KPMG report tears cover off Olympic Village developer selection
The critical new element in the KPMG report on Vancouver Olympic Village financing, released today at city council, is the disclosure that Millenium Development Corp. was actually third and last of the three firms that competed to build the project based on the city’s evaluation matrix.
In an April 2006 report, council was told “the three proposals were of a remarkably high calibre and were very close in terms of Evaluation Matrix points.” The exact ranking was not disclosed. Although all three bids were compliant, Millennium was last on marks.
How did the firm go on to win? KPMG explains that:
“No points were allocated to the offer price in the Matrix. However, the scores developed using the Matrix were then re-evaluated by undertaking a sensitivity analysis and allocating between 0% and 90% to the purchase price. This indicated that once the price was allocated at least 14.5% . . . Millennium Development Corp., which had the lowest score in the Matrix, would be the winning bidder.
“Detailed financial information was not included in the submissions from the three developers and, accordingly, there was a limited basis to assess financial ability.”
In other words, someone decided to apply the weighting necessary for Millennium to win, based on price, but did not determine if the firm had the capacity to pay. City Manager Penny Ballem could not say who had made the call when pressed by Councillor Kerry Jang.
When Millennium later ran into trouble, the city wound up paying more than $100 million in project advances, then taking over financing from a Wall St. hedge fund with powers that it took a special session of the Legislature to obtain.
It was, as Mayor Gregor Robertson put it, a “train wreck,” but a train wreck caused by the NPA’s mismanagement, not by Millennium. Millennium did everything it had to under the bidding process and will now deliver the project on time to VANOC — the only good news of the morning.
October 6, 2009