Winnipeg, MB - In September 2012, Mayor Sam Katz accepted the recommendation of the City Auditor to retain external resources to complete a comprehensive review of the new fire-paramedic stations construction project.
The Request for Qualifications process required that individuals or team members selected to perform the engagement must not otherwise operate, practice, or reside within the Province of Manitoba or be involved with the City, or acting as a consultant or sub-consultant to the City with respect to the Fire Paramedic Stations Construction Project to strengthen actual and perceived independence.
A Request for Proposal was issued to qualified proponents. On November 15, 2012, an award of contract was made to Ernst & Young LLP who conducted an independent objective review of the Project and the processes followed to construct the four new Fire Paramedic Stations for the City of Winnipeg. The major areas of the review included the following:
- Capital Project Oversight
- Capital Budget Processes
- Procurement
- Project Management
- Land Acquisition, Sales, and Disposal
- Legal Analysis pertaining to real estate transactions
- Municipal By-laws, Policy and Process review
- Real Estate Valuation
- Decision Making and Process analysis and review
In summary the Ernst & Young review found:
- The project was not well managed by a number of parties within the City.
- Oversight and appropriate due diligence were lacking for a project such as this.
- The project was assigned to an individual who did not have the appropriate expertise nor the resources within his department to manage it.
- Certain City policies were not followed and/or the interpretation of the policies may not have met the expectations of Council including the splitting of contracts to avoid Council budget approval and award authority.
- The project will be completed at a cost which exceeds the originally approved budget by at least $3.0 million.
- All contracts for the project were awarded on a non-competitive basis to one firm. The two competitive processes conducted did not result in the award of a contract.
- A decision was made to begin construction of Taylor Station # 12 in advance of the City having an agreement in place to acquire the land. This decision effectively bound the City to some form of transaction to obtain ownership of the Taylor land.
- The construction of Portage Station was awarded based on two contracts. One contract for the foundation and one for the completion of the building. The commencement of the construction of Portage Station # 11 with a foundation only contract, effectively bound the City to the construction of a station with the size and resulting cost that was not within the Council approved budget.
The Ernst & Young report included 14 recommendations regarding the City’s policies, processes and organizational structure. Highlights of the recommendations include:
- City Council should examine the basis under which they allow single source contracting evaluating the threshold where single source negotiation decisions should be brought to their attention. Council also should consider the contract award delegation limits as it relates to single source contracts and the expected disclosure to Council when transactions have not occurred in a manner established by City policies.
- City Council should also consider revising the organizational structure so that Legal Services would report to City Council rather than City Administration.
- The Public Service should develop, for Council approval, policies regarding land exchange transactions, constructions contracts related to land acquisition and authorities to be sought for Letter of Intent or similar agreements. The policy regarding the declaration of surplus property should also be clarified as to when Council approval is to be sought.
- The City’s procurement processes should be reviewed to determine the acceptability of substitutions and developing a strategy to ensure all proponents have access to the same information.
- The Public Service should also update internal processes regarding capital budget submissions and develop a means to account for non-cash transactions when reporting total project costs. Further, prior to issuing building permits on City projects, controls should be implemented to ensure all ownership rights in the subject property are unconditionally held by the City.
The report will be considered by City Council on Tuesday, October 22, 2013. View the electronic version of the report.