The Yukon government this morning announced an out-of-court settlement with Norcope Enterprises over a two-year-old contract dispute involving the Whistle Bend subdivision.

The announcement by deputy minister Harvey Brooks of the Department of Community Services was general in nature, with few details about specifics.

Brooks did say the settlement increases Norcope's original contract by $1.7 million, up from $15.9 million to $17.6 million.

The $17.6 million does address Norcope's argument that a $2-million sole-source contract handed to Sidhu Trucking in the spring of 2011 should have rightly gone to Norcope as an extra, Brooks acknowledged.

Brooks, however, said he could not say how much of the additional $1.7 million was dedicated to the specific dispute over the Sidhu Trucking contract, nor how much was used to address other matters in the dispute that have arisen since.

In court documents, for instance, Norcope blames the government for a long list of failures in managing the Whistle Bend project.

The company accuses government staff of trying to sabotage its reputation by making false and unfavourable accusations to Norcope's bonding company about Norcope's ability to do the work.

The lawsuit renewed last October said mean-spirited government staff were intentionally trying to prevent Norcope from getting other work requiring a bonding company.

In the Yukon government's counter claim renewed in December, the government blames Norcope for failing to do the work properly, and failing to conduct itself in good faith.

The documents accuse Norcope of bashing government staff repeatedly in correspondence sent to the premier and minister responsible for the project.

The settlement agreement announced today was reached on May 15, said Brooks.

Norcope president Doug Gonder could not be reached for comment.

Assistant deputy minister Tom Ullyett of the Department of Justice explained the agreement with Norcope includes requirements that both parties maintain confidentiality about specifics in the agreement.

Confidentiality requirements are common in these types of settlements, said Ullyett, who was sitting next to Brooks.

The settlement, said Ullyett, is the product of lengthy negotiations.

Brooks said the cost of the settlement and associated legal costs – including the cost of outside lawyers retained by the government – will be attached to future lot prices, though prices for phase one lots that hit the market last fall will remain the same.

The legal costs associated with the contract dispute fall within the amount of the contingency fund allotted for the Whistle Bend project, he said.

Brooks said approximately $60 million has been spent so far on the project. When all seven phases are complete, the anticipated cost will be $270 million for a subdivision large enough to accommodate 8,000 residents.

The May 15 agreement allows Norcope to get on with completing the underground utility work for phase two in time for Castle Rock Enterprises to begin the surface work in June, said Brooks.

He said phase two lots will be available in September, as scheduled.

There was no information provided this morning regarding how much of the work on the subdivision to date does not, or did not, meet the contract requirements, nor what repairs cost to date, or are expected to cost.

There's been no mention of who is at fault for the deficiencies.

The Department of Community Services has refused to provide a list of those deficiencies, suggesting those are matters to be addressed between itself and the contractor.

There have been suggestions, however, that some underground utility work will have to be dug up, requiring brand new pavement and sidewalks to be ripped up.

In a telephone interview late this morning following the briefing, Brooks said he understands it may be necessary to tear up a little pavement, but those issues are still being assessed.

He emphasized again the settlement agreement addresses all disputes, claims and counter-claims.

The standoff between Norcope and the government arose shortly after the company was awarded the $15.9-million contract in the spring of 2011 to install the underground water and sewer pipes, and other public utility work.

Before the ink on the contract was dry, the government announced it needed to make an adjustment, which resulted in the $2-million contract being sole-sourced to Sidhu to move an additional 2,500 truck loads of dirt.

The government maintains it was unable to reach an acceptable deal with Norcope for the extra work.

Norcope responded at the time the government wanted the extra work for next to free. The decision to give Sidhu the contract created resentment from Norcope.

As well, other local companies thought such a hefty $2-million addition should have at least been put out to public tender, not sole-sourced.

Norcope mounted a public protest in early June by driving a fleet of heavy equipment from Whistle Bend along Range Road, down Two Mile Hill and through downtown Whitehorse to the main administration building.

The equipment remained there for several days, with a rock truck staring straight into the premier's corner office window.

The intensity heightened in the ensuing days, weeks and months. In July, Norcope filed its lawsuit over the Sidhu Trucking contract. The territory filed a counter-suit, and fur started flying.

Justice Ron Veale of the Yukon Supreme Court at one point recommended to the two out-of-town lawyers representing the two parties that finding a solution outside the courtroom would be in everybody's best interest.

A lawsuit and counter-suit of this type could easily require a lengthy and costly trial, Veale cautioned. He suggested if the matter continued in court, the cost could exceed the $2-million contract to Sidhu that was in dispute.

The two parties negotiated, and eventually called on a mediator to assist.

Last fall, however, Norcope revived its court action, and the government followed suit.

This past January, an unknown party created a blog site largely aimed at slamming government staff for their handling of the Whistle Bend project.

There were suggestions Community Service Minister Elaine Taylor was out of touch with her department.

One blog submission drew the threat of legal action from the Department of Justice if it was not removed. It was removed.

The Norcope president denied having anything to do with the site.

Another blog submission suggested many of the woes with the Whistle Bend project were the fault of Community Services staff.

It said, for instance, that approximately 28 drainage manholes were incorrectly placed along curbsides by a government survey crew.

"Now the most amazing part of this screw-up is while the city advised YTG they were incorrectly installing these items, YTG continued to install, knowing they could be rejected,” read one of several blog submissions from an unidentified source.

Asked about the survey work late this morning, Brooks said he does not comment on blog submissions, nor speculation.

He reiterated the agreement today resolves all disputes.