budget is estimated to be $159 million.

The legal spat between PCL the RHA ended just five months after the lawsuit was filed.

No statement of defence from the RHA was ever given to the court, and no details about any kind of a potential settlement between the two parties have ever been made public.

Emails obtained by the Record show the Deputy Minister of Health’s office was aware of the legal spat, as were other senior officials with Manitoba Health.

In one email obtained through a FIPPA request, Norman Blackie, executive director of capital planning for Manitoba Health, calls the litigation surrounding the hospital “the ugly file”.

Documents show three companies had bid on the original tender. They were: PCL Constructors, Bird Construction Company, and Graham Construction and Engineering.

The province announced last spring the EllisDon Corporation had been awarded the construction tender for the project, and work on the hospital began shortly after the announcement.

The RHA and the province both refused to comment on this story.

Both parties cited a non-disclosure agreement between PCL and the RHA, as well as the Elections Financing Act, which prevents the province and its agencies from publishing or advertising information about its programs or activities in the days leading up to an election.

A byelection is taking place in The Pas on April 21.

A spokesman for PCL said the company would not be providing comment as the dispute has been settled.

 -- First published in the Selkirk Record print edition April 2 2015 p.2