Opinion: Sylvan Richards On New Airport Plans

April 7, 2015

[Opinion column written by OBA MP Sylvan Richards]

Christopher Famous has made a number of criticisms of Bermuda’s proposed new airport project, which may lead your readers to suppose that for some unexplained reason we have made a very, very bad decision.

That’s not the case at all, and I would appreciate an opportunity to set the record straight.

Bermuda must weigh two powerful factors having to do with the airport.

First, we badly need a new one, because age and wear are not only making the first thing our visitors see shabbier and shabbier, but more and more difficult for staff to operate.

Second, our ability to spend money on this kind of project is by severely hampered by the huge debt burden we inherited from the Progressive Labour Party that Mr Famous supports.

The arrangement we have made with the Canadian Commercial Corporation is a type of public/private partnership that involves no upfront spending for the airport by Bermuda, and no new debt for Bermuda.  Title to the airport remains with the Bermuda Government.

CCC’s involvement ends when work on the new terminal is completed.  The prime contractor CCC has selected, Aecon Group, Ltd, will raise the money required and will manage the terminal for a period of 35 years.

This structure, which is tried and tested in other countries, has a number of advantages:

  • It reduces the risk and expense of procurement.
  • It reduces the risk of budget overruns.
  • It reduces the risk of late delivery.
  • It reduces the risk to the Bermuda Government treasury and balance sheet.
  • It reduces unemployment in our island.

Our arrangement cuts procurement time dramatically, enabling shovels to be in the ground and jobs created much sooner than traditional methods.

Any obstacles to the British Government giving us the appropriate Entrustment Letter to move forward with the project have been dealt with to the satisfaction of both Governments.

The CCC was originally founded in 1946 to help rebuild Europe in the wake of World War II.  Many countries in the Caribbean have done business with it.

Mr Famous attempts to call the reputation of the CCC into question by saying it has done business with a Canadian company that has been involved in a series of corruption scandals.  The Corporation has dealt with thousands of companies – that one of them has been charged with corruption cannot be taken as a serious reflection on the integrity of the CCC.

Working as prime contractor, CCC, which is a company wholly owned by the Canadian Government, fully stands behind the on-time delivery and final budgeted cost of the project.  Its robust risk-mitigation process means that CCC supports only those suppliers that it considers are financially and technically capable and committed to ethical business practices and corporate social responsibility, thus ensuring a high success rate for projects.  The agency oversees all contracts from start to finish.

CCC is an agency that can be depended upon to remove all the disadvantages of competitive tendering, with the potential to save the Bermuda Government millions of dollars.

Mr Famous has made a great show of criticising this project on the grounds that it does not involve public tendering and is therefore, they say, a failure of the Government’s commitment to good governance.

But governments around the world recognise the limitations of tendering, and are constantly on the lookout for better ways to get best value for money.  The British Government itself recently welcomed a new European Union policy, for example, that modernises procurement procedures to provide more flexibility.

Far from a failure of good governance, this project is a creative and timely way of working around our debt-created challenges to make sure Bermuda gets the custom-built airport it can afford.

- Sylvan Richards

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Comments (37)

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  1. Onion says:

    Stop repeating PLP talking points.

    Merely repeating them gives them strength.

    • Lois Frederick says:

      I prefer to read information in the place of misinformation.

  2. watching says:

    These OBA columns by otherwise generally silent OBA MPs are hilarious.

    What is also funny is that the OBA is responding to Chris Famous, who isn’t even a PLP MP. He must really be hitting the nail on the head with his columns.

    • wow says:

      not really he just spouts a lot of non-facts that you people believe to be the truth. people could care less about famous in reality lmfao….

      seems like the OBA with its facts must be hitting the nail on chris’ head! maybe he just likes to hear himself talk and seem relevant…oh wait

      • BETTTYTRUMP says:

        The Famous one presents FACTS. Thus the need for OBA’S writer to put together a rebuttal which is weak at best and still failing to address the key points.

