A new report looking into the now dissolved East Side Road Authority found multiple problems with the way the authority was managing contracts with First Nations community-owned construction companies.
The report by Auditor General of Manitoba Norm Ricard found that the authority’s Aboriginal Engagement Strategy lacked measurable goals, and that it hadn’t done proper risk assessments for First Nations communities that partnered with the ESRA.
The authority was mandated to build and maintain the east side road project, which would connect communities along the east side of Lake Winnipeg that currently only have access to winter roads for a few months every year.
The project included signing community benefits agreements with the communities to provide training and mentoring opportunities, as well as access to untendered pre-construction contracts.
The audit looked at five community benefits agreements and 10 pre-construction contracts.
“The audit revealed many gaps in how the community benefits agreements and the related untendered contracts were being managed,” said a news release.
The part of the money given to the community-based companies for untendered pre-construction work included “capacity building allowances” intended to help the businesses become independently viable.
The money was supposed to decrease over time, but the audit found the ESRA wasn’t tracking how much money was being paid out, how much the allowances were being reduced over time, or how the First Nations communities were benefiting from the allowances.
Gravel-crushing contracts in September 2014 totalling $50.1 million included the capacity building allowance, totalling between $ 8.8 and $9.3 million.
“Without adequate information on the amounts paid out and the related outcomes, it is not possible to assess whether the public received good value for this expenditure,” Ricard said.
The audit also found that roughly half of the money from the community benefits agreements went to private companies that entered into joint venture partnerships with the community-based companies.
These private firms were supposed to provide mentoring to community corporation staff, but the audit found no mentoring plans were in place.
The audit also found no plans for measuring the effectiveness of mentoring provided by ESRA to community corporation staff and First Nations members.
Auditors also noted that the ESRA was not monitoring whether communities were complying with the conditions of the community benefits agreements, and found many instances of non-compliance.
“The Auditor General noted that overall responsibility for contract administration had not been clearly assigned, that contract administration policies were not in place, and that staff had not received contract administration training,” said the release.
AUDIT GENERAL REPORT VALIDATES WHISTLEBLOWER COMPLAINTS:
The auditor general also looked into whistleblower complaints made in March 2015 against the ESRA.
Out of five complaints filed, the auditor general concluded that four had merit.
The investigation found that a chart showing delegated financial signing authority had not been updated.
Overhead costs were allocated as a percentage of the budget without any justification for the percentage or analysis of the expense.
Monthly reports on capital asset values were late 10 of the 13 months examined, ranging from 17 to 103 days late.
Finally, progress reports on a joint Manitoba/Canada agreement related to the Manitoba Floodway were not submitted within the six-month deadline about 50 per cent of the time.
PALLISTER GOVERNMENT RESPONDS:
Premier Brian Pallister responded to the reports Tuesday, describing the organization as lacking accountability and oversight. He said it was a complete failure to monitor or measure the results of millions of expended taxpayers’ dollars.
“The previous government was warned there were serious problems with the oversight and management of ESRA,” Pallister said. “It knew the auditor general was investigating and yet did nothing to ensure that ESRA was fulfilling its mandate of providing First Nations communities with economic opportunity. Even worse, the government stood by on the eve of an election as millions of Manitoba tax dollars were thrown at a flawed model.”
Infrastructure Minister Blaine Pedersen said that between August 2009 and August 2015, ESRA signed community benefit agreements totaling $153 million. Many of these were signed after the Office of the Auditor General had started its investigation, which the minister indicated should have been a serious red flag to the previous government about concerns with the lack of monitoring and mentoring being provided by ESRA.
Pedersen also said that between Jan. 18 and March 9, ESRA pursued additional agreements worth nearly an additional $160 million.
He said that he would like to meet with representatives of all 13 First Nations communities involved in the East Side Road project, as well as with the Manitoba Métis Federation, to discuss the auditor general’s report and the project’s next steps in the coming days and weeks.
