N.S. considered various options before proceeding with one bidder on Halifax Infirmary project

As one of the bidders for the Halifax Infirmary redevelopment project pulled out of the running due to cost and scope concerns, government officials considered alternative approaches to get the job done — including scrapping the process and trying something different.

Documents obtained by CBC News show that in June, officials with the province and Deloitte discussed options other than the proposed project process consortiums EllisDon Health Infrastructure and Plenary PCL Health were bidding on.

EllisDon served notice they were pulling out of the process less than two weeks before that due to concerns about mounting costs of the work and challenges with the availability of labour and materials.

With only one bidder remaining, the first decision the province needed to make was whether to proceed with the status quo, revisit a proposal the two bidders submitted last January to do the work as a joint venture, or cancel the project and look at an alternative process to deliver the work.

Potentially breaking up the work

Ultimately, the province decided to proceed with Plenary PCL as the only bidder on work that is now estimated to cost more than $3 billion, a number that illustrates the effects time, inflation, and labour and materials availability have had on the job since cost estimates were first released in 2018. At that time, it was expected the work at the Infirmary and three other health-care infrastructure projects would total $2 billion.

According to the new documents, the government also considered the possibility of breaking up the work at the Halifax Infirmary. An option discussed was making the new patient tower the focus of one contract and the ambulatory centre and cancer centre the focus of another.

Documents CBC previously reported on show the proposal EllisDon and PCL made to do the work as a joint venture suggested that doing the project in stages was a way to prioritize certain aspects of the development while also being mindful of the cost pressures the scope of the overall project is facing.

The joint venture would also mean mounting risk associated with the project would be shared across the two consortiums, rather than being shouldered by a single bidder. CBC reported earlier this month that the expanding cost of the redevelopment project has PCL potentially looking for the province to indemnify it against risk beyond what it can attain insurance to cover.

Premier Tim Houston has said the government rejected the joint venture proposal because officials favoured a competitive bid process. The province now finds itself in the very position it was hoping to avoid.

In discussing alternative approaches for the project, the government was cautioned that separating the redevelopment into smaller projects "would be a significant change" and "likely run up against procurement issues if we tried to do it within the confines of the existing process — for example, the potential that other bidders might have participated if the project had been structured that way from the outset," the documents say.

Separate procurements for different aspects of the work would require terminating the existing process, a move that would require paying the consortiums bidding on the original proposal a "break fee," according to the documents.

Final bid expected in October

Internal Services Minister Colton LeBlanc, who has ministerial oversight for major health-care infrastructure projects in the province, recently told CBC that the project PCL is bidding on remains the same scope as was initially designed and announced in 2016.

Although documents CBC previously reported on suggest the scope of the project is no longer in line with updated population projections for Nova Scotia and additional operating rooms, inpatient rooms and possibly a new emergency department should be added to the work, Leblanc said any expanded scope is something that would be considered in the future.

A spokesperson for the province said Monday in an email that PCL's financial submission is expected in late October and the province has set winter 2023 as the financial close.

"Negotiations of this magnitude and complexity take time so this date is subject to change. We will work with the proponent to ensure we are getting a fair deal for Nova Scotians."