DND being ripped off by contractors, union alleges
Shoddy construction, overbilling rife, report to House committee states
By David Pugliese, The Ottawa Citizen February 5, 2012
Taxpayers are on the hook for shoddy construction work at Defence Department buildings and are being overcharged by private contractors providing services at military installations across the country, a new report to be presented Tuesday to a Commons committee alleges.
Photos taken for the report show crumbling foundations and sloping floors on new buildings, while invoices raise questions about whether Defence Construction Canada, a Crown Corporation that oversees construction work for DND, is being overcharged by contractors.
The report will be presented to the House of Commons defence committee on Tuesday by the Union of National Defence Employees, which represents DND construction engineering staff.
The report includes invoices, engineering reports and photographs to build its case.
One photo shows a pipe at the pool complex at Canadian Forces Base Petawawa attached to the ceiling by a rope. Another shows a heating system in a building at the same base, disabled because of mistakes caused by a company hired by DCC.
“We uncovered just a fraction of what we think is going on at all DND sites across the country,” said John MacLennan, the union’s national president. “We don’t know how much it is costing taxpayers but we’re asking for an audit to be done.”
MacLennan said the union repeatedly warned senior department officials about the ongoing problems but nothing was done. Instead, the department’s union workers have been repeatedly called in to fix the problems caused by private contractors, he added.
Some of the issues outlined in the report include:
Unusual billing practices such as a March 1, 2010 invoice in which a contractor charged DCC $22,455.30 to demolish an old floor and provide waterproofing and tiling services for a building at the military installation at Dundurn, Sask. That invoice included 336 hours of work at $46 an hour.
But DND staff at the site informed DCC the contractor never performed that amount of work.
On March 5, the firm submitted a new invoice to DCC revising the number of hours worked down to 182. But in that invoice the company instead charged $65 an hour. The price tag on the new invoice, however, was exactly the same as the first: $22,455.30.
Union staff challenged that again but DCC declined to discuss the situation further and refused to seek any further clarification from the contractor, said MacLennan.
In another invoice, the same contractor charged DCC in June 2009 more than $2,800 for small tools and more than $5,000 to rent a scissor lift, a mechanical device that acts as an elevated work platform. The rental of the two lifts was for a six-day period.
But the union’s report also includes an invoice from months before when DND staff at the same site rented the same scissor lift from the same supplier for two weeks for just $1,170. The union also questions why taxpayers would be charged by the contractor for basic tools, as it is common practice for a company to come equipped to do a job.
At Canadian Forces Base Gagetown, New Brunswick, a contractor mistakenly installed bolts in the wrong location on a building’s foundation, according to the report. Instead of correcting the situation, the bolts were sheared off and the walls of the garage just sat unsecured on the foundation.
At Canadian Forces Base Comox, B.C., the union obtained engineering reports showing that a contractor incorrectly installed temperature sensors and pressure gauges in a new building.
In other cases, a new floor installed in a kitchen at a military site was so sloped it was beyond use; vertical siding was improperly installed on another structure, leaving a large gap that allowed water and snow to come into the building. Other photos taken by union staff of work by DCC contractors show crumbling concrete foundations.
In other cases, the government was going to be overcharged for services by DCC-hired contractors, according to the union. At a DND building at St. Jean-sur-Richelieu, Que., a contractor wanted to charge $16,000 to install a sump pump. DND’s construction engineering staff objected to that, saying the price was too high. According to the union, they did the work for less than $7,000, which included all labour and materials.
The report also notes that an ammunition building at the Dundurn site had to be temporarily closed down after a private contractor mistakenly cut through the structure’s electrical grounding wire. DCC staff knew of the situation but did not understand the danger of the ungrounded structure, according to the union.
“Once discovered by CE (construction engineering) staff, the building was evacuated until the grounding wire could be repaired,” the report notes. “CE staff had to do corrective work at additional expense to the government.”
DCC staff lack the experience to understand that work is not being performed to specifications or building codes, according to the report.
But the president of DCC says his staff are not only highly competent but the Crown Corporation has the right procedures in place to ensure that value for money is obtained in all the contracts it handles. James Paul said contractors aren’t paid until their work is inspected and it is determined that it meets the contract requirements.
Last year, DCC completed 2,500 projects. In that time, it awarded more than $800 million in new contracts. Much of the work is for construction.
Paul said DCC could find no record of a contractor hired by the corporation cutting a grounding cable at the Dundurn facility. He noted, however, the incident could have been from a contractor working under a contract from Public Works and Government Services.
As for the allegations by the union about unusual billing procedures, Paul questioned whether that information was valid.
“We pay very close attention to the billing and, in addition, there are very strict internal audits and DND audits of all of the payments,” Paul said. “I am not aware of, nor would we accept, charges that are not for proper services delivered in accordance with the agreement.”
Contractor invoices are vetted closely enough that Paul said he didn’t think such abuses of the system would go undetected.
Defence Construction Canada was established in 1951 to help the Defence Department in contracting for major real property projects.
But the union says it has expanded beyond its mandate and DND is now giving jobs to DCC that were once done by the department’s construction engineering staff. “They’ve created a shadow public service, while we face a hiring freeze or layoffs,” MacLellan said.
DND did not comment on the union’s concerns about the creation of a shadow public service. DCC has doubled the size of its workforce over the past five years. It now has around 1,000 employees.
Paul acknowledged that DCC is taking on more activities than before but said those still fall within its original mandate. He noted that the government sees DCC as the most effective way to deliver services.
The Defence Department expects to cut several thousand public service jobs in the coming years and the union is concerned that the department is creating the situation to justify even further cuts.
MacLennan also said DCC is turning into a “landing spot” for Canadian Forces personnel, who in their military jobs had the responsibility for determining the amount of work the Crown Corporation received.
MacLennan said this is not against public service employment rules.
But the report also noted, “one needs to question the conflict of interest situation that is arising and whether all decisions made to increase the work load of DCC is in the best interests of the Crown.”
The union noted that it has found at least eight former Canadian Forces employees responsible for providing DCC work, now working for the corporation.
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