UK Objected To CCC & Cayman Airport Deal

December 2, 2014

An agreement similar to the one Bermuda is planning with the Canadian Commercial Corporation [CCC] to redevelop our airport “collapsed” in the Cayman Islands “after the UK expressed concerns about a lack of open tendering,” according to a report from the Compass Cayman.

MOU Signed Between Bermuda & CCC

Last month the Government announced they had reached an agreement with the Canadian Commercial Corporation [CCC] to build a new airport terminal building.

Finance Minister Bob Richards said the “financing will rely entirely on the future revenue streams from the new airport itself,” and it is expected to cost in the “range of $200 million”.

21-minute video of the original announcement last month

Opposition’s Criticism

The Opposition has strongly criticized the deal, and has urged the Government to “practice the principles of good governance and engage in a fair, open, and competitive tender process” for the airport redevelopment.

The PLP will be hosting a Town Hall meeting to discuss the airport redevelopment at 7pm this evening [Dec 2] at Francis Patton School, and in a statement announcing the Town Hall, Shadow Finance Minister David Burt said, ”With $1 billion dollars of future Bermuda revenue at stake, a no-bid contract to a Canadian Company, and the loss of control of our airport for 30 years through privatisation, this is an issue of national importance.”

CCC Deal Falls Through In Cayman

The Compass Cayman.article said, “Cayman officials will get the chance to see if the island missed a golden opportunity or dodged a bullet after the United Kingdom vetoed plans for a $200 million partnership with a Canadian government company to redevelop Owen Roberts International Airport.

“The Bermuda government announced last week that it was entering into an agreement with the same firm, the Canadian Commercial Corp., to develop its airport in a public private-partnership similar to one that was on the table for Cayman in the early part of 2013.

“The deal collapsed in Cayman after the U.K. expressed concerns about a lack of open tendering for the development, according to a statement from Cline Glidden, the tourism minister at the time.

“The proposal would have involved the Canadian firm financing and building expansions to the airport and runway in exchange for a 30- to 40-year operating concession and the right to collect “aeronautical and non-aeronautical revenues.”

“Concerns were expressed about a loss of direct government revenue, loss of control over a key strategic asset for the country and potential loss of jobs at the airport. On the plus side, the deal would have led to an extensive redevelopment and expansion of the airport with no up-front cost to the cash-strapped public sector.

“Cayman Islands officials have since opted for a more modest redevelopment of the terminal to be financed through existing Cayman Islands Airports Authority revenues,” added the news report, which is written by reporter James Whittaker who previously worked in Bermuda.

The Cayman Compass added that CCC  ”appears to have taken a version of the deal mooted for Cayman to authorities in Bermuda.”

Another report about the CCC deal from the Cayman media in 2013, cites Cayman Tourism Minister Cline Glidden as saying “it had been made very clear by the UK that earlier attempts at procurement in relation to the airport did not fall in line with good practice and would not be allowed to move forward.”

“As part of the new government’s efforts to comply with the requirements of the law regarding procurement processes, Glidden confirmed that any plans to move forward with the Canadian Commercial Corporation were off the table,” the report added.

Bermuda & UK

On November 21st, Minister of Finance Bob Richards said, “I can confirm that we have received the appropriate Entrustment Letter from Her Majesty’s Government in the UK to move forward with the project, despite the fact that a recent legal opinion established that a separate Entrustment was not necessary.”

During the last session of Parliament, Minister Richards tabled the Entrustment Letter from the UK, adding that ”Government is currently in discussions with the Governor on the terms and conditions specified in the Entrustment Letter” and the Government will update on the “outcome of these discussions in due course.”

In a recent opinion column for Bernews, Shadow Finance Minister David Burt said the UK stated in its letter of entrustment that “The project for the redevelopment of the airport must meet value for money tests in accordance with best practice set out in Her Majesty’s Treasury’s Green Book”.

“The value for money tests in HMT’s Green Book specify 4 different procedures that the OBA must follow to ensure value for money: open, restricted, competitive dialogue, or negotiated procedure. The most restricted of these 4 options, the negotiated procedure, requires the OBA to receive proposals from a minimum of three entities,” added Mr. Burt.

A copy of the original MOU between Cayman and CCC is below [PDF here]

airplane click here copy (1)

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Comments (71)

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  1. Encyclopedia says:

    Absolutely shocking and scandalous!!

    How could the BDA government not know about this when doing their due diligence about CCC? OR was a “due diligence” really not done, for “certain reasons”?

