Expert questioned about $20-M price surge at police HQ inquiry

A document outlining the guaranteed maximum price for the Winnipeg Police Service headquarters project fell quite short on detail, while one sudden construction cost hike sparked many questions, an expert told a public inquiry into the project Monday.

“If I’d have been involved in putting the contract together, this would have been way more detailed than what we see here… I would be immediately asking for more detail from the contractor,” said David Kimber, an expert on construction payment certification.

For example, Kimber said he would seek far more detail on the quantity of materials used to determine the estimate and costs for more specific elements of the work. The document included only budget lines for broad costs, such as upper-floor construction and roof construction.

He testified that one other estimate for the project listed 1,000 budget lines in its cost breakdown, compared to about 40 in this one.

“If I’d have been involved in putting the contract together, this would have been way more detailed than what we see here.”

“You need to make sure that what you’re… paying (is) the right price for work that is being performed,” said Kimber.

The inquiry was called to probe myriad problems with the headquarters project at 245 Smith St. An external audit found the project was severely mismanaged. Initially expected to cost $135 million, its price soared to $214 million, when flood damage and some late security upgrades are included.

Kimber was also asked to share his views on an October 2013 document that indicates the price surged $20 million higher.

“That just doesn’t happen overnight… I’ve never seen that before. It would trigger a whole bunch of questions,” he said.

George Orle, the lawyer for key HQ contractor, Caspian Projects, asked the expert to interpret part of the city’s contract with Caspian.

Orle noted one clause states project records Caspian was expected to provide to the city “do not include any proprietary information or intellectual property owned by Caspian or the bookkeeping or financial records created or owned (by) Caspian relating to the project.”

“If you take this particular paragraph on its own, it would appear that Caspian is not required to provide financial records,” said Orle.

Kimber said he believes the city’s overall contract did require more information to be shared.

“That just doesn’t happen overnight… I’ve never seen that before. It would trigger a whole bunch of questions.”

He was one of two experts from the consulting firm Deloitte to speak at the inquiry Monday.

Gina Campbell, a forensic accountant, shared a report on how she believes money flowed from project designer Adjeleian Allen Rubelli to a shell company called Triple D Consulting Services and others.

Campbell said AAR paid $1.3 million to Triple D Consulting Services. Of the $1.3 million, her report states Triple D retained $462,000 and paid $399,000 to PJC Consulting, a company owned by Peter Chang of AAR, and $462,000 to PHGD Consulting, a company owned by Patrick Dubuc of GRC Architects.

Campbell testified a Caspian employee was identified as the sole shareholder of Triple D. She said she did not see any financial records that indicate Triple D had its own employees.

Heather Leonoff, the legal counsel for the provincial inquiry, noted the inquiry could not subpoena Chang or Dubuc to testify because they live outside the province. Leonoff said the two were invited to do so.

“Neither of them have volunteered to participate in these proceedings,” she said.

In 2018, the City of Winnipeg sued Caspian, AAR, GRC and dozens of other defendants to seek damages for alleged construction deficiencies in the project. In 2020, the city launched a civil suit as well; it alleged a fraudulent scheme inflated the price of the project.

The city approved a settlement of the lawsuits in March 2023. It calls for the municipal government to receive around $23 million, if paid within 36 months. If the payment is not made within 36 months, the city will ask the Court of King’s Bench to order that it be paid $28 million. That deadline will be reached on March 24.

joyanne.pursaga@freepress.mb.ca

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Joyanne Pursaga
Reporter

Joyanne is city hall reporter for the Winnipeg Free Press. A reporter since 2004, she began covering politics exclusively in 2012, writing on city hall and the Manitoba Legislature for the Winnipeg Sun before joining the Free Press in early 2020. Read more about Joyanne.

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