Inflation driving up cost of HMP replacement, concedes N.L. government

Not a single shovelful of dirt has been overturned for a planned new provincial prison, but the Newfoundland and Labrador government concedes inflation is already driving up the cost and the opposition claims what was expected to be a $325-million facility is now north of half a billion dollars.

On Tuesday at the House of Assembly, Progressive Conservative infrastructure critic Loyola O'Driscoll said "industry sources" have told him the cost is now expected to be$520 million and he noted construction hasn't even begun yet, despite the provincial government's plan to start work this spring.

"They started in 2021 announcing that we're going to start today, in the spring, to dig holes in the ground, to start this project, and we're nowhere near that now, by the sounds of it," he said Tuesday after question period.

In 2019, the provincial government announced it would set aside $200 million for the project. An access-to-information request in March 2022 revealed the government's "affordability ceiling" was $325 million.

Infrastructure Minister Elvis Loveless wouldn't confirm the PCs' figure of $520 million but did concede inflation is a factor in the project's cost.

"I don't know where they got their figures from. You can ask them, I guess," he said. "I think it's quite evident, from all the media coverage [that] inflationary pressure is on everything, and it would be no different here."

Loveless took issue with the PCs' characterization of the prison as a "sole-source" tendering, noting three proponents initially bid on the project but two of them dropped out. The government is taking more time to evaluate the remaining bid by the Marco construction group because it is the only one left, he said.

"We ended up with one proponent," he said."It's a process that's ongoing with that single proponent, recognizing at the beginning, when we realized it was one proponent, that we had to expand our lens in terms of looking at the procurement process, which we did, and the proponent knew that, and so we're still continuing on with that process."

Loveless couldn't say how much longer the process might still take to award the tender.

"I think it's necessary that we need to do due diligence on it," he said. "It's taking more time because it's a single proponent, and I think that's the checks and the balances that are involved there."

O'Driscoll said the PCs are concerned that there's only one bidder left, saying they expressed their concerns to the government when the other two bidders dropped out.

"We certainly said that to them at that time, and, you know,they done nothing about it, and this is where we stand now," he said.

He suggested the government might need to start over.

"Knowing that there was only one bidder at the time and that it's gone over budget, then maybe something should go back and try to retender it and see if we can get some more bidders. If it doesn't happen then, then we'll have to live with what the industry does, what the markets bring."

Loveless conceded that it may come to retendering.

"That's part of the process we're going through right now, and I'll have more to say on that when we arrive at that decision."

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