Taxpayers picked up utility bills for Lansdowne businesses

The city is doing a poor job making sure the requirements of its contracts are being fulfilled, according to Ottawa's auditor general, who found problems with how staff was overseeing the Lansdowne partnership and agreements on pothole repairs.

Auditor found staff not overseeing contracts properly, including one for pothole repairs

Because the city doesn't fully understand its complex contract with its Lansdowne partners, the city paid for water and gas for Lansdowne tenants. (Andrew Foote/CBC News)

The city was paying the water and natural gas bills for private establishments at Lansdowne because the agreement overseeing the city's partnership with Lansdowne operators isn't properly understood by staff.

Meanwhile, the contractors hired by the city to fix potholes are using a lower-quality asphalt than specified in their agreements, and no one at the city knew because they didn't test it.

The findings were part of auditor general Ken Hughes' annual report at City Hall Thursday, where he underlined that city staff has to improve its "performance in contract management."

Ottawa auditor general Ken Hughes was surprised to find the city didn't test the asphalt used by its contractors. (Andrew Foote/CBC)
Many city staffers have spent the bulk of their careers delivering services, but with more and more of those services being farmed out to third parties, managers are now overseeing contracts instead of workers.  

"The managers have the will to do it," said Hughes. "I think we just have to make sure that they have the knowledge or the skills."

Potholes filled with wrong asphalt

The auditor general was surprised to find road services staff did not test the asphalt used in non-winter months. So his office tested two samples — at a cost of $3,000 each — from two different suppliers and found that in both cases, the asphalt used was inferior to what was called for in the contract.

"While this is a very small sample size, a 100 per cent failure rate is concerning," the report states, adding staff had also tested a asphalt sample used in winter, and that it failed, too.

It's unclear whether taxpayers lost money by receiving a lower-quality product than was called for in the city's contract. And because there was no testing done of the asphalt, staff also did not take advantage of its one-year warranty on the product.

"We suspect some of the pricing includes a charge for the warranty we know we're not going to enforce," Hughes said.

Asphalt standard too high

While staff recognized it was not following the details of the agreements with its contractors, managers argued the asphalt used to patch roads wasn't of low quality. Rather, it was set at too high a standard at some point by some unknown staffer.

City manager Steve Kanellakos accepted all the auditor general's recommendations. (Andrew Foote/CBC)
"We set a standard that's higher for pothole asphalt than what we use to pave all our roads," city manager Steve Kanellakos told reporters. "The real issue is we need one standard for asphalt, and we need to test that."

However, as the auditor general pointed out, it's a bigger issue when city suppliers aren't fulfilling their contractual obligations.

Audit committee chair Coun. Allan Hubley said he was "revolted" by the city's response to the audit, which he said comprised of vague promises to improve without concrete plans.  

Staff said it would come up with an asphalt testing protocol by early 2018, and implement it by the end of next year.

Lansdowne contract requirements not met

Considering the Lansdowne project is one of the city's largest partnerships, the lack of oversight of the contract was startling. The audit found there's a clear lack of understanding over who's responsible for what under the agreements. 

Among other things, the auditor found:

  • Insurance certificates for Lansdowne "have not been received nor requested by the city" as required under the city's agreements with Lansdowne operator Ottawa Sports and Entertainment Group.
  • Trust accounts for the stadium and parking garage reserve funds have not been set up as required under the contract.
  • More than half of the financial, operational and technical reporting requirements have not been met.
  • The city paid for "utilities for which they are not the end user." The city has already recovered the money paid for natural gas, and is in the process of doing the same for money paid for water.
  • The Ottawa Farmers' Market rent was lowered by someone not authorized to do so.

Meeting the contract requirements will now be the responsibility of Dan Chenier, the general manager of parks and recreation.