Toronto plans to fire contractor accused of overbilling city during investigation

Toronto city staff are calling for a general contractor accused of overbilling to face an additional suspension to prevent him from bidding on new contracts while an investigation into the allegations continues.

In a report, city staff called for Duron Ontario Ltd. to face an additional four-month suspension. Duron is a construction company based in Mississauga. The report will be evaluated in the general government committee of the city council on Wednesday.

The report notes that Duron was already serving a six-month suspension imposed by the city last June for violating the supplier code of conduct. The suspension is set to expire on Dec. 7, 2024, and is based on initial audit findings that showed “Duron overbilled the city,” the report said.

The report notes that Geneviève Sharkey, the city’s chief purchasing officer, recommended an additional four-month suspension to protect public funds and the city’s purchasing processes.

“The City strives to promote accountability and protect the integrity of public funds by enforcing the Supplier Code of Conduct. By approving the proposed additional four-month suspension and pending a comprehensive report in the first quarter of 2025, the City strengthens its commitment to responsible and fair procurement and contracting practices,” the report states.

On its website, Duron says it specializes in everything from building rehabilitation to concrete lining, waterproofing to pothole repairs.

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

Sharkey said the four-month suspension will allow the company to review and respond to documents provided by the city. Sharkey said he would evaluate any response provided by the company and submit another report to the council.

According to the report, Sharkey gave Duron a notice in October saying staff also recommended a five-year suspension, the maximum penalty possible for violating the city’s vendor code of conduct. While the investigation is ongoing, the company has been told it can provide more information and documents to the city by November 8, 2024.

Questions about change orders

The city hired KPMG’s forensic accounting unit to find out Duron was charging more than he claimed, according to a confidential document obtained by CBC Toronto last year. The city’s legal team is also part of the investigation, according to the document.

A letter dated March 6, 2023, sent by KPMG to the city and also obtained by CBC Toronto, outlines events that allegedly took place between the two parties.

The city has hired Duron for at least six major projects in recent years, the document states. CBC Toronto tracked down a series of projects worth more than $37 million dating back to 2018 that were contracted to Duron and approved by the city.

What wasn’t made public were the “change orders” submitted to the city by the company and various subcontractors and suppliers working for it. Duron submitted nearly 400 change orders; these are the costs the company is seeking above and beyond what was originally contracted.

According to KMPG’s letter, the city is concerned that these orders have been “improperly modified.”

The Gulf Concourse at Union Station opened July 27, 2021. City documents show Duron has renovated TTC stations and other city-owned buildings to make them accessible and has previously worked on major projects such as renovations at Union Station. (Martin Educator/CBC)

The document states that the city warned Duron about this. The company blamed the incident on a single unnamed employee, who it said had been terminated.

The report states that under Toronto’s municipal code, which includes a supplier code of conduct, suppliers must “deal with the City in an honest and fair manner.” Violating the supplier code of conduct may result in disqualification, suspension or other sanctions.

Subject to the decision of the general government committee on Wednesday, the proposal for an additional four-month suspension will be considered by the council on December 17.