Sechelt’s new sewage treatment plant project had no predetermined business case, insufficient oversight, and lacked transparency in procurement and decision-making, according to a highly critical report from B.C.’s Auditor General for Local Government.
The report [available here (PDF)], released April 29,also cited insufficient involvement of finance staff and the absence of a conflict of interest policy in connection with the $25-million project, now named the Water Resource Centre (WRC).
In the view of the Auditor, “the District exposed taxpayers to unnecessary risks” in how it carried out the project.
Specifically, the report found that:
- “District representatives held separate, closed meetings with potential bidders prior to issuing a request for proposals. The District cannot demonstrate that all prospective bidders received the same information at the same time and that the bidding process was conducted in a fair and open manner.”
- “Council did not approve terms of reference for the [steering] committee until it had virtually completed its work, and most of its reporting to Council was informal and verbal.”
- “During the period covered by the audit, the District lacked policy on how to deal with allegations of conflict of interest that were raised in the community.”
- “A document approximating a business case did not exist until several months after the District committed to proceeding with the expanded project.”
Key among the report’s eight recommendations is a review of the entire project, including an evaluation of construction, project management, costs in completing it as well as the risks, life-cycle costs and the WRC’s long-term financial stability. The review should also be made public when completed, the report said.
At an April 29 news conference, current Mayor Bruce Milne called the recommendation for the comprehensive review “explosive.”
“The Auditor General came in and looked at the largest single capital project that the District of Sechelt has ever done. And after doing a full audit on that project,” Milne said, “they’re saying they don’t know [if the project is good value].”
Milne said that council would “implement every single one” of the report’s recommendations.
“We’re going to follow through to ensure that we have the best practices, as we should have,” he said.
Milne said it’s likely that the review, which is expected to take up to one year to complete, can be paid for with contingency funds already allocated to the WRC’s budget.
“It won’t be new money we’ll have to find from taxpayer,” he added.
The Auditor General’s report also identified major flaws in the 2012 project to pave Mason, Heritage and Sandpiper roads in West Sechelt.
“We found no evidence that the District consulted with the affected community members about this proposed project, undertook traffic or other studies or rated this project in priority against other possible capital projects,” the report said.
Milne noted the report did not question the paving project itself so much as the process around it.
“There was in fact no business case for this. There was no rationale for the project. There was no clearly defined project scope,” Milne said.
In a news release commenting on the report, Sechelt’s Acting Chief Administrative Officer Bill Beamish noted that the audit only examined two projects, but the practices identified as concerns were not confined to them.
“Similar patterns of risk resulting from a lack of governance oversight and the need for stronger administrative procedures are evident on other District projects and programs,” Beamish said.
Milne described the District’s previous administration as a pro-business council that did not conduct its business well.
“It was a ‘business council’ not just in its own name and its own ideology, but supported by the business community,” he said. “I think that’s questionable and damning for that whole community.”
Milne was also critical of former mayor John Henderson for his role in leading the previous council through these projects.
“Henderson was a Chartered Accountant and proud of the fact that he was a Fellow at the Institute of Chartered Accountants of British Columbia.”
Milne said it stretches credulity to think that the council of the day did not know what they were doing and did not know what best practice is.
“People claimed on that council to have very significant business experience. They claimed to have a particular affinity to financial matters. The Auditor General is finding something very different.”
Councillor Alice Lutes, who was a member of the previous council, said she was relieved the report has finally been released.
“Now the community will get a chance to read it and discuss it and watch us make good changes,” Lutes said.
“I think the biggest takeaway will be what other communities can learn from this…now we can talk about why you don’t do things that way.” Rik Jespersen