Fraser’s audit disturbing

Highways and Public Works often has no idea the condition its roads and bridges are in, according to a scathing 35-page report from Canada’s…

Highways and Public Works often has no idea the condition its roads and bridges are in, according to a scathing 35-page report from Canada’s auditor general Sheila Fraser’s office released Friday.

On top of the department’s lack of knowledge, Fraser’s audit found Highways often breaks its own rules, makes costly decisions without analysis, spends more money and time to build than it anticipates, forgoes reviews of projects when they’re completed, and uses an agency to maintain property that swallows a staggering amount of money.

It’s clear big changes are needed, said Fraser.

“The department lacks effective long-term maintenance and replacement plans for highways and bridges,” she said at a news conference Friday, after briefing the Yukon legislature about the report.

“The government cannot ensure that it will do the maintenance necessary to keep the infrastructure and the buildings up to date.

“As we note in the report, there could be several bridges that could be in danger of becoming unsafe.

“So, we are recommending very strongly to the government that it needs a long-range plan,” she said.

Just how concerned should Yukoners be?

“We don’t do safety reviews; that’s the responsibility of the department,” said Fraser. “The major issue we’re trying to get at is there is an issue the department has identified — aging infrastructure which requires significant repairs.”

Highways spent about $60 million in 2005-2006 on roads, bridges and other transportation infrastructure.

In the same period, the property management agency it oversees spent $52 million to manage development, leasing, operation and maintenance of buildings.

Fraser’s audit examined how well the department has spent money over the past three years to meet its mandate.

On average, highway pavement in the Yukon is 20 years old. On an engineering scale, Yukon roads average 56.3 out of 100, even though the lowest acceptable limit for the department is 63.

The Highways department is aware a major investment is needed to stop roads from falling apart, let alone improve them, said Fraser.

A Highways study estimates it will cost $3 million every year for six years to simply stop deterioration, with more needed to improve the roads.

The department oversees 129 bridges in the Yukon, with more than 30 per cent of them built more than 40 years ago.

In an internal report in 2003, 29 bridges were found to be unacceptable and in need of repair, while a 2004 report was never finished.

More than 60 bridges require upgrades to withstand earthquakes, said Fraser’s report.

“Left unchecked, further deterioration of these bridges could lead to safety problems,” the report said. “For example, at the time of our audit, an urgent repair had to be carried out to fix a large hole on the deck of the bridge over the Upper Liard River.”

The report recommends the department create replacement and maintenance plans for its transportation infrastructure immediately.

But when Highways builds new roads, bridges and other hard parts, it often fails to keep tabs on its spending, timelines and results, Fraser’s audit found.

Since 2004, the department has started building 100 transportation projects, and many of them were found lacking.

Of 12 construction projects examined, costs were exceeded in eight cases, and the government management board had to approve spending increases for seven of them.

“Many of the projects we examined went over their initial budgets, and most were not completed on time,” said Fraser.

The cause could be inaccurate spending estimates and timelines, or a lack of following those guidelines once a project starts, she said. The vague answer is a result of a lack of knowledge: when projects are completed, they aren’t subjected to reviews, she added.

“We would have expected the department to follow its own procedures to do the review after completion of projects to assess why these things are occurring,” said Fraser. “That hasn’t been done and it needs to be done going forward.”

Many construction projects were found to start before contracts were signed, which can put the government at risk, she added.

“Contracts should be in place before work begins,” she said.

The Highways department builds and maintains infrastructure itself as well as for other government departments, which in essence become its clients.

But when the department of Health and Social Services contracted Highways to work on the multi-level care facilities in Watson Lake and Dawson City, that relationship went awry, said the audit.

Highways officials were excluded from meetings between the design consultant and Health and Social Services.

“It (Highways) was essentially participating after the fact” during its work on the two facilities, said the report.

In June 2005, then-Highways Minister Glenn Hart absolved the department of responsibility for either project.

Former Deputy Premier Peter Jenkins was largely criticized by opposition parties for micromanaging both projects.

Fraser’s report recommends Highways complete required reviews of projects to get a handle on excess spending and time extensions, comply with environmental standards, and ensure contracts are signed before construction begins.

And the department must open itself to criticism to allow MLAs and the public to keep it on track following her report, said Fraser.

“They need to get the information together and they need to develop a plan, and the legislature and the public need to have that information.”

Away from asphalt and bridges, Highways must get its property management agency to improve its methods, said the report.

There is currently no long-term strategy for acquiring office space, and much of it is secured on short-term leases and sole-source contracts. That means little analysis has been done to determine whether leasing, building or buying could save the department money, said the report.

Of the 48 government offices and buildings in Whitehorse — which sees 92 per cent of the total building space — 31 are leased.

A table in the report lists 10 leased government offices in Whitehorse; nine are sole-source leases.

“The only way to really test a market is to go out for competitive bids,” said Fraser.

 Many of the buildings leased are three-year leases — this despite some offices occupying the same space for more than 15 years.

A loophole in the contracting rules sees no requirement for request for bids or tenders when a lease is extended for three years or less, said the report.

“In our view, the department’s frequent use of this provision does not ensure that the government of Yukon is achieving value for money,” it said. “We are concerned that the lack of documented analysis of options could favour continuing the renewal of short-term leases as the only option, which could be the costliest option in the long term.”

Property management doesn’t have a complete inventory of all government offices and those who occupy them, said Fraser.

Some departments have too much space; others have too little.

More worryingly, there is no idea what condition many of the buildings are in.

In the 2005-2006 fiscal year, property management spent $21 million to maintain, operate and lease government buildings. It received $14 for facility management fees and rental payments from government departments, while departments spent $17 million to build and maintain buildings themselves.

Totaled, that’s $52 million — or about seven per cent of all government spending.

There are questions whether property management’s structure could be made more efficient.

“Be it an agency or a part of a government department, the issues we raised should be addressed,” said Fraser, noting the agency’s 210 employees appear highly competent.

“I get the sense they are very much focused on the day-to-day operations. It’s the long-term planning … that needs to get a little more attention.

While the government has agreed to follow all of Fraser’s recommendations in the report, it brought instant rebuke from the opposition parties.

“This report is obviously very damaging to the credibility of this government,” said Liberal MLA Eric Fairclough in a release.

“Beneath all the bragging about good fiscal management we now see the truth about how this government has mishandled the public’s money.”

He pointed to a random sample of 10 projects from the department that saw overspending of $8 million dollars.

Acting NDP leader John Edzerza sits on the non-partisan public accounts committee that will call department officials to task for the audit’s findings on Wednesday and Thursday.

He therefore reserved his comments for after the hearings, but noted the report is “a big wakeup call” for the Yukon Party government.

The Yukon Party and Highways Minister Archie Lang refused to comment.

Government spokesperson Albert Petersen claimed Highways officials needed to read the report before answering questions — this despite responses from the Highways department in the document itself.

When two damning audits from Fraser’s office were released in February 2005, Premier Dennis Fentie made public comments on both the very same day they went public.

Highways’ former top bureaucrat, John Stecyk, was fired in early January without explanation and will not appear before the committee.

The audit on Highways is the first in a series of audits by Fraser’s office, which audits the federal government and three northern territories.

The next audit, to be delivered in the fall, is on infrastructure spending for the Canada Winter Games.

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