    Is this the “we know CCC from financial services industry” and “they tickled all the boxes” as mentioned by Bob Richards?

  2. Encyclopedia says:

    Finance Minister should Resign immediately, for not doing any due diligence on CCC.

    • A Better Bermuda says:

      Errr…..this is a non binding MOU. All this drama is nothing more than politricking. A new airport would be good for Bermuda and create jobs. Why are you listening to Burt who was Junior Finance Minister when the island was sold to foreign lenders. He should resign for continuing to use the misleading $1B amount of lost revenue when in fact the total is $120M when you include the annual expenses. That’s the kind of voodoo math that made us bankrupt in the first place. This is a complicated agreement and if he doesn’t have the experience or knowledge to understand it, then he just shouldn’t say anything at all as it just highlights his incompetence as a shadow Fin. Min. That being said, I too am waiting to hear why we did not seek alternative bids.

      • Quiet the Morning says:

        1 Billion in revenue is right, even the independent Senator Jardine admitted that was the case.

        The facts are inconvenient. As for the profits, $120 million over the next 30 years can’t build an $200 million airport today so where is the rest of the money going to come from? Maybe Burt is onto something and its you that doesn’t understand.

        • A Better Bermuda says:

          Errr…revenue is very different from net profit and that’s what Senator Jardine was pointing out. He said “the total after 30 years would be $120M and not $1B and there is a big difference in those two numbers”.

          Using Burt’s logic, then the PLP should have around half a $billion extra after being in power for 14 years. I know he was Junior Fin Min. during that time when we incurring $2B in debt but even I didn’t think they also over spent by an additional half a billion.

      • Encyclopedia says:

        It is not about Burt.

        The main point is why were there no alternate bids sought, on what basis was CCC’s offer considered to the “best offer” and why was no due diligence done on CCC’s broken deal with Cayman.

        Didn’t BDA government know about the CCC-Cayman broken deal? If they did not, then the Finance Minister did not do his job right.

        • A Better Bermuda says:

          So are you equally as concerned about the lack of bids on the hospital? What about the Port Royal cost over run. Bermuda needs to hear responses to those questions before they feel they need to respond to anything Burt has to say given his poor track record. I have no doubt that the Government will provide more information on this in the near future when THEY are ready not when Burt and the PLP want. They are not in government and also have no credibility. Like I said, I would like the Government to explain the bidding process but to try and turn this opportunity into another political foot ball serves no one. The PLP have no credibility and should act accordingly

          • Live in the present... says:

            When are you people going to live in the present?! Everyone will agree PLP made mistakes does that give OBA the right to do the same or try to do better? Your argument is flawed!

          • Call a spade a spade says:

            i’m an OBA supporter but i’m not going to give them a free pass until the PLP admits all their faults. I have expectations around transparency from the government that I voted for that are not being met. Telling me CCC is ‘known’ and they tick all the boxes doesn’t cut it… or even come close.

            The opposition is doing their job challenging this one. I just wish they would remove the rhetoric and stop using an inflation-adjusted, 30-year, undiscounted, purely designed to grab attention and not to highlight important facts, cash flow stream and calling it the pricetag for this investment.

            If the most senior finance person at my company did that and presented a capital project proposal using that kind of math they’d be let go for incompetence.

            • Ian says:

              Im sure your free passes are exactly what the OBA bank on…

          • surprised says:

            Um, sorry to burst your bubble, the hospital went to tender.

        • serengeti says:

          When you get over your own hysteria maybe you could read the whole article. That should calm you down a bit.
          There are several ways of meeting the standards required in the Treasury Green Book. As long as those standards are met, the UK won’t have a problem with it. And, since the government is seeking an Entrustment letter, it presumably is willing to make sure it meets the standards required by the letter, even though it doesn’t strictly need to do that.
          Now, I know I’ve written 6 whole lines, which is more than you normally read in one go. So I know we can expect more hysterical ranting.

        • A Better Bermuda says:

          Your continued faux outrage and demands for resignations on every single OBA proposal and deafening silence on serious on-going PLP malfeasance and verbal assaults by their leader have turned the PLP into nothing more than a joke and a shadow of their former glory. It is obvious that your biggest fear is that Bermuda’s economy continues to show improvement and turn around, including more jobs as it shows that your policies failed

          • Encyclopedia says:

            I think you are confusing me with a PLP supporter, which I am not. I am raising a few specific points about this deal and nothing more on behalf of the taxpayer.

            Furthermore, I do not buy this logic “PLP screwed the taxpayer in the past many years, so OBA has every right to screw the taxpayer”.

