The City of Ottawa‘s decision to replace and beef up its vehicle fleet with Mercedes-Benz Sprinter vans over a five-year period wasn’t cost-effective in many cases – and “unjustified” by staff, an audit tabled on Thursday concluded.
The city procured 71 Mercedes Sprinters between 2011 and 2015, according to the auditor general’s report.
Some of those purchases represented good value-for-money, the auditor’s team found – but the city spent $396,000 more than was necessary on 14 Sprinters and didn’t produce any documentation or analysis to justify that choice.
Even after cheaper and “comparable” models from other brands became available – including the Ford Transit in 2015 – auditor general Ken Hughes said the city overspent another $307,000 by continuing to buy the luxury brand vans without explanation.
“The procurement of Mercedes Sprinter vans … represented an unjustified higher cost vehicle in these cases,” the report said. “There was no evidence on file that a value analysis comparison of options or choices was performed prior to the purchase of any Mercedes Sprinter vans within Fleet Services or Transit Fleet.”
The auditor general’s office launched its review into the city’s procurement of the Mercedes Sprinter vans after someone filed a tip with the city’s fraud and waste hotline in late 2015. The anonymous tipster wanted to know why the city was buying what they called “the most expensive commercial van on the market,” and whether the city had done a proper cost-benefit analysis.
In a presentation before the audit committee on Thursday morning, Hughes’ staff noted that some procurement forms for the Sprinters did initially identify that a more economical van existed, but that reference was later removed.
The city spent between $46,000 and $64,000 on each of the 71 Mercedes vans, before taxes and up-fitting costs, the report said.
The lack of proper documentation to explain and justify those purchases is problematic, Don Dinelle, the city’s director of fleet services, acknowledged. But he insisted the Sprinters were the only vans that ticked all the boxes for the city at the time.
The vans are ideal for city-related work because of their high roofs and generous cargo space, Dinelle said, and other municipalities like Calgary and Vancouver began purchasing them around 2011.
The auditor general’s report noted, however, that Ottawa bought a “significantly greater number” of the Sprinters when compared with two other Canadian cities.
Dinelle argued the newer models that came along didn’t initially meet the city’s needs – but once they did, the city changes its vehicle procurement practices. The city is now moving to buy the Ford models, he said.
City management has agreed to implement the eight recommendations Hughes made in his report. Among other things, the auditor general recommended the city re-evaluate its vehicle procurement options every time a cheaper model becomes available and have staff conduct “adequate” cost-benefit analyses each time the city has to purchase or replace a vehicle in the future.
The fraud and waste hotline was launched in 2005 and is operated by a third-party. It’s available to city employees and members of the public who want to report cases of suspected fraud or waste by the municipality.
The auditor’s team said on Thursday the number of reports the hotline received in 2017 decreased about 33 per cent from 2016.