Toronto City Council is considering a five-year ban against a construction company after an investigation found the firm overbilled the city more than $1 million on a recent infrastructure project.
Capital Sewer Services Inc. and its affiliates have done most of Toronto’s recent sewer projects, with about $200 million worth of contracts in just the last five years – and the city suspects this isn’t the only time they’ve overcharged taxpayers.
According to a report going before the general government committee next week, the city’s internal controls, as well as complaints received through the Auditor General’s Fraud and Waste Hotline, first identified irregularities in change order documentation submitted by Capital Sewer.
The issue revolves around work done on the Dufferin Sanitary trunk sewer system. Capital submitted a quote to the city for work by a contractor, saying it would cost $1.3 million. But when the city itself asked the same subcontractor for a price, they were quoted $470,000 – a third of what Capital charged the city.
“I’m glad that that was uncovered and we’re able to investigate and take corrective action, but if it happened once and it happened to the tune of a million dollars, what else are Torontonians paying for that they’re not receiving?” said Coun. Brad Bradford.
Capital has admitted to wrongdoing, but tells CityNews they were victims as well, saying in a statement that a single employee “abused his position of trust and intentionally bypassed existing procedures and controls for personal gain.” That employee has been fired, and Capital says they have strengthened internal controls and plan to repay whatever the city is owed.
The city says a forensic audit by KPMG is still ongoing and is looking at determining whether further overbilling activity occurred.
While city council will consider banning Capital from bidding on new contracts for five years later this month, the firm still holds tens of millions of dollars worth of contracts with the city.
“There are so few vendors and contractors that meet the requirements to work with the City of Toronto,” explained Bradford. “We will be engaged with contractors doing work on our roads, and there are existing lawsuits underway, and they’re still awarded contracts, and I don’t think that’s acceptable. I think we need to reform the procurement process at City Hall.”
Both Capital Sewer and the city have contacted Toronto police regarding the overbilling and document alterations.
