Royal Adelaide Hospital contract shows Government can terminate deal whenever it wants
EXCLUSIVE: TERMINATION of the multi-billion dollar new Royal Adelaide Hospital agreement can be made at any time and just for the State Government’s “convenience”, the contract documents reveal.
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TERMINATION of the multi-billion dollar new Royal Adelaide Hospital agreement can be made at any time and just for the State Government’s “convenience”, the contract documents reveal.
With the Government and consortium in charge of the $2.1 billion build this week locked in talks over a settlement that would end the threat of lengthy and expensive court action, a copy of the contract sighted by The Advertiser shows the State retains a broad sweep of get-out clauses.
The 368-page project agreement between the Government and SA Health Partnership, supported by a series of other weighty legal documents, details several scenarios for termination.
The most sweeping was one included under the heading of “termination for convenience”.
It reads: “the State may at any time in its absolute and sole discretion terminate this agreement on giving not less than 90 days notice in writing to Project Co (SA Health Partnership).”
However, the Government has other powers to pull the pin when construction is delayed.
Health Minister Jack Snelling issued a “major default notice” against SAHP in April last year because the original opening date was missed and demanded new plans to deliver speedy completion.
The new RAH contract shows such a move requires the consortium to offer up a “cure plan” that spells out how the construction will be completed.
It must also regularly seek agreement from the Government to extend the deadline to deliver fixes if they can’t be achieved quickly.
The Government was not allowed to “unreasonably refuse to grant an extension” but can do so for reasons including a belief that the consortium was not diligently pursuing required fixes.
In November last year Mr Snelling refused to give any more extensions to the cure plan, citing safety concerns which were later revealed to centre on fears a water-based cooling system which broke down during construction could fail again and put patient lives at risk.
The contract states that the failure of a cure plan to fix claimed faults with the hospital triggers a “default termination event”, a scenario in which the Government could also tear up the contract.
Powers available to the Government in a default termination event include taking control of the build, demanding money from SAHP or court action to win damages or completion of works.
The Advertiser revealed this week that Premier Jay Weatherill interrupted his post-Christmas leave to lead a high-powered meeting of parties involved in the new RAH build, including overseas investors.
The Government and SAHP have been at loggerheads for months. A Supreme Court case was already underway and both sides had begun planning further action that could have included action brought against taxpayers seeking up to $5 billion if the contract was cancelled.
The cases against the Government were threatened over claims it acted in bad faith and was deliberately delaying moving in because of problems with an electronic patient record system.
The Government in return has demanded $600 million in compensation. It was expected a deal would be reached this week where a payment would be made to the Government and legal threats shelved.
Mr Snelling last year told State Parliament the option of terminating the contract was “certainly on the table” but a last-resort move that was “not something that we are pursuing at present”.
“The Government is protected by a strong contract and it will continue to hold SAHP and (new RAH builder) HYLC to account in order to protect the people of SA,” he said.
A Government spokesman said the contract “is strong and protects the taxpayers of SA”.