The review of the construction of four new Winnipeg fire-paramedic stations has revealed severe mismanagement at the City of Winnipeg, breaches of city policy and a non-level playing field for awarding contracts -- but no criminal activity.
In a long-awaited review of the process by which new fire-paramedic stations were built in Sage Creek, River Heights, Charleswood and St. James, consulting firm Ernst & Young revealed a litany of problems in a program that engulfed city hall in scandal last year and has contributed to the departure of former chief administrative officer Phil Sheegl and former paramedic-chief Reid Douglas.
"The review concludes the project was not well-managed," Sam Katz told reporters after executive policy committee accepted the external review, which unveiled many problems and made 14 recommendations for improvement. "This review shows corners cut and questions skipped over on many occasions."
The review found the project was conducted without due diligence and suggested Douglas did not have the expertise to arrange a swap of three city properties for the site of a new fire-paramedic Station No. 12, built on Taylor Avenue land the city does not own. It also found that arrangement bound the city to purchase the Taylor Avenue land.
It also noted Sheegl told Douglas early in 2012 to conclude the land swap deal in an email that included the line "Get it done."
The review also found the award of what originally was a single contract was split up into four contracts that were awarded to Shindico Realty on a "non-competitive basis" – as well as in a manner that circumvented council approval. The awarding of a contract to build a new Station No. 11 on Portage Avenue bound the city to complete that station above the limit of budget.
The review also found the program exceeded the $15.3-million original budget by $3 million – and that the $18-million budget was known to senior officials before council approved the smaller amount
City will improve: Katz
Katz said the city will commit to making improvements to its processes regarding improvement and land development, specifically where it involve sole-sourced contract awards.
Several councillors called the audit’s findings sobering.
"Particularly disturbing is the notion that processes in place to ensure openness and transparency were circumvented and we are unable to determine whether or not the City of Winnipeg received value for money for the work performed," property chairman Jeff Browaty (North Kildonan) said.
"The fact that one vendor, Shindico, is identified as having an advantage is beyond troubling. The latest accusation made by our former Fire & Paramedic Chief Reid Douglas that he was told before the whole process commenced that Shindico would be awarded the contracts should be further investigated."
Any city contract above $10 million is supposed to come before council. The fire-paramedic station replacement program started out with a $15.3-million budget, but as of August 2012 -- when problems with the program first emerged -- the city only had a record of one contract being awarded: a $3-million contract awarded to Shindico Realty for building Station No. 27 at Sage Creek.
At the time, former CAO Sheegl told reporters council did not have to approve the overall contract to build the paramedic stations -- as stated in the request for proposals -- because the project was broken down into four components, one for each fire-paramedic station.
"There's nothing that's been done that's untoward," Sheegl said in August 2012.
Sheegl said at the time no council oversight was required because the original request for proposals was to design and build the stations, while in the end, each station wound up with different needs. For example, new No. 27 station Sage Creek wound up being a straight construction project on land purchased from Qualico, another developer, after a one-size-fits-all design was located in Ontario.
In the end, Shindico wound up receiving four separate contracts, of $3 million, $3.2 million, $3.2 million and $5.9 million. The public service has the authority to approve any contract under $10 million, without council oversight.
Sheegl also said there was no need for council approval once a budget was assigned to the project in July 2010, in a report that authorized $9.7 million of low-interest borrowing from Ottawa.
"I think we followed all the procedures and policies we have," the former CAO said at the time. "At the end of the day, this is a wonderful story. We have four new fire halls (and) our response times have improved in all those areas."
An official from Shindico said last year the firm expected the entire program had council oversight.
"It was always our understanding, that whatever we agreed to was subject to council," development manager Bob Downs said in November 2012. "So it wasn't being done behind closed doors."
Sheegl oversaw project: report
While Sheegl said in 2012 he was only aware of the fire-paramedic station construction program "at 50,000 feet," the review shows he provided oversight for the project.
"Our review indicates that the majority of project oversight, where oversight occurred, was done by the current CAO," the report states.
Sheegl declined to comment.
"I’m bound by a confidentiality agreement that I can’t discuss anything with you," he said in a brief telephone conversation.
Couns. Paula Havixbeck (Charleswood-Tuxedo) and Harvey Smith (Daniel McIntyre) said Sheegl should not have received a compensation package, given the fact he was head of the public service.
Fort Rouge Coun. Jenny Gerbasi said Sheegl should not have been hired in the first place.
"It was known from the start that he did not have the necessary experience or qualifications," she said. "Furthermore, the question of an inappropriate relationship between the Mayor and the former CAO has always been a dark cloud over this council.
"Now we have a circumstance where a single company (Shindico) appears to have been given an unfair advantage over other firms."
An official with Shindico declined to comment.