        Facts win over Fiction any day…well said Famous

  3. Young Bermudian says:

    Sorry Mr. Richards,

    I have to disagree with you on this one. One thing the OBA needs to learn (which was ultimately the demise of the PLP reign) is that the people’s opinion matters. The advice of technical officers in the civil service should also be considered with big developments. With all of the pressing infrastructure needs (Palmetto Road which has the road falling into the back yards of residents, The Canal project that is long overdue and lack of implementation has increased the flooding to recreational and business areas around Bernards park and Mills creek even further, waste treatment facility for the City of Hamilton, the waste and water needs for the town of St George….the list goes on) What is evident to is that the OBA hasn’t made the case as to why the Airport is a priority. Bermudians are world travelers and we have seen several dozen airports in island destinations and developed nations that don’t live up to our current facility. So let’s just pretend the airport is a priority…there are more pressing needs and you are treating the back of town folk like 2nd class residents. Entire main roads have been closed for more than a year! Furthermore to make agreements about the Airport without considering the causeway and infrastructure needs of the east end is just ludicrous. Stop ignoring the needs of the community. We have the Grand Atlantic, the Education Commisioner fiasco and the mega school concept as examples of how poor decisions impact us long-term.

    • Accurate says:

      Sorry Young Bermudian – but you’re missing the whole point of this exercise. Right now we have a foreign dollar funded benefactor willing to front us an airport and run it for 35 years at no (or minimal) cost to us. All of the other pressing needs that you’ve highlighted are undoubtedly worthy of attention but have nobody willing to pay for them. How would a toll road run by the Chinese go over for that Palmetto Road project? Yeah right.

      Again – just for clarity – if we don’t have at least 500 new foreigners moving hear and spending those externally sourced dollars (rents – food – insurance – taxes) by the middle of next year then we will face the total collapse of our economy.
      Look any OBA or PLP politician in the eye and ask them if this is true – if they reply in the negative they are either fools or liars

      • Mockingjay says:

        So after 35 years we will need a new one !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

      • Young Bermudian says:

        Accurate…take a look at the Annual reports of the Cayman Islands and the Bahamas airports. What you will see are ways that these islands created a win win agreement for their future. Yes the Canadian is willing to do the upfront costs…but the terms pit forth create a win lose situation. They win…BDA does not have equal benefits…

        • Accurate says:

          YB – Whether this project turns out to be less than ideal for Bermuda or not is completely immaterial at this point. Contracts can be and are renegotiated all the time.
          The facts are:
          A. Some one is willing to do this right now – even though by any measure you choose to employ Bermuda looks doomed to a serious financial downgrade.
          B. Any injection of real external capital in to our economy right now may help forestall the looming debt implosion and buy us time to think of and implement new ideas.
          C. Our entire airport was a gift that we would never have been able to undertake by ourselves. It was paid for with real sacrifice from real people and led to the modern Bermuda you live in. It came with benefits and drawbacks.

          At some point we have to trust that those whom we elect to represent us have our, their and Bermudas best interests at heart.

  4. Quo vadis says:

    the by-line should read: Don Grearson.

    • OBA Ghost Writers association says:

      Could not have said that any better!! Wish I could get a gig like Don’s – paid by the taxpayers to write political “poof” articles and surf blogs. That’s is one more consultant the taxpayers can do without and allocate that expense to the road repair budget.

    • wow says:

      next by line should read: PLP have ghost writers to…WHO CARES?!?!?

  5. Yes I says:

    “The arrangement we have made with the Canadian Commercial Corporation is a type of public/private partnership that involves no upfront spending for the airport by Bermuda, and no new debt for Bermuda. Title to the airport remains with the Bermuda Government.

    CCC’s involvement ends when work on the new terminal is completed. The prime contractor CCC has selected, Aecon Group, Ltd, will raise the money required and will manage the terminal for a period of 35 years.”

