Crap and corruption
By David Broadland, March 1, 2016
The sewage and bridge projects are wasting millions in public money, including the cost of hiding those costs.
DID TWO CRD EMPLOYEES—both former employees of the engineering consulting firm Stantec—greatly underestimate the financial implications of a contract between the CRD and Stantec? On the recommendation of the two, Stantec was hired as the CRD’s sewage treatment program consultant. The evidence suggests Stantec’s contract later ballooned in value. Had anything improper taken place? That’s the question Focus was trying to answer when it requested, through provisions of the Freedom of Information and Protection of Privacy Act, a staff report delivered to a 2009 in camera sewage committee meeting.
At that meeting, elected CRD officials voted to award a seven-year contract to Stantec.
If the two former Stantec employees did not accurately inform elected officials of the potential cost of the contract, can they be held accountable by the public for their error? Without knowing what their estimate was, we can’t even begin to answer that question.
Although the CRD released most of the staff report to us in April 2014, it refused to reveal the content of a two-sentence paragraph that described the “Financial Implications” of hiring Stantec. Focus subsequently appealed to the Office of the Information and Privacy Commissioner for a ruling on the withheld information. Almost two years after filing our request for the staff report, an OIPC Inquiry has ordered the CRD to release the two sentences by March 26.
The report recommending that Stantec be hired was put together by a committee consisting of Dwayne Kalynchuk and Tony Brcic—the former Stantec employees—and CRD Director Judy Brownoff.
Press reports following that 2009 in camera meeting indicated Kalynchuk had told sewage committee directors the Stantec contract would “likely be around one percent of the project’s total cost.” At that time, the CRD estimated the project would cost $1.1 billion. At one percent, Stantec’s fee over the life of the project would have been $11 million.
By November 2013, Stantec had already billed the CRD for $11.3 million, but the estimated cost for its services through to completion of the project had skyrocketed to over $43 million—even though the project cost had supposedly been reduced to $783 million. CRD Director Vic Derman, who had been on the sewage committee since its inception, told journalist Rob Shaw at the time: “Maybe I missed something, but I didn’t think it would be that high.” That prompted Focus to seek the report signed by Kalynchuk and Brcic.
Stantec’s contract runs until December 2016 and the CRD seems intent on renewing it. The CRD, through the law firm Stewart McDannold Stuart, argued to the OIPC Inquiry that releasing the two sentences could lead to Stantec’s competitors being able to calculate its rates and so could lead to a competitor providing a lower bid than offered by Stantec. Heaven forbid. Covering all possible bases, the CRD also argued that Stantec’s competitors, on learning of Stantec’s rates, might be discouraged from bidding against Stantec. The CRD, through its legal team, also told the OIPC Inquiry that having to bring a new consultant up to speed could cost the CRD $200,000.
Stantec participated in the inquiry through its Corporate Counsel Jeannine Tse. The adjudicator in the Inquiry, Victoria lawyer Ross Alexander, ruled that “disclosure of the withheld information could not reasonably be expected to harm the financial or economic interests of the CRD,” and that “The evidence does not establish that disclosure of the withheld information could reasonably be expected to significantly harm Stantec’s negotiating position, or result in undue financial loss or gain to anyone.”
Focus estimates the cost to taxpayers of the CRD’s refusal to provide the two sentences at $20,000, which would cover administrative and legal costs incurred by the CRD and OIPC. We’ll share those two sentences with you in our May/June edition.
MEANWHILE, the City of Victoria continues to refuse to release information that would reveal the true cost of the troubled Johnson Street Bridge Replacement Project, claiming that it’s “in mediation” with all of the parties involved.
Focus asked Victoria Mayor Lisa Helps what the harm would be if the City provided taxpayers with an update on the dollar amount of change orders submitted by PCL, the company building the bridge.
Helps said, “When you’re in mediation, you don’t make public what other parties are asking for. It condemns the City’s claims because then someone will ask ‘Well that’s what PCL wants, what’s the City going to do in response?’ So that begs that question, so of course we can’t answer that because that’s the whole point of mediation.”
