WINNIPEG – A public inquiry into cost overruns at a Winnipeg construction project has heard of an unusual change that helped the winning bidder.
The inquiry is examining the city’s development of a headquarters for the Winnipeg Police Service, which ran more than $70 million over budget by the time it was completed in 2016.
In civil court, the city’s former chief administrative officer, Phil Sheegl, was found to have accepted a $327,000 bribe from a contractor.
The inquiry opened with the city’s manager of purchasing, Barbara D’Avignon, who said bidders were initially supposed to post a $40-million performance bond — half of the projected construction cost, which D’Avignon said was the standard formula.
Emails released at the inquiry show there were complaints about the bond, including from a Caspian Construction official.
It was lowered to $25 million — a lower percentage of project costs than D’Avignon said she has seen in her three decades on the job.
“I’ve never seen it before and I’ve never seen it again,” D’Avignon told the inquiry Tuesday.
D’Avignon had earlier told other bureaucrats that lowering the performance bond would be risky in the event the project ran into problems and the city needed to recoup costs.
Documents released at the inquiry show Sheegl emailed another bureaucrat shortly before the change was made and warned that a contractor would phone then-mayor Sam Katz.
“Please make this thing work,” reads an email from Sheegl dated Dec. 16, 2010.
A few minutes later, an official with Caspian emailed Sheegl to thank him for his support.
Under questioning from a lawyer for Caspian, D’Avignon admitted that requiring a 50 per cent performance bond is not set in law and city officials have the right to adjust it.
She also said the lower performance bond would not just benefit Caspian.
“Anyone who wanted to take advantage of that lower amount could do that,” said George Orle, Caspian’s lawyer.
“Correct,” D’Avignon replied.
“That was part of the consideration that officials with the city had, is that we need to get more people bidding on these jobs to get the prices to a level that we’re happy with. Would that be correct?,” Orle asked.
“That sounds correct,” D’Avignon said.
RCMP investigated the project and no criminal charges were laid. Sheegl argued the money he received from a Caspian executive was for an unrelated real estate deal in Arizona. He appealed the civil court decision but lost.
The Manitoba Court of Appeal said Sheegl’s actions amounted to “disgraceful, unethical behaviour by a public servant.”
Sheegl is set to appear at the inquiry next week. Katz, who served as mayor from 2004 to 2014, is among the witnesses scheduled to testify later this week.
Brian Bowman, who served as mayor after Katz, had called on the Manitoba government to launch the inquiry, saying the controversy over the building project threatened to damage public trust in city hall.
The province approved $2.3 million for the inquiry, which is set to run until June.
This report by The Canadian Press was first published Feb. 10, 2026.
