A traditional procurement process would require Government to prepare a design and the associated traffic forecasts, environmental and geo-technical analysis, financial modeling and other studies, reports and project data necessary to compile a comprehensive Request for Proposal package at an estimated cost of $20 million. In light of Bermuda’s debt obligations and expected minimal interest amongst private lenders for airport projects the size of Bermuda’s (i.e. less than 1 million passengers); the Government opted to sole source CCC/Aecon.
- hardly any airports with fewer than 1 million passengers a year have been built with private investment;
- it is expensive to create a tendering process;
- there is no guarantee of a bid being received and small airports are not appealing to investors;
- a traditional procurement process would require a substantial financial investment – approximately $20 million for studies and preparatory works for tender - by the Bermuda Government, which is not possible at this time due to Bermuda’s debt.;
- tendering doesn’t always lead to the right results and could lead to an increase in public debt;
- two thirds of all airports operate at a net loss and 80% of airports the size of ours have average net losses of 6%. With that sort of industry track record, it is conceivable that a procurement process would garner few if any, interest from private sector investors.
This P3 arrangement has:
- saved Bermuda very large procurement costs;
- avoided wasted time and delays toward job creation;
- secured the performance guarantee of Canada; delivered significant private foreign investment for Bermuda;
- and, allowed Bermuda to revitalize one of its most important business and tourism assets - at no cost of Bermuda.
Read the executive summary on the Airport Redevelopment Procurement options.
Read the complete report about the financial characteristics of various procurement options available for the Airport Redevelopment Project (the “Project”), and the benefits of the procurement option selected relative to the most viable alternatives.
Watch the video: On Borrowed Time
Watch the video: The Best Option for Bermuda