Damning Orgaworld audit says city staff misled councillors

City staff, not elected officials, are to blame for the City of Ottawa’s costly green bin contract with Orgaworld, according to a long-awaited audit.

City has spent nearly $8M to process waste that was never actually processed, report finds

Ottawa's auditor general says proper analysis of green bin contract wasn't done by staff. 3:13

City staff, not elected officials, are to blame for the City of Ottawa’s costly green bin contract with Orgaworld, according to a long-awaited audit.

Auditor general Ken Hughes's report, which was initiated in 2011, was tabled Wednesday morning during a Finance and Economic Development Committee meeting.

In it, he said documentation and analysis was missing from Orgaworld contract records, that management failed to exercise due diligence, and that pilot project data wasn't correctly interpreted, was incomplete and had fundamental errors.

Ottawa Auditor General Ken Hughes delivers his report on the city's Orgaworld contract July 9, 2014. (CBC)

For example, the mixture of household waste and leaf and yard waste was never clearly defined.

The amount of all available organics in Ottawa varies from 21,000 tonnes to 57,000 tonnes, and has never approached the 80,000 tonnes the city pays Orgaworld to be processed each year under the terms of a 20-year deal signed between the city and the waste management company in 2008.

Under that deal, the city pays Orgaworld $8 million per year (before inflation) to process at least 80,000 tonnes of waste.

"The City of Ottawa paid about $8 million to Orgaworld that it should not have had to pay," Hughes said, referring to waste that was never processed.

"We cannot lose sight of the fact this project was built on a weak foundation where the proper analysis that should have been done for a project of this size was not done by city staff."

The city also spent about $1.7 million in legal fees over the Orgaworld contract, which could have been far less if proper documentation was available, he said.

Hughes also said City of Ottawa staff never warned council about the markup for processing leaf and yard waste at Orgaworld instead of the Trail Road facility. He said staff gave council the impression that 100,000 tonnes per year was easily achievable, and there was little exploration of options such as increasing the amount of waste over time.

Hughes's report includes 10 recommendations for the city, all of which have been accepted by management, including the possibility of terminating the Orgaworld contract early and considering other options such as building a city-owned facility or approaching another supplier.

Analysis of organics volume and payments expected in 2015

In an emailed statement, city manager Kent Kirkpatrick said the city "has acted proactively to strengthen its policies and practices around corporate project management and record keeping throughout city departments."

Kirkpatrick provided an example saying every report to committees and council must now contain standard sections on legal and risk management.

"In addition to strengthening its policies and practices, the city has already begun a comprehensive analysis of current and future volumes of organic material and payments under the contract with Orgaworld.

"The results of this analysis will be presented to council in 2015," the statement added.

Ottawa Mayor Jim Watson said after the meeting he's willing to look at the possibility of cancelling the contract if it makes sense on financial and service levels.

"We've been through the history of cancelling contracts in the past and it hasn't worked out too well for us," he said.

"But if we can ensure that it makes financial sense, that it's cheaper in the long run for taxpayers, and we have a facility to take the compostable material then we certainly should look into it."

As it stands, there isn't another local supplier that could handle Ottawa's organic waste.

Many staff involved in deal no longer employed by city

On Tuesday, the audit committee's chairman, Coun. Rick Chiarelli, told CBC News Hughes’s report would show staff misled councillors.

Audit committee chair Coun. Rick Chiarelli said Tuesday that city staff misled councillors before they signed a 20-year contract with Orgaworld in 2008. (CBC)
"The basis upon which the 80,000 tonnes per year were arrived at was faulty, inaccurate and just wrong," Chiarelli said Tuesday.

"There were councillors who questioned those numbers, particularly Gord Hunter, who called them false at the time,” said Coun. Rainer Bloess, who was also part of city council in 2008. “I think we should have listened to Gord Hunter as opposed to listening to our staff."

Many of the city staff members involved in the Orgaworld deal are no longer employed at the city, including Richard Hewitt, the man who signed the contract.

The Orgaworld situation has caught the attention of Ontario ombudsman Andre Marin. He singled out the project at a news conference where he discussed a bill that would allow his office to investigate municipalities, among other powers.

"It shows the utility of these officers, you can only imagine what an ombudsman providing a service province-wide … the kind of things it could help citizens with," he said.

Sources told CBC News Tuesday the report could lead to a renegotiated contract with Orgaworld. That potential new contract might allow plastic bags to be thrown into compost bins, a longstanding issue between the two sides.

The release of the audit was made possible when the city won a confidential arbitration decision last week, which also dismissed a $1.3 million Orgaworld claim against the city.


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