Toronto looks to suspend contractor accused of overbilling city amid investigation

Toronto city staff are calling fora general contractor accused of overbilling to face an additional suspension to stop it frombidding on new contracts as an investigation continues into the allegations.

In a report, city staffcall for Duron Ontario Ltd.to face a suspension of another four months. Duron is aconstruction company based in Mississauga. The report is being considered by city council's general government committee on Wednesday

Duron is already serving a six-month suspensionimposed by the city this past Junefor contravening itssupplier code of conduct, the report says.That suspension expires Dec. 7, 2024 and was based on initial audit findings indicating "Duron had overbilled the City," the report adds.

The report says Genevive Sharkey, the city's chief procurement officer,is making the recommendation for a four-month additionalsuspensionto protect public funds and the city's procurement processes.

"The City strives to uphold accountability and protect the integrity of public funds by enforcing the Supplier Code of Conduct. By approving the recommended additional four-month suspension, pending a comprehensive report in Q1 2025, the City reinforces its commitment to responsible and fair procurement and contracting practices," the report says.

On its website, Duron saysit specializes in everything from building rehabilitation to concrete finishing, waterproofing to pothole repairs.

The company has workedon a number ofmulti-million dollar government projects in Toronto.City documents show Duron is renovating TTC stations and other city-owned buildings to make them accessible and has previously worked on major projects such asthe renovations at Union Station.

The four-month suspension will allow the company to review and respond to documents provided by the city, Sharkey says.Sharkey says she will consider any response provided by the company andprovide another report to council.

According to the report,Sharkey served notice to Duron in October that staff are also proposing torecommenda five-year suspension, the maximum penalty possible for violating the city'ssupplier code of conduct.The company was told that it could provide the city more information and documents by Nov. 8, 2024 as the investigation continues.

Questions around change orders

To find out how much it has allegedly been overcharged by Duron, the city hashired KPMG's forensic accounting unit, a confidential document obtained by CBC Toronto last year shows. The city's legal team is alsopart of theinvestigation, according to the document.

A March 6, 2023 letter from KPMG to the city, also obtained by CBC Toronto, outlines what allegedly transpired between the two sides.

The city hired Duron for at least six major projects in recent years, the document says. CBC Toronto tracked down a number of projects worth over $37 million contracted to Duron and approved by the city, dating back to 2018.

What wasn't made public were the "change orders" that the company and various subcontractors and suppliers that work for it filed with the city.Duron submitted some 400 change orders costs the company is seeking above and beyond what was initially contracted.

The city is concerned those orders were "improperly altered," according to KMPG's letter.

The city alerted Duron to the issue, the document says. The company blamed what happened on a single unnamed employee, who it said was terminated.

Under Toronto's municipal code, which includes the supplier code of conduct, suppliers are required to "engage with the City in an honest and fair manner," the report says. Contravening the supplier code of conduct can lead todisqualification, suspension, or further sanctions.

Depending on what the general government committee decides on Wednesday, the recommendation for an additional four-monthsuspension will be considered by council on Dec. 17.