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This report provides an update to information included in the Auditor General’s report (June 28, 2023), “Winter Maintenance Program Follow-Up: Status of Previous Auditor General’s Recommendations & Processes to Hold Contractors Accountable to New Contract Terms“.

The Winter Maintenance Program Follow-Up report identified that Transportation Services was still working to implement 13 of the 22 recommendations from the original October 2020 report, Audit of Winter Road Maintenance Program – Phase One: Leveraging Technology and Improving Design and Management of Contracts to Achieve Service Level Outcomes, and two of the four recommendations from the June 2021 report, Winter Road Maintenance Program – Phase 2 Analysis: Deploying Resources.

In September 2023, the Auditor General was made aware of proposed changes to liquidated damages included in the winter maintenance contracts. The contract changes put forward by Transportation Services management impact information previously included the Auditor General’s report (June 28, 2023) on the Winter Maintenance Program Follow-up that describe the liquidated damages contract clauses and the amount of liquidated damages identified by Transportation Services staff and communicated to the contractors.

The Auditor General met with Transportation Services management and requested information about the change in contract terms.

Transportation Services management advised that the contractors were asserting that the contracted liquidated damages for “Failure to leave a Depot within the applicable Mobilization Period” (Item #6) was too high and out of line with other similar contracts. In response to the contractors’ assertions, Transportation Services management advised that staff undertook a review of Liquidated Damages Item #6.

Transportation Services management also indicated that revisiting the liquidated damages addresses Recommendation #11 from the Auditor General’s October 2020 audit, which was for the General Manager, Transportation Services Division, to

“reassess and document the rationale for liquidated damages amounts in the next contract cycle taking into account past claims against the City and other potential losses, to ensure that the liquidated damages amounts are fair and supportable.”

This report provides City Council with information about changes to the liquidated damages specified in the current winter maintenance contracts. The proposals to amend the contracts were formally communicated to the contractors by Transportation Services management in September 2023 and agreed in principle shortly thereafter. Amending agreements were drafted and sent to the contractors on November 7, 2023.