Muskrat Falls manager tried to influence expert assessment of project, inquiry told

Atop Nalcor executive attempted to massage the message froma panel reviewing the Muskrat Falls project prior to its green lighting2012, an inquiry into the project heard Thursday.

That was all in a bid to water down the tone of the panel's final report as it relatedto cost estimates and schedule timelines, as the Labrador hydroelectric project approached its sanctioning six years ago.

"The changes were totally unacceptable," consulting engineer Derek Owen told the inquiry.

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Another member of the 2012 panel, RichardWestney, was even more blunt in his assessment.His thoughts were captured in an email Westney sent to Owen, that was introduced into evidence at the inquiry.

That emaildescribed how Westney was unhappy about the changes, saying the rewording would be a violation of his professional ethics.

We absolutely cannot allow our work product to be dictated or edited byNalcormanagement.- Richard Westney

"We absolutely cannot allow our work product to be dictated or edited by Nalcor management or the [Muskrat Falls]project management and then issued as IPR team work product," Westney wrote on Sept. 3, 2012, just three months before Muskrat Falls was sanctioned.

"There are some suggestions I am comfortable with and some I am not; also some things that were deleted I feel should not have been," Westney wrote.

A 'cold eyes' review

Prior to sanctioning, Nalcor brought in apanel of expertsto give what's called a 'cold eyes' review of Muskrat Falls as it passed though key decision stages.

The panel was given free access toNalcor staff and documentation in order to prepare their reports, which were presented to the "gatekeeper" ahead of any big decisions.

The gatekeeper throughout that process was former CEO Ed Martin, who leftNalcoramid a sea of controversy over cost and schedule overruns more than two years ago.

Owen,Westneyand three others comprised that panel, and all brought various expertise to the process.

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Their role was to ensure the Muskrat Falls project team was following best practices.But their work was neither an audit nor a validation of the design, cost estimate, project economics, or plan.

They were overseen by the man in charge of Muskrat Falls, project director Paul Harrington.

'Clearly not what we recommended'

The panel submitted its final report on Aug. 31, 2012, with Nalcor just weeks away from what's known as decision gate 3, or final sanctioning.

The report offered plenty of praise for Nalcor planners, saying they were following industry best practices, but italso cautioned Nalcorto ensure its cost estimates and construction timelines were realistic.

Harrington then suggested some significant changes to the report, before it was presented to Martin and other top Nalcor executives.

"There was a nuance put into some of the words by Mr. Harrington that was clearly not what we recommended," Owen testified.

A document containing Harrington's suggested changes was entered into evidence at Thursday's inquiry hearing.

Harrington backed down

Harrington wanted to remove a reference to the possibility of substantial cost overruns, change words like 'recommendations' to 'observations,' and generally tone down references to costs and schedules.

"They were making statements as though we had found something, which in actual fact we had not," Owen stated.

They were making statements as though we had found something, which in actual fact we had not.- Derek Owen

Owen said Harrington backed down on thosechanges, and the report was submitted ahead of sanctioning.

What followed is now widely known: Muskrat Falls is billions over budget, and years behind schedule.

Harrington, meanwhile, is scheduled to appear before the inquiry for four days beginning Nov. 16.