Ottawa’s green bin recycling contract will cost the city more than $7 million in unnecessary costs – a number that could climb even higher, said the city’s auditor general Wednesday.
Ken Hughes said the city has not been able to meet the demand it promised Orgaworld and that has resulted in $7.7 million worth of penalties.
Under the terms of the city’s 20-year, $140-million contract with Orgaworld, signed in 2008, the city promised to send 80,000 to 100,000 tonnes of organic waste a year.
But those numbers have not been realized, said Mr. Hughes, and that could lead to more penalties down the road.
“City staff gave the impression that 100,000 tonnes was easily achievable, had little discussion of options, and did not properly identify the risks to council,” said Mr. Hughes in a statement.
The audit, which started three years ago and was updated this year, also found several other errors in the procurement process.
Pilot project data was incorrectly interpreted and the analysis was incomplete. Cost savings for internal processing of leaf and yard waste was not factored into the business case. And a ramp-up period for the contract was not considered in the request for proposal.
The report also said management did not exercise due diligence, much of the analysis and documentation is missing and communication to council was ambiguous.
City manager Kent Kirkpatrick said the city has already begun strengthening its policies around corporate project management and record-keeping throughout its departments.
“The Auditor has identified, and management agrees, that the City needed to be more rigorous in its approach to project management and more proactive in our analysis,” Mr. Kirkpatrick said in a statement.
He said the city now requires that every report to committees and council contain standard sections on legal and risk management, as well as the implementation of project management templates and business case tools.
He said these practices have already been put in place for large projects such as light rail transit, adding he believes the city now has the proper tools to evaluate the future of the Orgaworld contract.