Acting VSA Minister Leona Romeo-Marlin addressing MPs on Thursday.
PHILIPSBURG–The construction of the new St. Maarten General Hospital is expected to start in September, St. Maarten Medical Center (SMMC) General Director Kees Klarenbeek informed Parliament during the continuation of a meeting on the subject on Thursday.
Klarenbeek, who provided a detailed background of the new hospital project and gave an update on the process, said SMMC had conducted in-depth due diligence on the consequences of the extraordinary administrative procedure (EAP) involving the contractor selected for the project, Italian company INSO, in the period January to June 2019.
He said also that the risks related to continuing the project with INSO are mitigated by “solid measures” and have the consent of the lenders for the new hospital project and the World Bank.
INSO had been admitted into the EAP procedure of its parent company Condotte as of December 5, 2018, and is now a government-controlled company separate from Condotte. The EAP is intended to preserve the company, despite its state of insolvency, through restructuring or reconversion of the group’s economic activity.
Klarenbeek said the cost associated with ceasing the project with INSO and proceeding with a new tender are calculated at US $47.9 million.
“SMMC concluded that with additional securities from INSO and an addendum of the contract, continuing with INSO would be preferred compared to starting a new procurement process,” he said. “This position is shared by the lenders and the World Bank. SMMC decided, in agreement with the lenders and the World Bank, that SMMC will continue the contract with INSO under the explicit condition that INSO delivers all additional securities.”
The next steps in the process are to finalise discussion with general contractor for the hospital project, INSO, regarding additional securities and adding an addendum to the contract with INSO and lenders. This process started in July and is expected to wrap up this month.
INSO is also expected to finalise the design in order to start construction, which is expected to get off the ground in September. Construction will take about 42 months to be completed: the main building is scheduled to be completed in about 30 months with the wing and parking facilities being completed in an additional 12 months. Construction should be completed during the first half of 2023
In giving a historical perspective and outlining the need for the new hospital, Klarenbeek said the existing hospital had been constructed in 1991 for a population of 23,000 persons. The hospital in its current state is too small. It has 69 beds, is not functional with its open structure, is not efficient and is a hurricane risk. It is also old, has quality issues and is very costly to expand. Remaining in the status quo, he said, is not an option.
The new hospital will be constructed at the same location as SMMC. The main building will consist of five floors and a wing of three floors.
The height of five floors has been approved by the Minister of Public Housing, Spatial Planning, Environment and Infrastructure VROMI in a letter dated February 16, 2018, and the building permit was received in November 2018.
The new facility will have approximately 400 parking spaces in line with VROMI’s regulations. The new hospital will move from 69 beds at the existing hospital to 110 beds (clusters of 1 and 2 beds per room). It will have four level-1 operating theatres, of which one will be for C-sections and one for intervention radiology procedures.
The additional integrated wing of approximately 3,000 square metres will be for future expansion and/or other care functions. A total of 1,000m2 will be used for St. Maarten Laboratory Services (SLS) and the use of remaining space (2,000m2) will be determined and can be options for medical tourism.
The new hospital will have a wastewater treatment facility, will not have an incinerator but an autoclave/grinder in line with stipulations of the World Bank, and will have a helicopter platform.
The hospital will be constructed in phases. Phase one of the project will include – for the main building – side preparation, demolition and construction of a new wastewater plant, construction of the main building and construction of the technical building. Phase 2 will include relocating persons from current hospital to the main building of the new hospital and demolition of the current hospital.
Phase 3 will include the construction of the wing, the helicopter platform and the parking garage.
SMMC had negotiated additional securities to mitigate the risks of the EAP with the consent of lenders and the World Bank.
For the additional securities, INSO needs to accept provisions in an addendum to the contract with regard to adequate adjustments related to the on-demand performance bond and on-demand advance payment bond; adequate provisions related to the project bank account – the minimum balance on this account and the pledge and control agreement; adequate provisions pertaining to effective step-in rights for employer in relation to all subcontractors (including design and procurement) and suppliers of contractor in case of a contractor’s default; and an adequate provision that shall ensure that no change of control of contractor (including the direct or indirect sale of the shares of the contractor) shall occur without the prior approval of the employer.
Consequences of new tender
Klarenbeek said the consequences of retendering the hospital project include loss of the material part of the preparation expenses that were paid as of 2015 until today; a potential claim from INSO as INSO believes there is no legal ground for SMMC to break the contract due to the EAP, and legal expenses related to a court case with INSO.
Other risks include losing the World Bank grant, which is based on the agreed variation order between SMMC and INSO regarding the additional expenses for post-Hurricane Irma specifications, and a time delay as SMMC can only start a new tender for the new hospital after a possible court case with INSO for breaking the contract, as well as the cost of a new tender, which will take approximately nine months for issues such as project management and technical and legal support.