Auditor general says some contracts not properly approved, several firms hired without contracts or competition
Members of the province’s public accounts committee questioned information in the 2007 auditor general’s report on Tuesday showing that when P.E.I.’s wind farms were being designed and built, several people were employed without contracts or without competitive process.
The committee is reviewing the report, released last April, to try and get a handle on the province’s finances.
During an audit of the management, planning and contracting of the wind turbines in North Cape and East Point, P.E.I. Auditor General Colin Younker found a number of discrepancies in contract approvals and hiring practices by the P.E.I. Energy Corporation.
Some contracts were not approved by the Treasury Board or by Executive Council, as provincial regulation stipulates. And on several occasions, firms and services were hired without a signed contract.
Murray River MLA Charlie McGeoghegan was incredulous as the committee read through this section of the report.
“There’s basically no signed contracts,” he said of the wind farm construction. “That’s kind of a problem isn’t it?”
During phase I of the North Cape wind farm construction, for example, one of the technical engineering firms was hired without a competitive process and there was no contract signed. This also occurred during phase II with a consulting company, an engineering firm and for the foundation construction and in East Point during the construction phase.
“So they just hired whoever they wanted?” McGeoghegan asked.
“Yes, in this case,” Younker replied.
He added that in some of these cases the Energy Corporation chose to hire people who had done work with them before.
“Still there wasn’t a competitive process,” he said.
Younker explained the purpose of a signed contract is to detail the responsibilities and terms and conditions of employment.
“We did recommend that this should be documented,” he said.
Opposition Leader Olive Crane came to the P.E.I. Energy Corporation’s defence, pointing out the capital projects were built on time and under budget.
“The person who did the design and management had quite a bit of experience in wind energy and was involved in the Atlantic Wind Test Site for a number of years,” Younker said.
“But he should have signed contracts and documents.”
Stratford MLA Cynthia Dunsford said without proper documentation it’s hard to know whether salaries and budgets were followed.
“It’s called competitive for a reason – the price could come in a bit lower than budget,” she told the committee.
“In this case we don’t know whether or not that would have happened.”
Younker said the major contracts were approved by Executive Council. The problems with the hiring discrepancies occurred because of a misunderstanding by the Energy Corporation.
“A big part of the problem here was that the people at the corporation weren’t aware that they were under the Treasury Board policy.”
The auditor general’s office sent a followup letter and made recommendations in the report asking the corporation to seek direction from Treasury Board in the future.
“And then as far as contracts being signed by both parties – they followed up on all the recommendations that we’ve made,” Younker said.
The committee will meet again Feb. 12 to continue combing through the report.
By Teresa Wright
23 January 2008
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