    Yes we need a new airport, but I find it hard to believe that any corporation will facilitate the investment of 200 million to any country without seeing a return. What is Aecon’s plan post airport development and what will it mean to the public purse for the forecasted 35 years???

  6. Rene Clarke says:

    I just want to make a few comments about the airport. I think the Bermuda public need to be sold on what the crumbling airport infrastructure actually costs us as taxpayers and why owning a new airport would be significantly cheaper. I think Bermudians and tourist alike will pay in the 35 years after the airport is built. Aecon Group will probably try to recoup their cost overruns through their fees, personally I don’t believe Bermuda needs a new airport,when I go on vacation I think of an airport two times (arriving and departing)and have never planned a vacation around a fancy airport. Not sure how a new airport will attract more tourists. Bermudians need jobs so the airport construction will help out for 3-4 years, then what?.

  7. Vote for Me says:

    The airport decison will continue to come under scrutiny because it is a bad decision for Bermuda at this time.

    If we are frank, the periodic damage caused by storm activity does not justify the $255m the OBA plans to spend on a new airport. It would be more practical to set aside say $10m as a contingency for airport repairs every 3 to 5 years to compensate for storm damage.

    More importantly, the constant refrain that “this will not add to the government debt” is not true. The contract will have to be supported with a guarantee by government in the instance of further reductions of tourist arrivals.

    We are collectively waiting for the Auditor General to comment on the lack of tendering, the real cost to Bermuda and the real impact on debt.

    MP Sylvan Richards might also want to comment on Min. Bob. Richards statement that the airport is currently just about breaking even but will suddenly generate enough net income to repay the $255m loan over 35 years!! Anyone want to guess why the contract period has increased from 30 years to 35 years??

    It is like a mortgage – they need a longer period to make it affordable. The ‘devil is always in the details.’ In this case there are ‘lots of details and lots of devils…’

    Final comment – it is interesting to see how much defending of the airport is taking place!!

    • serengeti says:

      Any time to government comes up with a way to create several hundred jobs for Bermudians, all we hear is “we don’t need it”.

      Any time the government says it has a way to do things quickly, all we hear is “you should take your time”.

      Any time the government introduces plans to bring spending under control, all we hear is “you’re destroying Bermuda’s heritage”, and “austerity doesn’t work” and “you should increase the tax base”.

      Any time the government wants to invest in something to create jobs, like the AC, all we hear is “you’re spending too much on this. You should have a more austere budget.”

      Any time the government announces a way to increase the tax base, by making Bermuda more attractive to foreign investment, all we hear is “you’re too friendly to foreigners. You’re giving away Bermuda.”

      Any time the government announces a potential new hotel partner, and new inward investment, all we hear is “it will never work, no one will come here, our hotels are too expensive”.

      Any time there details are announced on how to use Grand Atlantic, all we hear is “but it’s about to fall into the sea”.

      Did I miss anything?

    • Accurate says:

      A rhetorical question for you VFM – it’s the 1800′s and you’re on a sailing ship in the middle of a hurricane – the ship is taking on water at an alarming rate and someone shouts ‘man the pumps’. Should you:

      A. Set up a committee to determine who gave the order, whether they were authorized to do so, and should negotiations start on the length of each persons shift?

      B. Leap to the job and pump like you’re possessed in the hope that you will still be alive later to contemplate any of the above?

      The proposed airport project may or may not be set up to benefit Bermuda to the maximum amount possible. In that fashion it is similar to every capital project any government in our recent history has undertaken. It will certainly NOT be the ruination of Bermuda as we know it. NOT starting something like this in the very near future will most certainly be.

