Council to blacklist bid-riggers in wake of announcement of OPP investigation

Ontario Provincial Police are investigating possible bid-rigging on paving contracts, as identified by Toronto’s auditor general.

Thestar.com
April 28, 2017
By David Rider

Amid a police probe of the possible rigging of paving contracts, Toronto council is signaling zero tolerance for any contractors found to have scammed the city.

Council voted 39-0 Friday in favour of a Councillor Josh Matlow motion asking city staff to report back on mechanisms to “blacklist” contractors who have acted “fraudulently, unethically or otherwise inappropriately.”

“If we were to hire a contractor for our own home, for example, and we found that they were ripping us off, I can tell you I would never hire them again,” Matlow told council.

“You lose the privilege of getting a contract with the City of Toronto if we know that you’ve been scamming the residents of Toronto.”

The Star revealed Friday that the OPP is examining findings by Toronto auditor general Beverly Romeo-Beehler in a probe warned of “potential signs” of bid rigging in city road reconstruction projects.

Romeo-Beehler looked at paving contracts awarded by the transportation department to private companies between January 2010 to June 2015 to ensure the tendering process is fair and competitive.

She found patterns suggesting possible collusion by companies to ensure inflated bids would win some contracts, with some winners apparently rewarding losing firms with lucrative sub-contracts.

The auditor general also saw signs of “unbalanced bidding,” possibly legal schemes, including submitting low per-unit or per-day bids knowing the amount required, and the eventual payoff, is significantly higher than the contract suggests. In some cases, bids won contracts where paving on some identified streets was not done.

Her probe, now examining non-paving construction contracts, identified at least $2.5 million in needless spending.

Romeo-Beehler warned, however, that city losses could be many times that amount.

Meeting in private, City council gave direction to city staff that has not been made public.

On Thursday Peter Wallace, head of Toronto’s public service since 2015, told council he found the findings “upsetting and very stressful.”

The city manager added that his team will, with the help of council, need to take drastic action to ensure city contracts are no longer vulnerable to abuse. This will include modernization of paper-only bidding that forced the auditor general to collect documents and create her own database to track trends and identify red flags.

“One of the root causes (of the problem) is dealing with contractors more sophisticated than us,” he said.

“We are a $12-billion organization, and we were gamed by firms that were more sophisticated than us.

“That’s not right.

“That requires investment, talent, management and skill to address.”

Wallace suggested council’s restraint-focused budget process, including across-the-board reduction targets, is part of the problem.

Mayor John Tory told council Friday that Romeo-Beehler’s findings, even setting aside potential legal wrongdoing, suggest “mismanagement and incompetence” by city management and staff.

Tory, a former Rogers chief executive, said if he confronted similar findings in business, he would “definitely would make some changes.”

He vowed council support for Wallace and Romeo-Beehler in getting to the bottom of the allegations and implementing reforms to ensure the integrity of the city’s bidding process.