Government needs to step in and discharge the general contractors of the $70 million new secondary school site before any further damage is caused, it was claimed last night.

Shadow Works and Engineering Minister Erwin Adderley said Minister Alex Scott should openly admit to the public that there is a problem on the site, and then begin to solve it.

"Government should take over management of the site and put Pro-Active Management Systems Ltd. in a subsidiary role to make sure they don't make a profit from this project," said Mr. Adderley.

"More importantly, what concerns me is the fact that Government committed itself to Pro-Active and sanctioned the company, which led to a lot of smaller companies getting involved in the job.

"They trusted Government's judgement and I am worried about their futures.

"Some of the sub-contractors are owed in excess of $200,000. It could put them in default of their commitments.

"At best, their credit is shot to hell, and at worst, they could find themselves in a bankruptcy situation."

But Mr. Adderley said if Pro-Active had been paid by Government on almost a weekly basis for work carried out, as claimed by Mr. Scott last week, he could not understand why sub-contractors had also not been regularly paid by Pro-Active.

"If Pro-Active is being paid for work carried out, then why are the sub-contractors not getting paid for work carried out?" added Mr. Adderley. It almost appears that Pro-Active has not been getting paid at all. Where has the money gone?"

But Mr. Adderley urged Government to do what the United Bermuda Party did years ago when Sealand Construction ran into major problems while building Westgate Prison.

He said another management company was brought in to oversee the project and Government paid off the $2 million debts of Sealand.

"If we were in Government, we would have discharged Pro-Active now. Get a management team in to carry this forward with the understanding that Pro-Active has defaulted on the contract. Then, it may be that the performance bond (form of insurance and guarantee) needs to be called in to meet additional costs. However, it may well be that Government is finding itself in an awkward position because it doesn't want to call in the performance bond that may or may not exist.Government needs to stop dilly-dallying around. It has to make quick and decisive decisions otherwise the project will just fall further and further behind."

But Mr. Adderley also questioned what had happened to the original $5 million that was set aside for the Berkeley project to help train young Bermudians in the construction industry.

"Is this money down the tubes now with the rest of it?" he said.

Questions have been raised about the authenticity and strength of the $6.8 million performance bond, which was put up by Union Asset Holdings Ltd. (UAH), owned by the Bermuda Industrial Union (BIU), as a form of insurance for Pro-Active.

Auditor General Larry Dennis raised concerns about the bond after noticing that it had been agreed before UAH had even been formed, and he questioned the ability of UAH or the BIU to have the immediate funds to meet a cash demand of up to $6.8 million, which is ten percent of the total cost of the job.

During his audit, he repeatedly asked the Ministry of Works and Engineering for a copy of the original bond agreement, along with proof that Pro-Active had paid the $700,000 insurance premium to get the bond in place. Neither were forthcoming, and he eventually passed the file onto Police. He also asked the Attorney General's Chambers for the written assessment of UAH that was supposed to have been carried out before the bond was agreed, but that, also, was not handed over. Both Mr. Scott and Derrick Burgess, president of the BIU, told the auditor that the bond was in place and could be called on if needed, and that the $700,000 premium was paid by Pro-Active.

Also see Page 11