The mayor’s explanation seems to fall into the category of “If you can’t dazzle them with brilliance, baffle them with…mediation.”
Strangely, the City’s contract with PCL contains no written provision for “mediation.” For dispute resolution it relies, first, on “Good Faith Efforts,” and, if that fails, “Arbitration.” We know there have been disputes.
In one case, PCL submitted a $9.5 million “Request for Change Order” early on in the project, as allowed for in its contract with the City. In fact, evidence has accumulated that PCL has filed several change orders as the bridge design evolved.
PCL’s contract with the City allows it to submit a “Notice of Dispute” if good faith efforts don’t resolve a dispute. In such a circumstance, according to the contract, PCL would be entitled to “arbitration” of that dispute. The contract requires that an arbitration be settled within 100 days of PCL requesting arbitration. Its $9.5 million change order request was dated March 17, 2014. Allowing 30 days for “good faith efforts” means PCL could have had that first dispute settled by August, 2014. Yet Helps would have the public believe that PCL is still politely waiting for mediation and its money—and she can’t answer questions about this because anything to do with the cost of the bridge is now “in mediation.”
WIDESPREAD PUBLIC KNOWLEDGE about how much money has been wasted on the bridge project could cause great discomfort for senior managers at City Hall. Their claim of “mediation” appears to be little more than an effort to delay accountability. Similarly, the CRD’s gross underestimation of the value of Stantec’s contract in the sewage treatment project would be an embarrassment, and the CRD has expensively resisted being outed on this. If they got that line on the budget so wrong, what about all the other lines?
The outcomes for the bridge project—huge overruns, a stripped-down product, heavy loss of key civic employees, endless avoidance of accountability—will all be repeated on sewage treatment unless the community refuses to accept federal and provincial funding. Unless a demonstrable need exists for infrastructure, big projects like these are nothing more than a politically-sanctioned transfer of community wealth to big companies like Stantec and PCL.
Until such time as senior governments provide an evidence-based rationale for land-based sewage treatment in Victoria, the community should set its own course. So far, the scientific consensus in our community is that land-based sewage treatment will provide little or no environmental benefit over the current marine-based system, and so should be a low priority. Heeding that advice is the best course we could take.
The second best response to senior government dictates on treatment would be to spend as little money as possible on meeting those demands. Last month I described a low-cost, all-natural approach to the problem of meeting new Fisheries Act sewage effluent discharge regulations. The idea is to use saltwater to dilute the effluent before it’s discharged through marine outfalls, thereby meeting standards imposed by Environment Canada for allowable levels of suspended solids and oxygen demand. Such a system would involve only minor additional construction at Clover Point and Macaulay Point, as well as new outfalls. All options under consideration by the CRD also require new outfalls.
Following publication of that story, several knowledgeable readers wrote and made the same observation: Option 10 utilizes a standard wastewater treatment technique called “split and blend.”
A form of “split and blend” was included in Amendment 7 of the CRD’s Wastewater Treatment Plan, which was approved by the BC Ministry of Environment. That plan included a tertiary-level plant in which one flow of effluent went through the plant and one flow bypassed the plant. The bypass flow would have received no higher level of treatment than to be diluted by the treated water exiting the tertiary plant. That’s the “split and blend” technique in a nutshell. The two flows are carefully balanced so that the effluent being discharged meets secondary treatment standards.
Instead of a treatment plant providing the diluting medium, Option 10 would use seawater. A very conservative estimate of the cost is $180 million. But think of all the crap and corruption we’d be spared, too.
Sure, Option 10 would be an imperfect response to what the local marine science community has concluded is a non-problem. The best response by the community would be to listen to the scientists and move on to a more pressing problem. But Option 10 would be a much more sensible solution than all the billion-dollar trans-poo-tation systems that few people seem to want.
Unfortunately, with over $500 million in bait left out on the table—like heroin for a junkie—our local political leaders don’t seem to have the ability to distinguish between what the community needs and the future that corporate lobbyists have arranged for us.
David Broadland is the publisher of Focus Magazine.