            • A Better Bermuda says:

              No I want PLP supports to be as equally loud and outraged about issues that happened under their watch too, not pick and chose what to have drama fits over.

            • BermyL says:

              Wholeheartedly agree.

              The attitude that OBA gets to make all the same mistakes that the PLP made is insane. We elected them because we wanted more and now they are not delivering.

              If there was an election tomorrow, I’d still vote OBA but only because the alternative is not viable.

              As a taxpayer, property owner, person employed in
              this country I expect more from my government. One way to help get what I want is to have a stronger opposition but unfortunately we don’t have that right now.

            • BermyL says:

              having said what I said above there’s plenty of opportunity for Richards to rectify the situation here. So a resignation is totally unnecessary.

      • Revenue & Profit says:

        One billion in revenue is not the same as 120m in profit. According to your explanation once expenses are taken away the 120m is profit not revenue. Are you saying 120 million in profit over 30 years is a drop in the bucket? Either way that is a HUGE amount of money leaving Bermuda.

        • A Better Bermuda says:

          How else do you propose we get a new airport when both sides are in agreement that we need one? We can’t even afford to renovate. That $20M from Port Royal would have gone a long way to at least stop the airports decay and buy us more time but “pffwt” it’s gone, no one knows where exactly, but it’s debt now!

    • Joonya says:

      Why didnt you demand Ewart Brown’s resignation when he “fooled” the people of Bermuda when sneaking in the Quigars?

      • Encyclopedia says:

        As a matter of fact, I did then.

      • Christopher James says:

        I and many other people demanded Dr Brown go at the time and we were called racists. A a bunch of frustrated white people. A lynch mob.

        Thank goodness we don’t live in a virtual dictatorship any longer. We can speak up now without fear of reprisal.

        • Ian says:

          Your fears of “reprisal” under the old government should now been replaced by the fears that should stem from anti-privaleged whites/foreigners sentiments which have risen to all time highs on the OBAs perceived preferential treatment [via legislative and policy changes] that clearly benefit those groups first and foremost.

    • jt says:

      Still not sure what you read.

    • Opinions are like...... says:

      Really? Ther cog in the wheel watched money pour out of the island like blood spewimg from a jugular, and Richards should resign?

      All I want is to be able to board a plane in the 21st century in my homeland and not get wet when it rains.. is that too much to ask???

    • Stunned... says:

      encyclopedia – you are sounding silly now.

  3. Quiet the Morning says:

    Where are all the Pro OBA Bloggers this morning. Looks like Bob Richards is picking up Cayman’s scraps.

    At least the UK talked sense into Cayman, maybe the OBA will listen to the UK and end this farce. It is ridiculous.

    OBA PUT THE DEAL OUT TO TENDER!!!

    • A Better Bermuda says:

      Farce, ridiculous, scraps? Sounds like you really want Bermuda to succeed and this isn’t nothing more than politics for you. What is your opinion on the fact that we have no $ left to build or renovate our own airport and have to rely on outside vendors to do it for us? I wait your response on this valid question. Why not ask Burt the same question while your at it. Do you think that the $20M over run on Port Royal would have gone a long way in at least renovating our airport or will we hear crickets on that too?

  4. Just a matter of time says:

    This whole thing stunk from Day 1….

  5. watching says:

    WOW!The time has come for Minister RIchards to give it up and change paths on this project.

  6. @ “Quiet the Morning” and all others; please read below and see what had made this different from the Cayman.

    Bermuda & UK

    On November 21st, Minister of Finance Bob Richards said, “I can confirm that we have received the appropriate Entrustment Letter from Her Majesty’s Government in the UK to move forward with the project, despite the fact that a recent legal opinion established that a separate Entrustment was not necessary.”
    During the last session of Parliament, Minister Richards tabled the Entrustment Letter from the UK, adding that ”Government is currently in discussions with the Governor on the terms and conditions specified in the Entrustment Letter” and the Government will update on the “outcome of these discussions in due course.”
    I hope now all who are against this opportunity will see the light :-(

    • Kangoocar says:

      @raymond, thank you for bringing that to the attention of the plp muppets!!! Once again the plp and their muppets have proven that they never let little things like, pesky facts get in the way of their miss guided agendas????

    • watching says:

      Raymond Ray,

      Any negotiations must be in line with Her Majesty’s green book which identifies that at least 3 RFPs must be sought to ensure the best deal possible. Why is the Government obsessed with only going with CCC? Shouldn’t the fact that the UK vetoed the deal in Cayman raise some eyebrows?

