Federal government approves $1.9M for contractor that didn’t complete Neskantaga water project on time

Neskantaga

Neskantaga First Nation has been under a boil water advisory since the 90s. Photo: APTN.


Annie Burns-Pieper, IIJ and Andrew Russell, Global News


An Ontario company that was asked to leave Neskantaga First Nation in 2019 after delays involving a multimillion-dollar water treatment project will receive $1.9 million to settle a legal claim, according to documents obtained by the Institute for Investigative Journalism, Global News and APTN News.

Details of the deal emerged as more than 200 members of the affected Neskantaga Nation in Northern Ontario approach the end of their second month away from home due to an evacuation ordered by its chief in October over concerns about contaminants in the water supply leading to a water shutdown.

Neskantaga residents have been living in a Thunder Bay hotel nearly 450 km southwest of their home since the evacuation. The reserve has been under Canada’s longest boil-water advisory with no access to clean drinking water for nearly three decades.

“We have to question why we have to go through all this; 25 years, 26 years is dehumanizing,” said Chief Chris Moonias.

The documents show that the $1.9 million was provided to resolve a legal claim launched by the company over its cancelled contract and will be paid out of federal funds from the $16.44-million budget for the water treatment project approved by federal Indigenous Services Minister Marc Miller.

This is nearly twice the original estimated cost of the project of $8.8 million from July 2017.

Neskantaga
Neskantaga First Nation has had the longest running water advisory in Canada. Photo: APTN

In an email, Indigenous Services Canada spokeswoman Leslie Michelson confirmed the amount, explaining that the $1.9-million payment would go toward an outstanding bill from Kingdom Construction for work performed under contract.

Michelson disputed language in documents was to settle a legal claim.

“The payment was not for any costs relating to damages as a result of the First Nation’s decision to terminate their contract with Kingdom Construction,” said Michelson in an email.

“ISC provides funding directly to the First Nation for their approved infrastructure projects. The First Nation is responsible for administering the funding for the project within the terms of the funding agreement.”

Kingdom Construction was hired in 2017 to work on the upgrades to the community’s water treatment plant, originally constructed in 1993. The original completion date was May 2018. In February 2019, after more than eight months of delays, the community terminated its contract with the company.

Following the termination of work, the First Nation and the company were engaged in litigation through binding arbitration, a process overseen by an arbitrator rather than through the courts.

“It’s an agreement, well, at least we’re parting ways,” said Moonias, declining to comment on the details.


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The news of the payment follows a call by Neskantaga for an investigation into the business practices of contractors and engineering firms that worked on this project. The federal government has agreed to hire a third party to investigate in collaboration with the First Nation.

“At this time, Neskantaga First Nation Chief and Council are working to draft terms of reference, which will be shared with ISC for co-development,” Michelson said. “The terms of reference will dictate the scope of work for the investigation. Once these are established, a third party will be hired to carry out the investigation.”

In November, CBC News reported that contrary to the commitment made to the nation, the Ontario Regional Director General (RDG), Anne Scotton, informed Neskantaga that terms of reference were near to being finalized and that a consultant had been chosen without the First Nation’s involvement.

After the nation pushed back on this approach, Minister of Indigenous Services, Marc Miller Miller said that new terms of reference will be co-developed and a new third-party manager chosen with the community’s involvement.

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Warning signs at a drinking fountain in the school in Neskantaga First Nation in 2019. Photo: APTN

Kingdom Construction president Gerald Landry told Global News that both sides were satisfied with the settlement and wanted to move on.

“When we arrived and tried to get the work done, it was very apparent that things were materially different than what we were interpreting our contract to include,” Landry said in an email.

Moonias has disputed this allegation. “There were a lot of delays. So we took the work out of their hands.”

Landry said there “were a few large issues” that delayed the project and eventually “the owner got upset and terminated the contract.”

“We then simply pursued claims for our damages and we finally settled the claims in a mutually satisfactory manner.”

Landry noted that Kingdom had not been on the site for nearly two years and had no knowledge about what had transpired with the project since that time.

In an interview in November, Landry expressed confusion over why his company’s work was terminated in the first place.

“We were in a meeting, sitting down, ready to do a job site meeting, and then the chief came in the meeting without any notification — without any notice, any warning, anything — came in the meeting and announced that Kingdom was terminated off the job,” Landry said.

He said to this day, he doesn’t know why but that “we have no resentment and we wish everyone the best in the future.”

Neskantaga
Part of the water system sits disassembled in Neskantaga during an APTN News tour in 2019. Photo: APTN.

The company, based out of Ayr, Ont., states on its website that it has “a very meaningful, long-lasting, and committed relationship to the First Nations communities in Ontario and Manitoba.”

The company has worked on six other major water and wastewater projects on First Nations.

ISC officials did not respond to questions when asked if the payment by the government was an admission that the termination was not valid.

“The Department does not provide funding to support legal claims brought against First Nations for decisions made by First Nations that are not in accordance with governing laws and regulations,” Michelson said in an email.

“The First Nation, at their discretion, may seek legal advice and assistance to support them in administering their contracts and making decisions that align with the requirements of the contract. ISC supports First Nations and gives advice and technical assistance whenever that is requested or required.”

With files from Patti Sonntag, IIJ and Melissa Ridgen, APTN News