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Methods to avoid fraud, mismanagement needed in Nova Scotia hospital project: auditor

December 13, 2019   By Michael Tutton, The Canadian Press

HALIFAX—Nova Scotia’s auditor general is raising concerns about inadequate safeguards to prevent fraud and mistakes in the largest capital project in the province’s history.

In a report released Dec. 10, Michael Pickup delved into the management of the $2-billion health-care project that includes an expansion of the Halifax Infirmary and the construction of a new community outpatient centre.

He criticized the Department of Transportation and Infrastructure for failing to carry out all recommendations received last year from its own consultant to improve governance and ensure the project’s completion as a public-private partnership.

His report found of the consultant’s 18 recommendations, 11 weren’t completed, including seven considered critical to the project.

Pickup also said the project lacked clear methods for assessing fraud risks, including a fraud policy, a code of ethics, fraud awareness training and processes to monitor ongoing risks.

“The lack of attention to fraud risks is concerning to us,” the report said.

The auditor noted the issues of oversight of public-private partnership projects aren’t new, recalling how his office pointed out “significant weaknesses” in oversight of the private sector developers of schools in 2010.

At that time, the auditor general’s office recommended a central organization with the necessary expertise be assigned oversight responsibilities.

In 2015, the province made the decision to involve the Department of Transportation and Infrastructure Renewal in all building projects over $1 million.

“It is concerning that despite this improved approach to oversight, gaps specific to these projects, which were identified by the department’s own consultant almost two years ago, have still not been fully addressed,” Tuesday’s report said.

The department said in response that it has accepted Pickup’s call for a fraud policy for the Queen Elizabeth II redevelopment project and is putting one in place. It also said the process of carrying out all of the consultant’s 18 recommendations is “well underway.”

Pickup’s report noted that the project team overseeing the health centres isn’t fully staffed, with nine of 49 positions unfilled. It also said there is a lack of planning for a project that, taking into account maintenance of the facility, will extend over several decades.

“Adequate succession planning is important to help avoid gaps in leadership and to mitigate the loss of expertise and experience on the project team,” the report said.

Last year the province created a Crown corporation to oversee the Queen Elizabeth II project. It reports directly to the deputy minister of the Transport and Infrastructure Department.

Progressive Conservative Leader Tim Houston issued a news release saying the auditor’s assessment is the latest indication the government of Stephen McNeil isn’t focused on the basics of keeping a vital project from failing.

“It’s not enough to wave the victory banner that you’ve saved health care when it’s done this carelessly,” he said. “It’s only a matter of time before something goes wrong.”

Susan Leblanc, an NDP member of the legislature, said the lack of sufficient oversight is particularly concerning given the health centre work is a public-private partnership.

“Today’s report shows us that the Liberal government is not only ignoring the public and outside experts, but it is also refusing to listen to its own experts,” she said.

“We continue to call for the Liberals to reconsider using a (public-private partnership) deal for this once-in-a-generation project. Considering the issues the auditor has pointed to today, that call is even more urgent.”

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