Quashing the public interest

By David Broadland, May 2016

On the sewage treatment issue, Mayor Helps and the CRD seem to have lost sight of whom they are serving.

Save Clover PointI WROTE HERE LAST EDITION about my two-year battle with the CRD to get two sentences of a 2009 staff report released to the public. I believed the sentences would show that CRD staff greatly underestimated, either intentionally or by honest mistake, a significant cost related to the development and construction of a secondary sewage treatment system for Victoria.

As ordered by the Office of the Information and Privacy Commissioner, the CRD released those two sentences in March. Since the cost to taxpayers of the CRD’s refusal to release the two sentences was significant—I estimate $20,000—I am going to provide you with every single word. The two sentences that the CRD—and the engineering consulting firm Stantec—were determined to keep secret were these: “The program management consultant service fees are estimated at 3 percent of the total project construction value and will be shareable under the federal and provincial planning agreement. Stantec’s hourly rates are up to 40 percent lower than the next ranked firm.”

On the basis of that estimate, CRD directors decided to award a major 6-year contract to Stantec. The cost to the CRD was to be based on those very competitive rates.

Here’s why the CRD and Stantec didn’t want to give up those two sentences. Stantec’s estimate for the cost to build a secondary treatment plant at McLoughlin Point was $783 million. Of that, about $410 million was for construction costs. Applying the “3 percent” from the two secret sentences to that cost, Stantec’s expected fee over the life of the project would have been just over $12 million. But by 2013 the CRD and the Seaterra Commission were estimating Stantec’s eventual cost would be $39.6–$43 million. That’s a 3-fold increase over Stantec’s 2009 estimate.

This is significant for two reasons.

First, those two sentences were written by two CRD employees, Dwayne Kalynchuk and Tony Brcic. Both just happened to be former Stantec employees. It’s evident in the second sentence that they promoted Stantec’s hourly rates as being considerably lower than those of Stantec’s two competitors for the contract. Yet once Stantec was awarded the contract, the expected cost to taxpayers ballooned. Naturally, one wonders if Kalynchuk’s and Brcic’s former employment with Stantec played any role in their recommendation of Stantec and the subsequent escalation of Stantec’s fee. I can make no comment on that. I would wager, though, that most CRD taxpayers would want to see more stringent care taken by the CRD to protect the interests of taxpayers in the awarding of contracts than was practiced in this case.

Secondly, the underestimation was apparently based on information provided to the CRD by Stantec. Did it deliberately provide the CRD with a low estimate to get the contract? Or was it just bad at estimating costs?

Either way, the three-fold underestimation raises questions about Stantec’s $783 million price tag for the project. Has Stantec been underestimating the overall project cost, too? Or, if Stantec couldn’t accurately estimate its own portion of the overall project cost, should anyone have confidence in its ability to estimate the overall cost? This is critical. The support for McLoughlin Point by some CRD representatives, including Nils Jensen, Ben Isitt and Geoff Young, has been based on the validity of Stantec’s estimate.

Stantec’s 6-year contract with the CRD will expire in December, and the CRD seems determined to keep working with the firm. This is the most perplexing part of this story. Even though Stantec’s expected fee had inflated far beyond its initial estimate, the CRD argued against releasing those two sentences, partly on the basis that revealing them might result in Stantec’s competitors under-bidding it if the contract were reopened. That is, taxpayers might get a better deal. The CRD, funded by taxpayers, seems to be opposed to that. Instead of being appalled by the huge increase in Stantec’s expected bill, they chose  to protect its interests. Shouldn’t the CRD be focussed on the interests of the people in the community who fund it?

 

THAT RELEGATION OF THE PUBLIC INTEREST to second-class status is also playing out on a much larger scale in the sewage treatment issue. A peer-reviewed scientific study by DFO scientists showed that higher levels of treatment would have a “negligible effect” on environmental conditions in the Salish Sea. Detailed analyses have been made by marine scientists and public health officials showing that the current marine-based treatment facilities at Clover Point and Macaulay Point are safe and effective and are doing no harm to the environment. Those scientists have argued that new regulations being imposed by Ottawa do not take into account the physical circumstances that have allowed this system to function safely for many years.

At the same time, crucial aspects of the system proposed to replace it have not been worked out—how biosolids would be safely disposed of, for example—so the environmental risks of those unknown details can’t be weighed. Since a replacement system will likely cost local taxpayers $1 billion or more, you would hope that the default position of Victoria’s elected officials would be to insist that Ottawa and BC provide exacting proof that the local marine scientists and health officers are wrong before the community is forced to go to such great expense.

Sadly, the opposite is true. When the federal government recently sent a letter to the CRD reiterating its crude, formula-based determination that Victoria’s tidal-powered, organic and self-disinfecting approach was “high risk,” Victoria Mayor Lisa Helps said, “Very clearly, they’ve taken 2014 data that shows all the things which are not good for the marine environment are way over the threshold. So I am very happy we have received this letter. I hope this will completely quash the debate.”

Helps, who led an expensive, year-long debate to a complete failure at Rock Bay, doesn’t know what she’s talking about. Under Ottawa’s point system, Victoria fails because the test puts so much emphasis on total suspended solids and oxygen demand, characteristics of sewage effluent that local marine scientists have said has negligible impact on the environmental health of the Strait of Juan de Fuca.

Instead of accepting the wisdom and professional experience that scientists and health officers have obtained after years of observing Victoria’s marine-based system, Helps has accepted the authority of Ottawa to make an arbitrary and unreasonable decision. In doing that, she has put the community at greater risk of having to spend an unbelievably large sum of money unnecessarily. She’s failing to serve the public interest, just like CRD staff did when they chose to protect Stantec’s interest.

The part of the community that Helps supports, that wants to build something without even knowing whether it will provide a net environmental benefit, can’t find a place to put their project. No wonder. Without a proven need for replacing the existing treatment system—a system the community has already bought and paid for—any location that’s considered will always appear to have a higher value as something else. Even a parking lot has a higher value than an unneeded treatment plant. That’s been true for Haro Woods, McLoughlin Point, Viewfield Road, Rock Bay and now Clover Point. A bureaucratic formula that has nothing to do with the public interest is going to remain unconvincing to the other part of the community that wants to see hard evidence that the scientists and health officers are wrong.

David Broadland is the publisher of Focus.

 

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Kalynchuk's legacy

Crap and corruption

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Report delivered to in camera CALWMC meeting June 10 2009.pdf621.06 KB