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Scathing audit shows taxpayers out millions of dollars over green bin contract

A scathing report released on just how the contract between Orgaworld and the city came to fruition was released on Wednesday, concluding city staff made several major errors.

The 20-year contract, which was signed in 2008, calls for Ottawa to send up to 80,000 tonnes of kitchen waste per year to the Orgaworld plant yearly at an annual cost of $8-million.

Auditor General Ken Hughes said he found nothing to help figure out how staff thought 80,000 tonnes was a reasonable target.

"Ottawa has been paying a premium to send some of its leaf and yard waste to Orgaworld on one hand while not being able to meet guaranteed volumes at the plant on the other," said Hughes.

"The analysis that should have been done for a project of this size was incomplete and confusing. Appropriate information was not provided to council…The bottom line, Mr. Mayor, is the city of Ottawa paid about $8 million to Orgaworld that it should not have had to pay."

Taxpayers were also on the hook for close to another $1 million in legal fees for the recently wrapped up arbitration between the city and Orgaworld. Hughes said if there were proper documents, that legal bill would have likely been a lot smaller.

Councillor Maria McRae, who called for the audit several years ago, said she was stunned by the conclusions.

"It's just so disappointing this council or previous councils weren't given factual information by our staff. And I'm going to stop short of calling our staff liars, Mr. Mayor, but I think we all know what I'm leading up to."

Hughes said he concluded that a more realistic figure is between 21,000 and 57,000 tonnes. But there is a major caveat with even those smaller numbers; it assumes that every single kitchen scrap in the city of Ottawa is going into the green bin or that everyone is using it.

Hughes warned it's time for councillors to consider their option.

"In our view, this would be a good opportunity to examine early contract termination and assess other options, including a city owned and operated facility."

Mayor Jim Watson said he is open to possibly cutting ties with Orgaworld, but not right away.

"If it makes economic sense and we have a supplier that's ready and able, I'm more than willing to entertain the auditor general's recommendation… but it has to make financial sense. As you know, cities and governments get into breaking contracts and it doesn't always work well for them and we saw that with light rail transit."

The city and Orgaworld don't even agree on the cost of cancelling the contract. Orgaworld General Manager Dale Harley told CFRA News it tops $56 million, but city manager Kent Kirkpatrick said it's between $8 million and $10 million. Harley added he would be willing to possibly re-negotiate the deal.

Kirkpatrick apologized to city council and said new measures are now in place to prevent this "failure" from happening again.

"It's a requirement that any report that comes to council has a defined section on legal commentary, financial considerations and risk management."

What is likely more salt in the wounds of Ottawa taxpayers is that Gatineau city hall staff clearly fared better. The audit noted that a similar organics processing contract signed between that city and a Cornwall-based facility is $30 million cheaper than the Ottawa's deal.

Kirkpatrick said staff will look at other options, including cancelling the contract, and report back in 2015.

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