The City of Winnipeg paid a private contractor more than $800,000 this past spring to buy sandbags it never received, a CBC I-Team investigation has uncovered.

Following a dire flood forecast in January, which warned of serious spring flooding in Winnipeg, the city signed contracts for one million sandbags from private companies.

One of those companies, Mulder Construction, agreed to charge the city $1.82 per bag for 500,000 sandbags, according to contract documents obtained by the CBC I-Team.

The forecast was later revised, and the big spring flood never happened in Winnipeg as originally forecast. Still, the city was on the hook for a large chunk of its sandbag contract with Mulder Construction.

'The best we could do at that point was cut our losses, stop them at right away.'—Brad Sacher, director of public works

To get out of that contract, the city renegotiated, and the price went up from $1.82 a bag to $2.65 a bag for 280,000 bags, according to documents.

"The best we could do at that point was cut our losses, stop them at right away," Brad Sacher, the city's director of public works, told CBC News.

Furthermore, in order to save on delivery costs, the city never received a single sandbag from Mulder Construction, but it still paid the company more than $800,000.

Sacher said it was cheaper to leave the sandbags with the contractor than it would be to pay extra for delivery.

"In this situation, not being able to use those sandbags was unfortunate. But the cost of not acting and being wrong is catastrophic," he said.

No exit clause

Evaristus Oshionebo, a University of Manitoba law professor who specializes in contract law, said the City of Winnipeg should have included a termination clause when it wrote the sandbag contract.

"If a contract is based on a future event which may or may not occur, you want to have certain terms in the contract that will protect you in the event that you no longer require the number of units of sandbags that you thought you were going to require," Oshionebo said.

Evaristus Oshionebo, a contract law expert at the University of Manitoba, said the city should have included a termination clause in its sandbag contract. (CBC)

"The city would have saved everything. In other words, the city would not have had to pay out an additional sum of money to the contractors."

Oshionebo added that termination clauses are included in provincial government contracts.

Mayor Sam Katz said city officials were just trying to be prepared for possible flooding. While the city was making its own sandbags, they needed more just to be safe, he said.

"Everybody else was coming to the city for help during the flood, too, and we were providing them with sandbags," Katz said. "So how much money did we save everybody else by the fact that we had inventory?"

Katz said he has no doubt that city officials "did a good job of negotiating the deal."

What happened to the city's unused sandbags is not known, as Mulder Construction refused to comment.

Later in the spring, as the Assiniboine River began to crest, the province also went to Mulder Construction for sandbags, signing a contract for $1 a bag for 250,000 pre-made sandbags.

Provincial government officials declined to comment on the sandbag contract.