  8. M.P. Sylvan Richard Sir, please don’t be deterred by the negatives remarks…The O. B. A. are doing the correct things for the Island on a whole. With us having so many men / women unemployed and C.C.C. offering 400 Bermudian men and women jobs out of the 600 jobs to be offered at the site, L.F. Wade International Airport. That’s good news to anyone who are seeking work.
    Why is it so difficult for certain people to acknowledge this is not an expense to us or our Government? The C.C.C. will foot the bill and agree to hire them that are approved by someone else (and Bda. Govt.) and once agreed upon the contract will include C.C.C. managing the operations and expenses of maintaining the airport for the 30 odd yrs. before handing it over to us / Bermuda Govt. who-ever they maybe with no charges…
    In quoting the M.P. “First, we badly need a new one, because age and wear are not only making the first thing our visitors see shabbier and shabbier, but more and more difficult for staff to operate.
    Second, our ability to spend money on this kind of project is by severely hampered by the huge debt burden we inherited from the Progressive Labour Party that Mr Famous supports.”

  9. anon says:

    The companys website actually says its mission is to “to assist in the development of trade between Canada and other nations and to assist persons in Canada to obtain goods or commodities from outside Canada, and to dispose of goods and commodities that are available for export from Canada.”

    Also
    “sourcing Canadian goods and services on behalf of governments in other countries.”

    Says nought about hiring locals to do the job. I’m sure their services include constructing an airport, and when it happens and they bring in their own workers to do it the OBA will say “Bermudians weren’t qualified enough” or show some jumbled statsictics to say that “we hired sixty people” which in fact means we hired six to oversee the project and those six employed ten people in their private companies that has absolutely nothing to do with the airport.

    • @ anon: Had you been following the information shared with the Bermudian public or had attended the Town Hall meeting in St. St. George’s you would’ve heard that the agreement includes specific clauses, one being, “out of the 600 people to be hired to construct this new airport 400 will have to be,(I want to emphasize) be Bermudians” Bottom-line, do some research and stop believing hearsay.

  10. Rhonda says:

    Why does it oba present their opinions as facts, no. I know why. But don’t be fooled people into believing the only way is the oba way, weigh all the opinion including if we really need a new airport

  11. Pondering says:

    “Our arrangement cuts procurement time dramatically, enabling shovels to be in the ground and jobs created much sooner than traditional methods.”

    So if we have a problem with our “traditional methods”, why don’t we just fix them?

  12. M.P. Sylvan Richard Sir, please don’t be deterred by the negatives remarks…The O. B. A. are doing the correct things for the Island on a whole. With us having so many men / women unemployed and C.C.C. offering 400 Bermudian men and women jobs out of the 600 jobs to be offered at the site, L.F. Wade International Airport. That’s good news to anyone who are seeking work.
    Why is it so difficult for certain people to acknowledge this is not an expense to us or our Government? The C.C.C. will foot the bill and agree to hire them that are approved by someone else (and Bda. Govt.) and once agreed upon the contract will include C.C.C. managing the operations and expenses of maintaining the airport for the 30 odd yrs. before handing it over to us / Bermuda Govt. who-ever they maybe with no charges…
    In quoting the M.P. “First, we badly need a new one, because age and wear are not only making the first thing our visitors see shabbier and shabbier, but more and more difficult for staff to operate.
    Second, our ability to spend money on this kind of project is by severely hampered by the huge debt burden we inherited from the Progressive Labour Party.”

  13. flikel says:

    “But governments around the world recognise the limitations of tendering”

    This makes no sense to me. If CCC is indeed the best choice, they would have been chosen after a tendering process.

    How is having more options and having organizations actually compete for a $250 million contract a bad thing?

  14. Jeremy Deacon says:

    PFI in the UK, the equivalent of PPP here, has been proven to costs billions more than if Government had paid for the projects – the private sector borrows at a higher rate of interest than Governments.
    PPP is a way of getting projects done, no question, but there are long-term implications that will affect the general public.
    If revenue is insufficient for the private company to cover the debt and make a profit, charges will go up. It is the public that will pay in the long-run.
    I have to question as well, whether Bermuda needs such a grand airport. Sure the old one is looking pretty tatty now, but do we need a new one with all the bells and whistles?

