A former NWT Housing Corporation construction manager says the government agency bowed to political pressure and ignored numerous red flags when it awarded more than a dozen modular home contracts to an ill-equipped and inexperienced company run by newly-elected MLA Rocky Simpson, a decision that ultimately resulted in the project’s failure.
Allan Cleary, a third-generation contractor with decades of experience in the construction industry, began working for the NWT Housing Corporation (NWTHC) in 2014.
As construction manager, Cleary says he was privy to how the corporation evaluated construction bids from contractors. The standard internal procedure involved three to five NWTHC managers sitting down to assess each bid before a recommendation was made to senior management, according to Cleary. Managers would carefully look at the competency and capability of a company during the evaluation process, he said.
But in June 2016, when NWTHC awarded Hay River-based Concept Energy Services Ltd. — owned by Simpson, MLA for Hay River South — contracts to construct 19 two-bedroom duplexes, Cleary says that process was “completely bypassed.”
“It never happened,” Cleary told News/North. “I talked to other managers in the office and we all felt kind of jilted that we weren’t party to the decision making, that it went over our heads.”
Concept Energy was given the green light to build the much-needed homes, which were to be delivered to several communities, including Ulukhaktok, between March and June 2017.
By October of that year, only eight of the 19 units had been partially constructed.
The setbacks continued. NWTHC pulled the plug on the project in November 2017, cancelling Concept Energy’s contracts when it became apparent the outfit couldn’t follow through on all of the promised units.
News/North reported last month that when the contracts were awarded to Concept Energy, Simpson owed the NWT Business Development & Investment Corporation (BDIC) almost $2 million in loans.
The NWTHC’s costly quagmire with Concept Energy could have been could have been avoided but politics got in the way, alleges Cleary.
“There was a big push then to support northern manufacturing,” he said.
“It wasn’t logical. It was political.”
He believes senior management at territory’s housing corporation chose to award the contracts to Concept Energy over established and experienced southern-based bidders because going local stood to spur economic growth while saving the GNWT money.
When Concept Energy secured the contracts, the territory’s new premier Caroline Cochrane, then the minister responsible for the NWTHC, touted the project as a game-changing, job-creating leap forward for the northern manufacturing.
“Where the political pressure exactly came from I’m not sure. It could have come from a dozen directions,” said Cleary.
Cleary added housing corp brass likely “fell in love” with the $9.3 million project cost proposed by Concept Energy, which he says was far lower than what was being offered by competing bidders.
Concept’s low bid was a red flag for Cleary, one of many in the company’s proposal he says should have been caught before the project went ahead.
Had the NWTHC’s own protocol been followed instead of the “behind closed doors” deal, Cleary says Simpson and Concept Energy would never have won the contracts. He says there were simply too many glaring logistical and design shortcomings in Concept Energy’s proposal: Simpson didn’t have a practical plan to transport the modular homes, especially when it came to getting the structures to more remote areas in the Beaufort Delta.
Cleary says Simpson’s company also lacked the experience to properly design and construct the modular units to meet industry standards. While the company was proficient in making modular oil field camp shacks, Cleary says it lacked the knowledge and expertise to build the duplexes, which differ structurally.
On top of that, Concept Energy provided designs that were at odds with plans proposed by the housing corporation, according to Cleary. Normally, if a bidder came back to the government with incongruent designs that were that far different from what the corporation was looking for, they would be dropped from consideration.
With Concept Energy, Cleary says that didn’t happen.
Instead, he alleges NWTHC began making “concessions” to Simpson’s company, giving the manufacturer a break when it failed to file a bond by deadline.
“The corporation was trying to do some creative things so they could bypass that process and that’s a bad sign,” said Cleary.
Simpson declined to comment on the allegations, citing the need to go through the legislation’s integrity commissioner.
Protocol was followed, says housing corp
Responding to the allegations levelled by Cleary, NWTHC told News/North the corporation followed the GNWT’s procurement protocol before awarding Concept Energy in the contracts in 2016.
“At the time of award, the NWTHC was satisfied as per GNWT procurement guidelines that contractor had the capability in all respects to fully perform the contract requirements, and the integrity and reliability to assure performance of the contract obligations,” corporation spokesperson Cara Bryant stated in an email on Oct. 30.
“No other concerns were brought forward to NWTHC senior management regarding Concept Energy’s ability to fulfill the contract,” stated the email.
There was no indication Concept Energy had debt issues, and the company met the corporation’s security and liability insurance requirements, says the NWTHC.
Bryant added NWTHC used an “enhanced process to evaluate the proposals to ensure strict oversight of the project,” given its size and scope.
Despite Concept Energy’s shortcomings as a company, Cleary thinks Simpson genuinely put his “heart and soul,” into the project. Instead, he blames the housing corp for “supporting (Simpson’s) misbelief that he could do what he was proposing to do.”
“The government helped this man get in over his head. They should be held accountable for that,” said Cleary.
NWTHC says it recouped in full the $1.38 million it advanced to Concept Energy for the project. The corporation recovered its initial investment for the project and the rest of the project funding was invested for the construction of 28 units under the original plan – 18 have been constructed and 10 are set to be completed this year – according to the NWTHC.
Around 900 people have been wait-listed for public housing across the NWT, according to figures released in April.