Alberta Auditor General Slams Fossil ‘War Room’ for Undocumented Sole-Source Contracts

Alberta Auditor General Doug Wylie took aim at the Jason Kenney government’s hapless fossil industry “war room” in an annual report that identified more than C$1.7 billion in accounting errors, inaccurate projections, and other “adjustments” in the provincial budget.

The war room, known as the Canadian Energy Centre, was one of several agencies singled out for in-depth review, CBC reports. It took heat for “the awarding of $1.3 million in sole-sourced contracts without adequate justification or documentation.”

Other greatest hits in the report included $637 million unaccounted for in 19 crude-by-rail contracts from which the government said it had divested, 11 of which were still in place at the end of last fiscal year, $100 million the government failed report related to its lavish financial support for the Keystone XL pipeline, and a $795-million cost overrun at the Sturgeon Refinery in Redwater, AB, apparently driven by crashing oil prices earlier this year.

“In a financial statement audit you will always have observations, but in this particular year, these are significant errors that were found,” Wylie said, adding that the gaps he’d spotted were “concerning”.

In its review of the war room, the report “details improper hiring practices for the CEC’s team of writers, website developers, photographers, and campaign managers tasked with combating what the province considers misinformation on Alberta’s oil and gas industry,” CBC says. “The provincial corporation freely awarded sole-sourced contracts without documentation, spent money without board approval, and paid contractors before their contracts were signed, auditors found.”

At $1.3 million, the total value of those contracts was more than half of the war room’s $2-million budget. A statement from the office of Energy Minister and former pipeline executive Sonya Savage said the biggest chunk, $400,000, went to what CBC describes as an “urgent national ad campaign” for the failed Teck Frontier tar sands/oil sands mine.

“Unlike open bidding, sole-sourcing is a non-competitive process,” so “provincial procurement guidelines dictate that sole-sourced contracts are only permitted when only one known source exists, or when a specific contractor has specialized expertise,” CBC explains. “Wylie found that CEC contracts were being awarded without adequate evidence that the successful bidders were solely qualified for the work, or that the services would be provided at a reasonable cost.”

The audit also revealed that the war room’s draft spending and procurement policy “had not been approved by the board, and none of the policies described in the document were being implemented,” the national broadcaster says.

Opposition leader Rachel Notley called the report “quite a doozy”, adding that “this government created a black hole run by a [United Conservative Party] partisan to spend Alberta taxpayers’ money with no public oversight. Taxpayers are getting no value from the war room. In fact, their incompetence is hurting our international reputation.”

“Albertans need assurance that the amount of money invested into the corporation is appropriate and well spent,” Wiley said in the report. “Ineffective contract management processes may result in wasted time and public funds, potential or perceived conflicts of interest, and an increased risk that Albertans are not receiving the best value for the investment of public dollars in the organization.”