Ottawa Hospital construction woes 'shake confidence' in industry

The Ottawa Hospital needs to mend its "credibility problem" with a stricter model of procurement before contractors are selected to re-imagine the near century-old Civic Campus, says the Ottawa head of construction company EllisDon.

The comments come after CBC reported the former director of capital projects, Frank Medwenitsch, went on a luxury fishing trip as a guest of PCL Constructors Canada Inc., a company that later won bids for two construction projects worth more than $100 million a piece.

EllisDon bid for the $135-million project to expand the University of Ottawa Heart Institute, which was eventually awarded to PCL in November 2014.

Steve Smith, the Ottawa-area manager for EllisDon, said he's confident Infrastructure Ontario handled the open bidding process for that project fairly, but is concerned about what may have happened before the formal process.

"It certainly leaves a bad feeling in the pit of your stomach," he said.

EllisDon spent several hundred thousand dollars preparing the bid.

"It's our business to prepare and submit pricing for this type of work. We make our living doing this type of work and, at the end of the day, all anybody in our industry would ask for is a fair shake," Smith said.

'Black eye' on industry

Medwenitsch is also a defendent in a lawsuit launched by the Ottawa Hospital last week alleging ethical breaches in his handling of contracts with other companies worth under $250,000.

John DeVries, head of the Ottawa Construction Association, said he felt "extreme disappointment" over the allegations in the Ottawa Hospital lawsuit because that's not how business is generally conducted in the industry.

"One bad story just puts a black eye on the whole industry," DeVries said. "It's a huge industry 40,000, 50,000 people in Ottawa alone but it only takes one or two individuals to hurt that credibility."

Smith said the Ottawa Hospital lawsuit "sent a shock wave through the industry" that raised concerns about the bidding proces.

"It shakes the confidence of the players in the industry pretty significantly," he said.

Dr. Jack Kitts, the hospital's president and CEO, broke his silence over the lawsuit Tuesday saying he has been unable to respond to questions about the allegations because the matter is before the courts, but promised to share as much information as possible.

"I am concerned that the trust we have worked so hard to earn is at risk of eroding. I am sorry for the frustration and disappointment our silence on this matter has caused our many supporters," he wrote.

Matter referred to police

The Ottawa Hospital ordered an external audit last summer after noticing "irregularities" in its planning and facilities department. It launched a lawsuit last week after the audit was complete and referred the matter to police.

"We will continue to be vigilant in identifying irregularities and we will take immediate action should anything arise that is in breach of our policies, is counter to our values, or is below the high standards of behavior in the administration and service delivery of your hospital," Kitts wrote.

The hospital accused Medwenitsch and Brock Marshall, former director of engineering and operations responsible for procuring contractors, of breaching their fiduciary duty through fraud, embezzlement and misappropriation of funds in the lawsuit.

PCL is not involved in that lawsuit.

The contractors accused in the lawsuit are: Federal Electric and its director, Larry St. Pierre; DRS Construction (incorporated as 1436937 Ontario Inc.) and its director, Gerry Dub; GAL Power Systems Ottawa and its director, Guy Adrian Lapierre; Pro Management Construction, Ottawa Diamond Construction and Roch St-Louis, who is the director of the former and operator of the latter.

In December,DRS Construction filedits own lawsuitagainst the hospitalfor unpaid bills it claims ledthe company to lay off five employees.

None of the allegations hasbeen proven in court.

Read the full message fromDr.Jack Kitts here.