Millions lost in ‘negligence,’ potential savings for City of Toronto vehicles: auditor general

When it comes to the City of Toronto‘s extensive fleet of vehicles, the auditor general says millions have potentially been unnecessarily spent over the past several years as a result of “negligence,” inefficiency and missed opportunities.

Auditor General Beverly Romeo-Beehler announced the findings in a 47-page report to be reviewed during Friday’s audit committee meeting at city hall, which marks the second phase of her examination of the City of Toronto’s fleet services division.

According to the report, the division maintains just shy of 5,000 vehicles and pieces of equipment collectively worth around $330 million.

The vehicles owned and used by the City of Toronto are deployed among a wide range of departments and services, including waste management, parks, forestry, recreation and roads maintenance. The division is also responsible for managing the maintenance and life cycle of the vehicles along with the buying and selling of fleet equipment.

Here are a selection of the major findings found by Romeo-Beehler and her staff:

Millions in vehicle damage categorized as ‘negligence,’ ‘vandalism’

Romeo-Beehler’s office said maintenance staff reported that “not all operators handle their vehicles with care.” Between 2018 and mid-2019, $2.8 million — representing 7.8 per cent of all repairs — was spent fixing damage that was categorized as “negligence.”

“This represents an unnecessary cost for the City. If the City were able to reduce repairs caused by lack of operator care or vandalism by 10 per cent, the City could save $180,000 a year,” the report said.

Up to $2.6 million in warranty savings potentially missed

When it comes to new vehicles, most come with standard limited warranties of up to three years or a certain amount of kilometres. And while City staff were able to claim approximately $500,000 a year over the past three years, Romeo-Beehler said there are opportunities for improvement. The report said auditors looked at work orders for repairs that were higher than $150 between 2011 and 2019 in relation to the standard warranties.

“We identified $2.6 million in repairs, or about $300,000 per year, occurring within the warranty period in which the warranty was not claimed,” the report said.

“It is not possible to determine how much of this amount could have been successfully claimed due to some of the above deficiencies in the existing warranty function. However, it does demonstrate there is still room for increased potential savings.”

$1.9-million worth of fleet equipment unaccounted for

The report said that during an early 2019 review of inventory, there were 101 pieces of equipment that weren’t found as of July. Most of the missing pieces were equipment such as Zamboni machines, forklifts, trailers and lawn mowers. Collectively the pieces are worth $1.9 million. The report said it’s unclear if the equipment has since been located. The discrepancies were attributed to a variety of causes, including missing machine attachments, lack of inventory review, outdated inventory lists, unclear reporting guidelines and lack of documentation.

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Excessive rental vehicle expenses

Romeo-Beehler’s office called for an analysis to be done on whether renting vehicles will be cheaper than buying vehicles. The report said there were 27 times since 2010 where staff rented vehicles for periods between two and six years. It was estimated that approximately $431,000 could have been saved by buying the same vehicles.

The report also found between 2018 and 2019, the City of Toronto spent $79,000 in rental costs for vehicles that sat unused. The auditor general’s office said it took seven days on average for the vehicle to be delivered to whoever needed the vehicle from the vendor. Romeo-Beehler’s office said the delay can be reduced by giving staff the ability to pick the vehicles up straight from the vendor.

Roadside assistance

According to the report, free roadside assistance was only used about 30 per cent of the time when it was available. As a result, the City spent approximately $35,000 in annual towing charges.

Lifetime maintenance costs exceeding purchase prices

Romeo-Beehler’s office said between 2014 and mid-2019, they found 526 vehicles were determined to be “beyond economic repair.” As a result, almost half of the vehicles removed from Toronto roads “incurred lifetime maintenance costs in excess of their original purchase cost.”

‘Poor’ fleet planning resulting in expensive repairs

As a result of purchasing delays, the report said some divisions have kept vehicles beyond the recommended optimal lifespan, resulting in increased risk of failure and more maintenance.

Over a one-year period, Romeo-Beehler’s office said, the final-year repair bills for 69 vehicles were much higher than what the City of Toronto could get by selling those same vehicles. Auditors found approximately $875,000 was spent to repair vehicles that collectively sold for $427,000 (a loss of $448,000).

What comes next?

As a result of her investigation, Romeo-Beehler made 20 recommendations to the audit committee and Toronto city council aimed at addressing the issues found during her audit. Friday’s report follows one from earlier this year.

She called on senior management to change how new vehicles and equipment are purchased, addressed the backlog of vehicles that need replacement, create new policies to flag vehicles as “beyond economic repair,” improve fleet inventory management, enhance communication between staff and divisions, and overhaul warranty-related claims and reporting.

In the report, it was noted City of Toronto staff agreed with all of Romeo-Beehler’s recommendations.

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As for the exact amount of money that will be saved going forward, Romeo-Beehler said she wasn’t able to determine the exact figure.

“The implementation of recommendations in this report will improve the management of the City’s fleet assets, and will likely result in cost savings from improved warranty administration and reduced operating costs,” she wrote.

Lawvin Hadisi, a spokesperson for Mayor John Tory, called the report’s findings “disappointing” and said it raised “many important questions.”

“Vehicles that are part of the City’s fleet should be serviced properly and handled with care. It is clear that the City needs to implement all recommendations made by the Auditor General to ensure that our fleet is managed well and that there is complete oversight,” she told Global News in a statement Saturday morning.

“The Mayor is confident that Deputy Mayor Stephen Holyday, chair of the Audit Committee, and the entire committee will thoroughly review these findings and make sure City staff implement all necessary changes.

“Torontonians expect that their tax dollars are being used in an appropriate manner and the Mayor hopes this report serves as a wake-up call to all those responsible for fleet services.”