City auditor flags overbilling concerns on traffic sign contract

A municipal watchdog is renewing calls for stricter controls on city contracts after her office found that the company hired to maintain Toronto’s road signs spent one quarter of its billable hours driving around looking for signs to fix.

In a report headed to the city’s audit committee on Monday, auditor general Beverly Romeo-Beehler detailed complaints dating back to 2016 about city sign contracts worth millions.

While she found no evidence of deliberate overbilling by the company hired to do the work, she recommended the city transportation department improve its oversight to prevent unnecessary spending.

Coun. Stephen Holyday (Ward 2, Etobicoke Centre), who chairs the audit committee, said the auditor’s findings fit a pattern “we’ve seen over and over again” of the city not doing a good enough job managing its contracts.

He cited as the most egregious example the auditor’s previous investigations into the city’s forestry contracts, which found work crews drove to malls and coffee shops when they claimed to be tending to trees, costing the municipality $2.6 million a year in lost productivity.

Holyday said outdoor work like sign and tree maintenance can be hard for the city to keep track of, and “if we’re going to contract out these services, we have to be diligent in monitoring how those services unfold.”

“The auditor has repeatedly found that we can do better,” he said.

In her report, Romeo-Beehler didn’t name the company that holds the traffic sign contract. But other city documents indicate Guild Electric Ltd. has been awarded successive contracts for the work since 2014.

Under their terms, the company is responsible for installing traffic signs on major roads and expressways throughout Toronto, and making sure they’re properly displayed and kept in good condition.

Guild’s most recent contract began in 2020 and was to cost the city up to $9.7 million over its first two years. It included $1 million for sign work and $7.8 million for installation of devices for the Vision Zero road safety plan, plus taxes.

Guild also won the city’s previous two sign contracts, which combined were worth more than $10 million between 2014 and 2019.

According to the auditor general’s report, her office received a complaint in December 2021 alleging, among other things, that Guild was spending an excessive amount of time on “non-site travel.” The term refers to time crews spend patrolling roadways looking for traffic signs that need repair.

Although patrolling is a requirement of the contract, the auditor found the amount the company charged for — about 26.5 per cent of its total billable hours — “appears high.”

The auditor recommended the city take steps to ensure “accountability for the vendor’s time,” including requiring the company to document which streets it patrols.

She found other allegations in the complaint unfounded.

The company didn’t return a request for comment for this story.

The city has received complaints about the Guild contracts before. According to the auditor’s report, in 2016 someone contacted the city’s fraud and waste hotline to allege the company was overbilling and the transportation division wasn’t doing enough to prevent it.

A subsequent report completed by the city’s internal audit division in 2017 concluded “there was a potential for overbilling to occur and it may not be detected” by existing protocols.

That review also found no evidence of deliberate overbilling, but documented 777 instances over two years in which a worker charged for more hours in one day than were allowed for in the contract.

Many of those instances were found to be a result of data entry errors, but the internal audit division recommended the city tighten its oversight of the contract, including by finding a way to better track workers’ time and developing systems to verify what work the company completed.

The transportation department agreed to implement the recommendations by the second half of 2018. But according to the more recent report, as of this year some of the recommendations still hadn’t been put in place.

“It is imperative that the division follows through” Romeo-Beehler’s report states, and better oversight “should be formally incorporated” into the division’s standard operating procedures.

She said better controls are particularly important because the city is set to issue a new contract for traffic signs this year.

Ben Spurr is a Toronto-based reporter covering city hall and municipal politics for the Star. Reach him by email at bspurr@thestar.ca or follow him on Twitter: @BenSpurr

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