Latest electric bus audit raises concerns about charger contract

Ottawa's auditor general's office is raising concerns with the way the city's electric bus charging contract is structured.

Earlier this yearthe City of Ottawa approveda multi-year, billion-dollar procurement of 350 electric buses and equipmentto transform the OC Transpofleet away from dieseland curb greenhouse gas emissions.

The city is using money already earmarked for replacement buses, from anInfrastructure Canada grant for cities to switch to zero-emission busesand viaa loan with the Canada Infrastructure Bank.

The loan would be repaid with cost savings from the buses. City officials expressed a desire to act quickly to qualify for that federal money and get ahead of a potential supply crunch.

Auditor General Nathalie Gougeonand her office havebeen doing anunusual set ofproactive audits of the electric bus planbecause she was concerned about the cost,new technology and speed with which the city took it on.

On Tuesday, her office released its fourth audit on the approximately $180-million charging equipment deal with Hydro Ottawa subsidiary Envari, following analysis of the deal'spilot, procurement andfederal funding.

Risks and rewards

The office said the city went right to Envari without any competition and drew up a deal with bindingprotocols rather than detailed requirements, which means the city will need proper oversight of the work.

The city said this approach letsit stay flexible in a quickly evolving industry and went over various departments it's getting involved to watch over this work.

It also said it will getinformation technology workers involved in developing contracts by the end of the yearrather than bring them in shortly after it's signed, as the audit recommends

Gougeon's office goes over the risks and rewards of the way the city is managing the costs of this charger program.

Going with a "cost-plus" model where the city puts a flat 15 per cent overhead and profit margin on costs versus a fixed price could end up making the city pay more than expected and make it cut the project back.

On the other hand, partnering with the company it has connections to could benefit both sides Envari could get a better interest rate, for exampleand increase revenue for the city.

"We are unable to provide assurance that the 15% overhead and profit margin will yield the best value for money for the City. However, as noted above, we believe there are benefits and synergies for the City by working with Envari and Hydro Ottawa," the report said.

"We appreciate that management needs to move forward with this contract given the interdependencies with
the rest of the (zero-emission bus) program and the fact that choosing an alternative direction at this point would likely cost the City more and be contrary to Council direction."

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