    • Encyclopedia says:

      This does not answer any of the questions raised.

      You are asking for the taxpayer to be either blind to the facts OR non-thinking OR “trust Bob. He knows what he’s doing”.

      Why should the taxpayer not ask very valid questions, without bringing any political angle to the issue? The bill is ultimately going to be foot by the taxpayer and the next generation.

  7. Starting Point says:

    So now the PLP are fans the the UK government and their opinions? So hard to keep track, I thought those were the colonial slave masters who we couldn’t trust?

    • A Better Bermuda says:

      They are only evil slave masters when it suits our political agenda of getting back into power at ANY cost.

    • Kunta says:

      Yup still cant trust em, but its laughable when de pro colonist get scolded by de crown.
      LMFAO

    • BermyL says:

      that’s an ignorant comment that doesn’t advance the conversation. I encourage all to ignore it.

  8. puma says:

    bobby booby…..plese read the above….you can read can’t you?

  9. puma says:

    what is wrong with you booby bobby?

  10. obasellouts says:

    doesn’t matter what they do the oba can break/change/subvert any law or promise they see fit.

    time grows short

  11. flikel says:

    Can someone please answer two questions:

    1) Why is the OBA seemingly against putting this project out to tender? If, in the end, CCC is the best deal…then go for it. At least, everyone will be better informed as to what options are out there.

    2) Why are OBA supporters seemingly chastising PLP supporters who are requesting an open tendering process? Why are the past PLP misdeeds brought up in an attempt to discredit them…it seems attempts are being made to shoot down the messenger, without listening to the message.

    • surprised says:

      Thank you for common sense. Something that is missing from blind political supporters on both sides!

      Put the effin this out to tender!

    • LOL (Original TM*) says:

      at 1 CCC may be the only group doing this at this point. not sure how many firms out there build something for nothing up front? Personally I would have wanted it to go to tender aswell, but those the brakes init.

      for #2 People are tired of the PLP hypcorcy based on their past performance. Also the “other Bermudians” are tired of their race baiting and antiBermudain behaviour towards said Bermudians so at this point have no time for the PLP.

      LOL simple really

    • A Better Bermuda says:

      I agree 100% about putting it out to tender but I don’t agree that this means that the Government is somehow underhanded or evil or are hiding something. This is nothing more than an MOU to EXPLORE this one possibility. SMH

    • Edmund Wells says:

      Flikel-

      The answer to question 1 is a combination of time and problems with tendering. As to time, Minister Richards wants to use airport construction to create jobs as quickly as he can, and believes a tendering process would only slow down getting shovels into dirt.

      The problem with tendering (second part of answer 1 and all of answer 2) is that tendering doesn’t necessarily mean lowest (or even lower) cost, or that the winning bidder will have sufficient experience to know what they don’t know, so to speak.

      Frequently, the winning (low-cost) bidder knows there will be change orders (Burgess’ lights?) and other non-competitive changes in the contract, and will plan on pricing those (which are non-competitive) to enhance the profitability of the contract. The lowest bidder also may not have the experience of other bidders.

      Heritage Wharf, the Hospital, Berkeley and the Courthouse are all examples of where the bid price bore NO relationship to the final cost. Landmark Lisgar was a low bidder- did that work out well for Bermuda? The criticism of PLP supporters reflects (i) their silence when all of these projects were running wildly over budget and (ii) the hypocrisy of asserting how wonderful tendering is when PLP performance with it was abysmal.

      I respect Minister Richards for trying to find a middle ground, and for recognizing that the tendering process isn’t always a guarantee of the lowest cost.

      EW

  12. High Road says:

    Perhaps Her Majesty felt that the Government of Cayman was unfit to enter into such an agreement

  13. Hmmm says:

    Whatever the OBA achieve will not be right in some peoples eyes. Some people are so bent out of shape that they would rather say no to a development on some ridiculous and uncolateralized mental association with the PLP than yes, despite it actually benefitting them directly and indirectly.

    If it is principle based, then how do your prinicples justify the golf course spending following the auditor report.

    • Encyclopedia says:

      You are right. There is no justifying that. There is no justifying a lot of things done in the past.

      However, that does not make this right.

      Moreover, it is best to point out something before a mistake is committed, on behalf of the taxpayer.

