February 13, 2012

Union claims construction oversight needed at defence department

Defence Construction Canada (DCC) should be looked at by the auditor general to determine the extent of substandard work, fraud and delays in the tendering process, says the union representing defence employees.

The Union of National Defence Employees presented a report to the House of Commons defence committee on Feb. 7, which identified serious problems that have emerged in the last five years with the crown corporation that deals with construction for the Department of National Defence.

“Our undertaking has discovered some very harmful evidence pointing to poor quality workmanship allowed by DCC, the duplication of services DCC provides already being performed by the public sector, questionable application of the Financial Administration Act, the amount of wasteful spending of Canadian taxpayer dollars and how DCC is becoming a Shadow Public Service,” said John MacLennan, the union’s national president to the House of Commons Committee.

The focus of the report is to determine the impact these problems are having on Construction Engineering (CE) worksites at bases across Canada.

“Over the course of the study, several situations were discovered where DCC staff’s lack of experience resulted in contractors performing substandard work,” said the report.

“In the 17 locations visited, each location reported situations where CE staff needed to be called in after contract work was performed to rectify deficiencies or to correct errors made by the contractor. Some of these situations resulted in buildings needing to be taken off line until corrections were made.

According to the report, these errors were not even noticed by DCC staff responsible for the contract, but by CE staff after the job was completed.

In fact, in most cases DCC staff lacked the experience to even understand that either the work was not performed to specifications or that code violations were made.

For example, in one case, a contractor cut through the grounding wire at a munitions building.

“The DCC contracts administrator knew of the situation, but was not properly trained to understand how serious this situation was for staff working in the building, said the report.

“Once discovered by CE staff, the building was evacuated until the grounding wire was repaired.”

In another case, a contractor installed sill plate bolts in the wrong location on a foundation. Instead of having the contractor correct the situation, the bolts were sheared off and the walls of a garage placed directly on the foundation basically “floating” with no secure attachments.

After repeated attempts to have DCC contact the contractor to correct the situation, CE staff undertook corrective work at additional expense to the Crown.

DCC was established to assist with the contracting process for construction projects and initially reported on the time taken to award contracts as one of their performance measures.

However, over the past four years DCC has dropped this contracting process.

DCC now requires extensive peer review of all Department of National Defence (DND) supplied information to determine the “bidability” of the project.

“This process, carried out for the most part by individuals not qualified to do so, has added several months to the contracting process and now DCC performance is no better than that of PWGSC (Public Works and Government Services Canada), said the report.

“In addition to the added time in the front end of the process, DCC now unofficially measures their performance from the time required to award a contact once the RFP is posted on MERX, totally ignoring the amount of time DCC is taking at the front end of the project.”

The report said this practice is not only misleading, but it is duplicating the role of DND CE staff and adding significant delays in project delivery.

It is estimated that this process has added at least four to five DCC staff members at each DND location, adding about $10 million in personnel costs.

One of the most disturbing findings of the report involved numerous financial irregularities and deliberate disregard for the Financial Administration Act (FAA).

For example, a contractor hired by DCC provided an invoice containing inflated hours. When the information was challenged by a CE employee, DCC returned the invoice to the contractor, who revised the hours down, but increased the previously stated material costs to arrive at the same total invoice amount.

The CE staff challenged the situation again, but DCC refused to discuss the matter any further and refused to seek additional clarification from the service provider.

In another situation, DCC staff advised DND that a project was completed and asked for the release of the total funds to the contractor.

Upon further investigation, it was found that the construction of the building was not completed and once the contractor had received the funds, delayed the completion of the project by several weeks.

It was determined that DCC is “fixing” employees’ time sheets to maximize the amount of salary dollars billable to projects, whether they have worked on the project or not.

They are presenting these falsified time charges to contract administrators who are signing off on the fraudulent costs and recovering these funds from DND.

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