Toronto wasted $31M on poorly managed snow clearing contracts since 2015, report finds

TORONTO -- Toronto’s auditor general says the city could have saved tens of millions of dollars in snow clearing costs over the past five years if it properly enforced its arrangements with contractors and did more to ensure that work was being completed as billed.

A new report released publicly on Friday says the city could have saved $24 million over the past five years if the terms of the deal with contractors which specified that they would not receive standby payment in addition to payment for actual hours worked had been applied. The report also found that the city spent an estimated $7.1 million in overpayments to contractors for work not performed as required over the same period.

That amounts to roughly 7.5 per cent of the $411 million the city spent on winter road maintenance over those five years.

Auditor General Beverly Romeo-Beehler also found that the city could do a much better job of keeping track of the work being done through available GPS technology.

In a random sample of 850 vehicles contracted between November 2018 and January 2020, 227 had no GPS data, either because the GPS units malfunctioned or because the vehicles operated without them.

“As a result, we could not verify whether service levels were met by these vehicles or whether the contractor payments for these audit samples were correct, and neither could management,” Romeo-Beehler wrote.

When GPS data was available, Transportation Services staff generally didn’t use it to verify that the work had been completed as logged by the contractors, according to the report.

In addition, Romeo-Beehler’s team found that several contractors were not consistently meeting service targets and that Transportation Services staff were not properly managing the contracts.

“For example, we found that several contractors had excessive stop times, were starting their shifts late, claiming more hours than worked, and operating without a functioning GPS device. As a result, council approved service levels may not be met,” the report states.

One contractor claimed more hours than actually worked 44 times over the audit period, while another took 32 excessively long breaks.

According to city figures, $47 million of the city’s roughly $90 million annual snow clearing budget is spent on contractors’ standby payments so that those contractors are available when it snows.

The auditor found other issues with the city’s road maintenance program, such as salt spreader errors and inefficient manual processes, but was not able to put a dollar figure on how much those problems cost the city.

Responding to the report Friday, Mayor John Tory said he read the report with interest and added that it’s a good example to highlight the value of having an auditor general.

“I think this is exactly why you have an audit committee and an audit process, is to identify these kinds of things,” Tory told reporters at a news conference. “I can assure you, I'm looking for every penny under every couch cushion that we have in this city hall. We have found $500 million plus in savings because we've had to during the pandemic and we will continue to do that and this is another good example of a place where I'm sure we could find more.”

The report comes at a time when the city is struggling to balance its books, having been hit hard by the COVID-19 pandemic. While the federal government has come to the table with help for cities, Toronto is already staring down an estimated $1.5 billion shortfall for the next fiscal year.

The report includes 22 recommendations for improving the city’s road maintenance program.

The auditor General is calling for contract requirements to be clarified regarding responsibilities and timelines, reporting and resolving GPS issues, reasonable break times and liquidated damages.

She is also calling for the city to fully leverage GPS technology to monitor its workflow and modernize its processes, as well as for better verification of contractors’ work before payment and standardizing the process to monitor contracts.

The current winter roads maintenance contract was signed in 2015.

Romeo-Beehler pointed out that with two years left to go in the current contract cycle, the city could save an estimated $9.6 million if the express terms of the standby provisions in the contract were applied. However she said the city’s lawyers would need to review the contract.

The report is set to go before the city’s audit committee on Oct. 23.