Carol Altmann – The Terrier

How to save $700,000 in seven days, instalment #4:

Today’s instalment is not a revelation, but a reminder.

It’s a reminder of a story I ran last November where developer and former councillor Graeme Rodger revealed the Warrnambool City Council could have saved at least $328,000 on a tender for part of the Simpson St drainage and tunnel project.

That is another $328,000 that could have been shaved and saved off council’s spending in 2018-19.

To recap: Mr Rodger’s company, Rodger Constructions, put in two tenders for the multi-million dollar job last August: one “conforming” and one “non-conforming” which basically means one that stuck to the letter of the tender, and one that suggested a cheaper option.

The council went on to award the tender to another company for a higher price than both options put forward by Rodger Constructions.

The council said the bid by Rodger Constructions, which was short-listed, had a number of flaws.

Mr Rodger said all of these could have been worked out with a simple, face-to-face meeting that was never offered.

The council said such a meeting was optional and it chose not to take up this option for a number of reasons.

You can revisit the full, blow-by-blow detail in the story here.

The end result, however, is the job will cost ratepayers $328,000 more than it could have.

If the council had chosen the non-conforming option, it could have saved $424,630.

So here we are four days into the seven-day search for savings and I think we are close to the $700,000 mark already by taking a closer look at this tender, the cost of the two new toilet blocks, the cost of consultants and the spending on council corporate credit cards.

Nip, tuck, shave, save and suddenly there is no need to cut essential services or push rates up above the 2.5% cap.

But we still have three days to go.

I will be back on Monday – we can all catch our breath for a bit – for the first of the final three instalments.

Thanks for hanging in here.

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By Carol Altmann

Local construction giant Graeme Rodger has taken a rocket to the Warrnambool City Council for a tender process that will see ratepayers pay at least $328,000 more than they could have for part of the Simpson St drainage project.

At a time of rate capping and tight spending, you would think the WCC would be aiming to save every dollar it can, which is why a story about tendering becomes so interesting.

Mr Rodger’s company, Rodger Constructions, was among those who in August bid for a multi-million dollar contract for a stage of the Simpson St stormwater drain upgrade – a 725m long tunnel that directs stormwater from East Warrnambool out to the Hopkins River.

Rodger Constructions put in two tenders: one for just under $3.213 million and another, called a non-conforming tender, which suggested a cheaper option that would have cost $3.116 million.

The council went on to award the tender to another local company, despite its price of $3.542 million being higher than both of the Rodger Constructions’ tenders, which begs the question of why spend more ratepayers’ money than you need to?

As Mr Rodger pointed out in no uncertain terms in a letter on Oct 4 to council CEO Bruce Anson and councillors, the selected tender will cost ratepayers almost 10% more – $328,530 – than the one submitted by Rodger Constructions.

And if the council had considered the alternative, ‘non-conforming’ option, it could have saved almost 12% – or $424,630 – which is no small potatoes in a tight council budget.

According to Mr Rodger, the extra cost to ratepayers is due to a flaw in the tender process and it is this, rather than losing the tender, that he wants to blow open. As a former city councillor (with Warrnambool and Colac) and a chair of South West Water (now Wannon Water) for 12 years, he knows a bit about tendering – from both sides.

I know what you are probably thinking at this point, because I thought it too: Rodger Constructions is peeved at not winning the tender and maybe its tender was just way off course, so let’s look at that.

While a $3 million-plus tender is a big project and Rodger Constructions no doubt wanted the job, it is not a make-or-break deal for a company that has several huge contracts on the go at any one time including, at the moment, the site works for the new Warrnambool Special Development School and the Hopkins Ridge housing estate.

Perhaps it is precisely because of this success that Mr Rodger can speak out publicly although, like so many others, he has been advised against it.

(If I had a dollar for every time I talked to someone who said I can’t use their name in a story because they feared a backlash, I would be basking somewhere in Barcelona).

So what about the tender submitted by Rodger Constructions?

Well, it was robust enough to made the council’s short-list.

As part of that short-listing process, the council highlighted specific parts of the tender that need tweaking and then Rodger Constructions could submit its “best and final offer”.

Rodger Constructions did just that: they tweaked the parts highlighted by the council and put in a best and final offer.

