Company defends handling of Annapolis County high-speed internet project

The company who was selected to build a high-speed internet network for the Municipality of the County of Annapolis, N.S., says a notice posted by the municipality that announces the contract's cancellation is "defamatory."

Last year, the municipality signed a contract with Mainland Telecom to design and build a 405-kilometre fibre-optic system.

At an April 16 council meeting, the municipality's chief administrative officer, John Ferguson, said it cancelled the contract after Mainland Telecom missed three deadlines and estimated cost overruns of $2 million. The contract between the two parties will end in July.

"The network design, for all intents and purposes, does not exist and I'm very nervous about costs, I can't stress that enough," Ferguson told council.

Mainland Telecom is a company based in Kentville, N.S., that provides internet access in Nova Scotia and Prince Edward Island. Company co-owner Craig Parsons called Ferguson's concerns "unfounded." He said the company had a design that would have met all the county's requirements and said there's a reason for the increased costs.

'Mainland's work was not overbudget,' says company

"The cost overruns relate to costs charged by Nova Scotia Power and Bell," said Parsons. "Mainland's work was not overbudget."

Parsons said the municipality was aware third-party costs would be difficult to predict and outside of the company's control.

The municipality has issued a request for proposals from companies interested in designing and building the network. They have until June 19 to submit proposals on the project for which the municipality has borrowed $13 million.

A 'less robust system'

Ferguson warned councillors that if the municipality continued with Mainland Telecom, it would have meant an immediate, significant tax increase. For a taxpayer with a $150,000 home, the increase would have been $300.

He also said he was concerned the municipality would get a "less robust system" than anticipated, which would deliver slower service.

Ferguson also said the county's legal counsel and the project manager had concerns about the project.

"When all three professional advisors issue a warning about the risks that are piling up, I think it behooves council to listen very carefully to that advice because its primary responsibility is to protect the interests of the taxpayers," said Warden Timothy Habinski.

'We've lost control of this project': councillor

Coun. Michael Gunn, who represents District 8, agreed with the warden at the April 16 council meeting.

"We've lost control of this project," he said. "We have to take back control and the only way to do that with no muss or fuss is to terminate for convenience."

County councillors voted 7-4 in favour of that, which is permitted in the contract. Terminate for convenience means no one is assigned blame, the work to date is paid for and legal action should be avoided.

Company wants notice taken down

Parsons said Mainland Telecom was never given a chance to present its side of the story to council. He also objects to a document posted on the municipality's website.

"The notice suggests the contract was terminated for cause, not convenience," said Parsons. "It's defamatory."

He said he's asked the municipality to take it down a number of times.

'We are confident we made the right decision,' says CAO

When contacted by CBC News about Parsons's concerns, Ferguson would only say the county's lawyer was responding to a letter received from Mainland Telecom's lawyer.

"We are confident we made the right decision," added Ferguson.

Mainland Telecom is now negotiating with county officials for payment of the work done so far and has not ruled out submitting another bid for the municipality's internet project. But Parsons believes this latest process is being rushed and he isn't sure the company will have enough time or information to submit a proper proposal.

Ferguson would not comment on the current request for proposal process.

$193M trust fund for high-speed internet projects

The changes to the Annapolis County project comes as work gears up for internet projects across the province. Develop Nova Scotia, a provincial agency, is overseeing a $193 million trust fund for rural internet projects.

A list of companies that have pre-qualified to apply for the financing of projects was issued in April. Mainland Telecom is one of eight private companies and two municipalities — Kings and Pictou counties — on that shortlist.

"We do have concerns that the notice on the municipality's website may impact our reputation and our ability to compete in these processes," said Parsons.

The first round of applications have to be submitted to Develop Nova Scotia by the end of June. Another round is expected in the fall.