Toronto wants to suspend the contractor accused of overbilling the city during an investigation

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

In a report, city staff calls for Duron Ontario Ltd. faces a further four-month suspension. Duron is a construction company based in Mississauga. The report will be discussed by the city council’s general government committee on Wednesday

Duron is already serving a six-month suspension imposed by the city last June for violating the supplier code of conduct, the report said. That suspension expires Dec. 7, 2024, and was based on initial audit findings that found “Duron had overbilled the city,” the report adds.

According to the report, Geneviève Sharkey, the city’s chief procurement officer, is recommending an additional four-month suspension to protect the city’s public resources and procurement processes.

“The City is committed to upholding accountability and protecting the integrity of public resources by enforcing the Supplier Code of Conduct. “By approving the recommended additional four-month suspension pending a comprehensive report in the first quarter of 2025, the city is strengthening its commitment to responsible and fair purchasing and contracting practices,” the report said.

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

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

The four-month suspension will allow the company to review and respond to city documents, Sharkey said. Sharkey says she will consider any response from the company and submit another report to the council.

According to the report, Sharkey told Duron in October that staff is also proposing to recommend a five-year suspension, the maximum possible penalty for violating the city’s supplier code of conduct. The company was told it could provide the city with more information and documents by Nov. 8, 2024, as the investigation continued.

Questions about change orders

To find out how much Duron allegedly overcharged, the city hired KPMG’s forensic accounting unit, according to a confidential document obtained by CBC Toronto last year. According to the document, the city’s legal team is also part of the investigation.

A March 6, 2023 letter from KPMG to the city, also obtained by CBC Toronto, outlines what allegedly happened between the two parties.

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

What was not made public were the “change orders” that the company and several subcontractors and suppliers who work for the company submitted to the city. Duron has submitted some 400 change orders – costs that the company is asking for more than what was initially contracted.

The city is concerned that these orders “have been inappropriately modified,” according to the KMPG letter.

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

The city notified Duron of the issue, the document said. The company blamed one unnamed employee, who it said had been fired.

Under Toronto’s Municipal Code, which includes the Supplier Code of Conduct, suppliers are required to “deal with the city in a fair and equitable manner,” the report said. Violating the Supplier Code of Conduct may result in disqualification, suspension or further sanctions.

Depending on what the general government committee decides on Wednesday, the recommendation for an additional four-month suspension will be considered by the council on December 17.