FREDERICTON, N.B. — The province has decided to pay the Maritime Road Development Corporation $24.5 million above the original fixed price for the Fredericton to Moncton Highway.
The agreement to build the highway, signed in 1998, included an arbitration process clause allowing the company to file a claim for $27.2 million last summer, says Transportation Minister Percy Mockler. With another possible $80 million in disputes coming down the road, the province decided to settle and avoid any future risk.
“We had another option. We could have continued the costly legal process we were undertaking with MRDC,” says Mockler. “It is our belief this process would have taken months or years to resolve, leading to greater costs to taxpayers than settling this dispute.”
The settlement means there will be no further Maritime Road claims against the province for the design and construction of this highway.
The road builder was to go before a three-person arbitration panel to argue its case this spring. Extra costs were reportedly incurred in relation to contaminated soils as well as unknown or differing soil conditions. Additional costs to improve pre-existing sections of highway in the Salisbury-Moncton area and extra work at various locations including the Fredericton West high-speed connector in the Hanwell Road and Rainsford Lane areas also occurred.
The minister defended the payoff, saying it was a fair and equitable decision for all the parties involved. And even with the increased total, Mockler says, choosing Maritime Road was still the best option compared to below competing bids.
“This settlement brings the total amount paid to MRDC for the Fredericton-Moncton highway project to $629.9 million,” Mockler says. “And I want to specify, the other two proponents to build the highway submitted bids of $754.9 million and $778.8 million. A difference of $125 million and $148 million respectively as compared to MRDC.”
But the contract signed back on Jan. 22, 1998, stipulated the new highway was to be built for a guaranteed maximum price of $584.4 million.
“If $27 million was sent to arbitration and they ended up with $24.5 million, it seems like MRDC did very well,” says Liberal Leader Bernard Richard. “I think it deserves some explanation.”
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