  14. Just a matter of time says:

    Would be interesting to know what is stated in this Entrustment letter. Did a proper tendering take place for such a project that is one of the Govt’s main bread and butter revenue wise? It doesn’t appear so… We’ve built airports before, why do we have to use this foreign company? Time will continue to reveal the ugly on this project which has only just begun…

    • Naive Observer says:

      Please review the difference between an MOU and a Contract.

      http://en.wikipedia.org/wiki/Memorandum_of_understanding

      This is a NON BINDING MOU, therefore it only signifies that both parties agree on a line of action. But being non-binding, either party can decide to pull out if things develop in a way that they are no longer in agreement with. Once matters have been fully explored to both parties satisfaction then we can expect an actual contract to be signed. An MOU lets both sides proceed with due diligence, establish that appropriate funding can be procured etc. and will also generally allow the exchange of more sensitive information such as future projections, confidential plans, etc.

      Bermudians should be well versed in this since MOUs have figured in several “big announcements” made under the previous government’s term that never came to fruition.

  15. Joe says:

    The fact is that the UK Government hasn’t objected to Bermuda’s airport arrangement, so their objection to Cayman’s plan is irrelevant

    • Unbelievable says:

      Exactly. The deal didn’t work out for Cayman. Who says it’s not going to work out for Bermuda?

    • surprised says:

      If the UK didn’t object, why is Bermuda in negotiations with the UK over the project.

      • Joe says:

        Bermuda isn’t negotiating with the UK. Our Constitution makes the UK responsible for our foreign affairs, so when we want to start negotiating with foreign governments directly, we need them to sign off on it.

        Is this negotiating with a foreign government? It’s arguable, which is why the Government was smart and got the UK to give us an entrustment letter whether we needed it or not. Prevented a major outburst of Opposition hot air!

  16. Stunned... says:

    for those clamouring for RFP’s which ordinarily makes good business practice, let’s first wait to understand the Government’s rationale for proceeding with the current plan. Then assuming the masses are still not satisfied with the Government’s response, and Bermuda incurs the cost and delay to seek RFP’s, to incur fees to

  17. Stunned... says:

    con’t – pay Consultants and to vet the RFP’s only to arrive at the same conclusion, what have we gained moreover what have we lost? Time and Money.

  18. limestone says:

    Politics always being the bogeyman in the room, and what we have recently experienced with our new hospital with the MacAlpine connection, I sure would like to know how much influence UK contractors had on vetoing this Cayman Islands job.

  19. watching you says:

    Every single thing the OBA government have done has been of no Benefit to Bermudians besides them. The first law they try to change is give non Bermudian children the right to work here without a permit and we have our own children who cannot find jobs when they finish university. The airport situation is no different, jobs for the Canadians and a few token locals to make it look good.

    • A Better Bermuda says:

      watching you:

      No benefit to Bermudians???…interesting point of view. You must be reading the wrong information becuase I see:
      - new investment/development at Hamilton Princess
      - new investment/development at Sonesta
      - new investment/development at Ariel Sands
      - new investment/development at Grand Atlantic
      - new investment/development at Pink Beach
      - interest in developing Club Med
      - 30% increase in commercial real estate
      - increase in real estate sales
      - increase in rents
      - increase in new reinsurance start ups
      - increase in new ILS and mutual funds
      - increase in payroll taxes collected
      - increase in containers coming to the island
      - America’s Cup
      - possible new airport

      Everyone is talking about how things are finally starting to slowly pick up again. You might think this is good news but everyone else sure does.

    • BermyL says:

      You fail to understand that this country dies without foreign investors. You can’t kick out all the non-Bermudians that are here and prevent other non-Bermudians from coming without killing Bermuda in the process. It is a balancing act that is not easy to get right.

      Your one-sided comment overly simplistic comment is nothing more than rhetoric. I encourage all to ignore.

    • LOL (Original TM*) says:

      Really lets then talk about the first thing the PLP did which was…………..GIVE THEMSELVES A RAISE …or did you forget…

      LOL take about only benefiting themselves.

      • A Better Bermuda says:

        ..and after the raise, they also gave everyone a day off to celebrate. At least we still had money in the back then!!!!

  20. Eyeinthesky says:

    Cayman’s loss is our gain or should we look at the same principals that led this deal to fall through in the cayman’s. Seems to me Cayman and GB did most of the work for Bermuda….. should the same principals apply…

  21. A Better Bermuda says:

    It’s hysterical how people (Alaska hall?) spent the evening hitting the dislike button in the articles that show the PLP in a bad light…not that it’s hard to do these days. When I went to bed they weren’t there, yet when I skim these article this morning, it’s like a bunch of elves were up all night logging in under different names just to hit dislike buttons. How sad and pathetic things have become for them