    • NCM says:

      Jeremy,

      Bermuda does not have the borrowing power of the UK or US. It is likely that CCC can borrow at a lower rate than the Bermuda government. We are a minnow in the global sovereign debt market – not to mention we are already tapped out and any further debt we need to raise will have to pay for civil servants’ salaries and keeping things like buses and trash trucks running. We can’t add another $200 to $250 million for the airport.

      As to needing a new airport – absolutely. As a passenger you don’t see behind the nice shiny departure and arrival lounges but a new terminal is sorely needed. The maintenance costs alone are crippling. And as the Minister has said, if we want to be a first class destination for tourism and international business we need an airport that reflects that. How many times have you had to run through the rain to get on or off an airplane?

      And jobs. This project will create jobs for Bermudians.

      • BETTTYTRUMP says:

        No we do not need a new one with all the bells and whistles at this time. I think a good repair job would work for now Jeremy. ….

        Big OBA Mistake……

  15. Jeremy Deacon says:

    Just to add to my last comment – I cannot help but think that the money would be better spent on providing attractions in Bermuda; to develop the Hamilton waterfront; to improve our appalling infrastructure ….

    • Trulytruly says:

      But we are not supplying to money, so the project has to make financial sense to the entity that is financing it. Of course we will pay them back and then some. Not that different than you or I borrowing to buy a house.

  16. desmondp says:

    1st of all here we go again poor decision bhy government. the nw airport is suppose to begin next year but with all these hotels in the same development stage why wouldn’t it get pushed back until after americans cup as that is wen we will b in need of jobs. just imagine if the plp didn’t have the the hospital job goin on wen they did. the island would b in a lot worse shape with un-employment. there is no vision in this administration wat after hotels built airport done n no visitors comin so hotels r empty so no jobs in d hotel all construction is dead cause all the project have been completed.i hve flew all around the Caribbean y ours aint tht bad. just give it a 5-7 mil face lift y try tendering it which was never done so how can u say it was the best interest for bermuda. fair is the way the hospital was done a whole separate entity controlling the bid process n all the proposals given to the bhb board with no names attached just proposal 1-5 that is transparency. We have to do wat is right for bermuda not canada not uk. i do not no how the uk gov would sign off on this deal anyway. but if any of this stuff goes through its only 1 thing left for the bermuda people to do after d next election. go independent were the premier controls the police/court/judges which will enable the new govermnt to void contracts with out any complications cause they would control the courts n d police . so yup let them try to privatized everything n let them spend millions but we have a quick fix that will end up with these companies loosing millions just by us going independent from the uk comment

    • Casual Observer says:

      So you want no separation between politicians, the courts and police? You have essentially advocated for an authoritarian state.

      Not to sure you understand how democracy works and the checks and balances between the legislative and judicial branches.

      Wow, you are one scary individual if you think that should even be contemplated.

  17. JUNK YARD DOG says:

    We are up to our eye balls in debt.

    How many times do you need to hear that ?.

    We cannot afford a new airport, i know it, and you know it,most people can not wait to get out of airports ! Where is the romance. ?

    Renovate the old one using Bermuda labor.

    • We’re not paying “diddly-squats” for the airport. Please take the time to read the proposal.
      The L.F.Wade structure can be compared to,(no offence meant)a wrinkled face woman that often goes to have her dermatologist give her a facelift by tightening her skin yet the bones below the skin are still old…Well that’s one of the problems facing Bermuda with our present day dilapidated E.F. Wade International Airport. Furthermore this will not be costing us, e.g. Bermuda Government a red cent. Please, read the article thoroughly.

  18. Article says:

    WHAT are Bermy’s LongTerm costs? Are we trodding down here same path as Britain?

    http://www.independent.co.uk/money/loans-credit/crippling-pfi-deals-leave-britain-222bn-in-debt-10170214.html

  19. Charlly X says:

    Good idea sorta . But the lease is too long . 15-17.5yyrs max . No plan for the cause way tied to it . Mr Burt Mr ETB Richards and a few others need to be locked in a room together to sort this debt mess out !!