Audit blasts $583M Arctic DEW Line cleanup cost, lax controls

The cost of cleaning up 21 toxic Cold War radar stations across the North has more than doubled to $583 million amid lax controls, says a scathing audit.

The cost of cleaning up 21 toxic Cold War radar stations across the North has more than doubled to $583 million amid lax controls, says a scathing audit.

Distant Early Warning (DEW) Line sites that dot 5,000 kilometres of Arctic tundra are being dismantled as part of one of the largest environmental restoration efforts in North America.

Of prime concern are polychlorinated biphenyls — persistent pollutants once widely used in everything from transformers and electrical equipment to paint. PCBs have been effectively banned from commercial use since research in the 1970s suggested links to cancer.

The DEW Line stations, built in the 1950s to warn of incursions by Soviet bombers, soon became outmoded when intercontinental ballistic missiles emerged as a nuclear threat.

The storied installations were symbols of Cold War tensions in tiny northern enclaves such as Broughton Island, Cape Hooper and Mackar Inlet.

Equipment has so far been removed or buried at 14 locations in hopes of keeping contaminants out of the Arctic food chain. Cleanup is underway at six more sites, but total costs of the project have soared.

Work that was to be completed this year at an estimated cost of $280 million has now been extended to 2018 at a new cost of $583 million.

Internal auditors at the Department of National Defence, which is responsible for the sites, raised alarms in the recently published report. It analyzed the massive project between April 1, 2002, and March 31, 2005.

Auditors acknowledged improvements in several areas but still offered this blunt conclusion: The project's "size, complexity, longevity and geographic dispersion create significant risk for DND with regards to ensuring effective stewardship and accountability for $583.3 million in public funds.

"It is recommended that the [cleanup] project team develop a risk management plan and finalize approval of an exit strategy conducive to effective project completion."

Audit questions sole-sourced contract

Auditors flagged the 1996 decision to name UMA Engineering Ltd. of Calgary as head contractor of the project with no competitive process.

"The contract file did not demonstrate that the decision to sole-source the 1996 contract had been adequately justified prior to entering the contract," says the audit.

Moreover, it notes that the company was awarded future contracts plus additional work.

"This approach created the right conditions for both scope and cost creep."

Auditors also cite missing paperwork to track project funds, and lax control over subcontractors who supervise remote sites — often charging overtime fees that are "not clearly defined."

The audit specifically underscores inadequate oversight when possibly contaminated equipment is removed.

That lack of control "over the removal of possible hazardous material could have far-reaching environmental and financial implications for DND."

Remote sites difficult to monitor, says crown corporation

David McCuaig, director of national operations group for Defence Construction Canada, says it's a major challenge to keep tabs on far-flung sites. The Crown corporation manages the cleanup contracts for DND, reporting to the minister of Public Works.

McCuaig says there's now a tightened process to oversee removal of equipment and other materials.

It's designed "to ensure that no contaminated materials are removed from the site unless the environmental risks have been properly analyzed and mitigated — and also that there's no residual legal or financial liability to [National Defence]."

It has been difficult in the past to limit scavenging when sites are close to communities, McCuaig said in an interview.

"I mean, these sites are not enclosed. They're not fenced off. It's difficult to have control of every piece of material that may be out on the tundra somewhere."

McCuaig says officials are acting on the audit's other recommendations.

"Valid observations have been made. But notwithstanding that, we remain confident that these things were well managed, and that value was achieved and funds were expended appropriately."

UMA landed the lucrative contract without competition "presumably because of the expertise they had in that area," said McCuaig, who was not involved in the decision. The engineering firm had previously won an award for its clean-up of similar sites in the Western Arctic.

Initial cost estimates soon ran into the hard reality of frozen tundra, he explained.

"Most of the stuff is concealed underground. It's in permafrost, it's under snow. So every time you go on the site you'll see something new. Cost predictability is very challenging in that constraint."

Steve Stowkowy, a UMA vice-president, referred questions to Defence Construction Canada with the comment that "it's been, in our eyes, a very successful project and it's provided a lot of value."

Kevin Gaudet of the Canadian Taxpayers Federation says the audit suggests mismanagement with impunity.

"I don't understand, in all candour, how projects can be run like this.

"Unfortunately the track record of the federal government — all governments, to be fair — in managing taxpayers' dollars seems to go this way. They contract a budget. They blow the budget. They say all the things they're going to do to fix it … and then it gets to be 15 or 20 years after they started.

"I would suggest the government rigorously implement private-sector controls over project management."