ARAPUNI CONTRACT

Sun (Auckland), Volume III, Issue 813, 6 November 1929, Page 6

ARAPUNI CONTRACT

REVIEW OF BARGAIN DRIVING TALK OF A MILLION THE SUN’S Parliamentary Reporter PARLIAMENT BLDGS., Tuesday. The terms upon which Armstrong, Whitworth and Company, Limited, relinquished their contract at Arapuni were furnished in a return tabled in the House of Representatives today by the Minister of Public Works, the Hon. E. A. Ransom, at the request of Mr. J. S. Fletcher (Grey Lynn). The return stated that it was difficult even to make a summary o£ the operations in connection with the termination o£ the contract and the terms o£ the settlement, as the negotiations occupied some months. In the first place, Armstrong, Whitworth and Company did not formally ask to be relieved of their contract, but endeavoured to escape from their responsibilities, which called upon them not only to build the powerhouse, but also to design it, by asking the Public Works Department for directions as to what they should do when they found difficulty in connection/with the unwatering of the foundations. Naturally, continues the return, to have begun giving (Jetailed instructions to the contractors would have relieved them of the major responsibility, and would have thrown on the Government the responsibility of making decisions and devismg schemes for which it was already paying the contractors. The contractors had taken up the stand that what the "Government asked them to do was impossible. That it was not impossible had been amply demonstrated since. After considerable argument the contractors put forward certain suggestions and asked that the Government should approve them, thereby taking the responsibility for the success or otherwise of what was proposed. IMPOSSIBLE TO CHECK

Also the contractors wished to be paid for the cost of doing anything in excess of what they had originally contemplated. As there was no evidence of what they originally contemplated it would therefore have been impossible to check what necessary work had not been allowed for in tendering. For that reason the contention of the contractors would not be accepted. Meanwhile the contractors had ceased work on the most essential part of the job and for a long time before ceasing had made such poor progress that it was amply evident that they could not complete the work-in anything like contract time, even if they had attacked the problem vigorously. The department, served them with various notices to get on with the work, and finally a special King's counsel was sent out from London by the company to negotiate direct with the Government with the idea of getting out of the contract altogether. He tried to put the blame of the trouble on the department by stating that it had induced his principals to take a contract to do what was impossible, and what Government officers now knew in their hearts was impossible. The Government officers had never admitted this connection and had since proved the contrary. EXTRAORDINARILY HIGH FIGURES

In pursuance of this attitude the company’s representative had mentioned some extraordinarily high figures as being what he considered his firm should receive as compensation for cancellation of the contract. A newspaper report of the interview with the company’s London representative had mentioned £1,000,000, but later Sir Edward Shortt, K.C., denied the accuracy of this report. There was no doubt, however, that the figure which Sir Edward Shortt had in mind, when discussing the question with the Government was at any rate a very considerable part of £1,000,000. lie did not, however, commit himself to writing to any great extent, but, after having prepared a scheme which varied from the proposals included in the original contract, he claimed that the Government should take responsibility for the new proposals, and that his company should be paid the extra cost of this variation, plus the costs of any excavatign and concrete below the levels shown on the plans submitted, plus other costs, and £275,000 to cover direct and indirect loss. The Government could not agree to that, being of the opinion that the design of the work as originally proposed should be carried out, and that if the contractors chose any alternative the onus was on them to pay for it. After a great deal of argument, a lot of which was not reduced to writing, a settlement was made by which the company was to be paid at schedule rates as far as possible for the work already done?, and £30,000 for preliminary works, which included accommodation.