~ Another bid to build, maintain if INSO cannot fulfil contract ~
PHILIPSBURG–Health, Labour and Social Affairs VSA Minister Emil Lee said on Wednesday that INSO, the Italian construction company granted the contract to build the new St. Maarten General Hospital, is not bankrupt and the project will not be halted.
United St. Maarten Party (US Party) Member of Parliament (MP) Rolando Brison on Tuesday called on Lee to halt the project until he is certain that taxpayer’s money and the viability of the hospital’s future is safe. Brison’s call came amidst concerns over INSO’s financial turbulence and, according to Brison, its potential bankruptcy.
Lee told reporters during the Council of Ministers press briefing that INSO and its parent company Condotte are not bankrupt and have not filed for bankruptcy as was being alleged. “The hospital project is going ahead, it is going to be built. It may suffer a delay – but it is going to be built,” he made clear.
Lee said he is in direct contact with INSO’s administrator in Italy and expected to receive a letter on the situation with the company on Wednesday afternoon to determine how to proceed with the project. Lee told The Daily Herald late yesterday (Wednesday) that the letter had not yet been received.
He told reporters at the press briefing that the administrator is “aware of the situation. His job is to preserve the value of the company. The value of the company is determined by the contracts that they hold. He has an incentive to make sure that all the contracts that are currently in-house with INSO are maintained. So, he has every incentive to find a way to make the project work. Keep in mind that he is administering a company with 1.3 billion euros in turnover, so it is going to take a little bit of time, but we are on top of it.”
He said if INSO cannot fulfil the build and maintenance part of the contract, this part of the project would have to go on bid again. He made clear that all the funding is intact. “All the documentation, the drawings, the permits are owned by the SMMC [St. Maarten Medical Centre – Ed.]. All monies paid for contracted services to this point have been delivered. In the event that INSO cannot perform on the contract, we issue a new bid for the construction and maintenance portion of the project,” he said.
“The new St. Maarten General Hospital, and by extension SMMC, has not lost one guilder as a result of the issues between Condotte and INSO. Not one guilder has been lost. The project is well put together, with proper safeguards, and we will proceed with construction only once everyone is confident in the security of the project moving forward.”
The hospital project is currently in the phase where preparation of final drawings for the construction of the building are being finalised, the requirements for the site conditions are being worked on, topographic and soil samples are being taken and two mock-up rooms have been built for SMMC staff testing. These two rooms have been built “to size” to ensure that the planned procedures can be carried out in these rooms.
Sizes of doorways and bathrooms, the flexibility of moving beds in and out of the rooms, etc., are all being tested to provide feedback for the design criteria. Currently, the reinforcement and repair project of the current SMMC, funded by the World Bank, is ongoing and will continue.
According to Lee, the project is organised in phases; for example, planning and design. This phased execution enables all parties to review the steering/adjustment points and compare progress with the contracted objectives.
“I actually see it as a blessing that this is happening now and not when we have already started with the construction phase of the new hospital,” he said.
The project managers, SMMC, the VSA Ministry and all the financiers, in consultation and with coordination by the administrative and security agent for the lenders, the National Investment Bank (NIB), have decided to not issue any payments to INSO until clarity has been established.
“When we look at the agreement with INSO, they have defaulted on their contract. We have requested clarity from INSO, so that they can prove that they still have the financial capacity to perform on the contract,” Lee said.
He said the financial circumstances surrounding Condotte are recent and the project team had been informed. With this knowledge, the team actively addressed the matter by conducting evaluations and consultations, including with international advisors. At the time, Condotte’s financial turbulence did not pose a threat to INSO and the project execution. “Let us remember that the contract with INSO was signed in 2016,” Lee said.
INSO informed recently, just before the scheduled ground-breaking on December 3, that it might be impacted as a result. “With this knowledge, as stated before, it was agreed on by SMMC, the VSA Ministry and lenders that no funds would be released to INSO until clarity has been established.
“INSO’s parent company Condotte, has been operational since 1880 and has an annual turnover of 1.3 billion euros. The extraordinary administration filing of Condotte is the result of something that is happening in the construction sector in Italy.
“Condotte is part of the top Italian construction companies, ranking in at number 3, along with Astaldi – number 2, and Trevi – number 6, all three of which are under extraordinary administration. It is a process that allows for Government to step in and take over the management and decision-making of the companies and properly restructure the debt of the companies.”
Lee also addressed comments regarding the role of NIB and ENNIA and stated: “To be clear, ENNIA is not a financier of the hospital. No portion of the ENNIA group is financing any part of the hospital.
“The NIB offers a service. They are an administrator that coordinates between the lenders. Their role is to coordinate, to synchronise and communicate, to regulate the agreements that all the lenders have come with.” He said that as part of the project process, there was also a tender for the administrative and security agent service that took place, which the NIB won in December 2017.
Lee gave a brief recap of the project process for the new hospital thus far. He said the scope and the requirements of the project had been established in a tripartite setting amongst the VSA Ministry, Social and Health Insurances SZV and SMMC. “The work that has been done in terms of determining the requirements, the scope and everything of the hospital stands in good order,” he said.
Before bidders were allowed to submit an official bid for the build and maintenance of the new hospital, they had to undergo a pre-qualification and selection process. This process consisted of a review of their financial and technical capabilities as well as the capacity to manage the project. “INSO obviously went through this process and passed the review.”
As part of the due diligence process of the World Bank granting funding to SMMC, the entire process for the bidding for the new hospital was also reviewed by the World Bank. “They put the entire procurement process under review and they came out with a positive advice on how the process was executed.”
Further due diligence was executed by the project management team, having visited the hospital in St. Lucia constructed by INSO. This was to review the quality and execution of the project. The contract with INSO was signed in September 2016, between INSO and SMMC.
The ground-breaking event of December 3 was planned and scheduled months in advance, with the planning and anticipation that several steps and phases were to be completed. Some of these steps were the preliminary design required for the building permit, which was completed and approved, and the building permit request, which was completed and granted.
Also, meeting the “Conditions Precedents” requested by financiers – the lenders of the project. The financiers agreed to the funding of the project and outlined a list of conditions to be met before releasing funds to the project. The independent consulting engineer contracted by the lenders verified to the project managers that this process is on track.