David Reevely, Ottawa Citizen
Our city government signs something like $1 billion in contracts a year for everything from bus tires to emergency shelter beds, but almost everywhere auditor general Ken Hughes looks, he finds that managers are slack about enforcing them.
“Deficiencies in contract management” are the theme in Hughes’ work so far, he told city council’s audit committee in presenting his latest pack of audits Thursday.
Take the partnership with the Ottawa Sports and Entertainment Group to rebuild and manage Lansdowne Park, which Hughes looked at closely this year.
Councillors wanted two things out of the OSEG deal. First, a big infusion of private money to redevelop the site. And second, somebody else to take on most of the risks of running it. As Hughes’ audit report puts it, this is “the most significant public-private partnership ever undertaken by the city,” at least until the new light-rail system opens.
Making it work “requires careful attention to the terms and conditions of the agreements affecting operations and maintenance, as well as ensuring that the city’s assets are maintained, maximizing safety, reliability and availability.”
The auditors picked 43 specific commitments that OSEG made to the city and found it was failing on 22 of them. More than half. These are mostly technical things: Supplying the city with proof that its many operations are insured is one of them. Filing periodic reports on the states of Lansdowne’s buildings is another. OSEG is also supposed to have set up dedicated trust accounts and put money aside for when those buildings need major renovations.
“In some cases, neither the city nor its partners were aware of the contractual requirements,” the audit report says. This is the behaviour that the Lansdowne deal’s harsher critics warned about: We’d sign the place over to the private partners and go for coffee.
“The matters raised by the auditor general were addressed by OSEG some time ago,” said Graeme Ivory, an OSEG spokesman. “Reserve trust accounts for future repairs to the stadium and parking garage are set up, reporting requirements have been met and all insurance certificates are now up-to-date.”
Lansdowne was probably always insured in all the necessary ways — “I would be surprised if it wasn’t,” Hughes told the councillors — even if the city hadn’t seen the certificates. OSEG had the cash it was supposed to be saving for renovations — just not in segregated accounts. And so on. Neither the physical place nor the operation there is falling apart. But if they were going to, the collapse would start with the city’s being lazy about the contracts its private partner is supposed to obey, blinding itself to incipient trouble.
That’s why all this technical stuff was written into the contracts in the first place. Why else did the lawyers spend all those months negotiating and councillors spend all those days debating? What was the point in sweating all the conditions if we weren’t going to bother enforcing them?
City manager Steve Kanellakos said the city had stumbled between the construction-and-opening phase at Lansdowne and the lasting operational phase. That’s included things such as accidentally feeding Lansdowne’s private occupants $200,000 of free water through a pipe the city thought was only serving Sylvia Holden Park just to the north, and having trouble tracking what utilities the Ottawa Farmers’ Market uses and should be billed for.
“The challenge when you get into a deal like Lansdowne (is) we struggle when multiple departments are involved in managing an issue,” Kanellakos said.
He’s put Dan Chenier, the general manager of the city’s parks-and-rec department, in charge and people from the other departments have started meeting every two weeks for check-ins, which Kanellakos said has helped.
We have so many cases now where assuming people with a plain incentive to screw us would not do so turned out to be a bad idea, including in the very same audit pack Hughes presented Thursday.
Asphalt contractors pledged to deliver a particular grade of pothole filler and substituted cheaper stuff; nobody noticed until the auditors sent a couple of samples for testing. They’re supposed to prove that the scales they use to weigh the stuff the city buys have been properly calibrated; many can’t.
The city has contracts with emergency shelters, which Hughes found generally do what they’re supposed to, but when city inspectors visit them they apply standards that haven’t been updated since 2005. Inspectors don’t centrally track their findings and even the diffuse records they keep can be cryptic: What does it mean when an inspector checks a box on a list that says “Mattresses”?
Hughes has previously reported on disasters in the infrastructure department, which didn’t closely mind the contracts on construction projects.
We contract out so much of this work because contractors are supposed to be more efficient than direct city employees, because if they don’t do the job right we can pick somebody else next time. That’s true, but the system only works if we check to make sure they’re doing the job right.