Mr Rodger said it came as something of a shock, then, when the council later rejected the tender for reasons that he says were never raised in the shortlisting.

As Rodger Constructions wrote in a letter to councillors, the main reasons given for rejecting the tender had never been issues in the past – the company has done contract work for the council for five decades – and they could have been resolved easily with a one-on-one meeting. (Such a meeting is allowed under tendering rules.)

One of the reasons for rejection, for example, was Rodger Constructions’ failure to demonstrate its financial capacity to do the project.

Others were concerns around quality assurance and meeting the project completion date.

“We are a pre-qualified company, with national accreditation, to complete contracted works for any single job up to $15 million,” Mr Rodger said.

“We have been performing similar contracted works for WCC for over 52 years. If we had been asked, then these concerns would have been alleviated. This could have been done via a simple post-tender meeting, which once again is normal practice and is in the WCC Procurement Policy.

“Not having this meeting has cost the ratepayers of Warrnambool,” he said.

In a letter to Mr Rodger on October 26, council CEO Mr Anson said it was “discretionary” for the council to ask for more information from tenderers, to have any further talks or negotiations, or to allow a tenderer to amend their bid.

“In this instance, the council elected not to exercise any of these options,” Mr Anson wrote.

“This decision was made based on the specific requirements of the tender process in question, and also in light of the council’s obligations under its Procurement Policy,” he said.

Mr Anson then outlined the need for transparency, fairness, and judging each tender on its merits, which includes council staff not relying on information they already know about a company.

Of course Mr Anson is right, such an approach is necessary and sound, but if the council could have saved more than $300,000 on the final contract price, why not also use its perfectly legal discretion to meet with a tenderer to flush out any missing facts?

Mr Rodger has since asked for a copy of the tender audit trail to nail down that – expensive – question.

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There is an old saying in journalism that you should always follow the money and that is exactly what we have done with the ongoing saga of the Warrnambool City Council’s purchase of the old Porter’s shed and it has led to an intriguing twist.

As those who have been following this story already know, the council paid local developer (and former councillor) Graeme Rodger $40,000 for the shed that sits on the edge of his new residential land project on Wangoom Rd, but shortly after tried to get rid of it via auction.

Unfortunately for the council, auctioneer Brian Hancock couldn’t attract a single bid and the shed was passed in at $20,000.

One reason for the shed’s unpopularity among bidders was the cost of dismantling, relocating, repairing and rebuilding the old shed at a new location, as the council is now discovering, and why it tried to “move it along” without success.

More recently, we have since learned, the council was told by Mr Rodger’s lawyers that the shed had to go: it was supposed to have been moved by mid this year, and each month that has passed since has been a blight on Mr Rodger’s land sales, after all, who wants to buy a block with a derelict shed next door?

In our last piece on this saga, we told you that the council had received a quote of $170,000 to move, relocate and reassemble the shed, making the $40,000 shed now costed at $210,000.

We also told you that the council rejected this quote and instead decided to pay Mr Rodger another $63,000 to dismantle and relocate (but not re-assemble) the shed, but that’s not the full story and herein lies the twist.

Mr Rodger is being paid $63,000, but, as the council is fully aware because it organised the arrangement, he is passing that money on to a third party to actually do the dismantling and relocating.

Why would the WCC want to use Mr Rodger as a go-between and not pay the third party itself?

We have pondered this question long and hard and the only possible solution we can come up with is that it is tied up with the council’s procurement policy, in other words, the rules around how it spends money.

These rules are quite complex, but include that any spending on services between $15,000 and $74,999 requires at least three written quotes. Perhaps by paying Mr Rodger for the cost of the shed AND its removal, the council could avoid this step and get the shed off the land by the new, mid-January deadline.

Also, under the rules, a council director can only authorise spending of up to $149,000 and anything above that must go to tender.

Director of Infrastructure Peter Robertson has so far spent $100,000 on the shed, but there are still major costs yet to come and that is the reassembly, re-fit and any repair costs for the corrosion. (See images below)

This is almost certain to exceed $40,000, which begs the question of whether this whole mess should have gone to public tender in the first place?

Unfortunately the council’s media manager Nick Higgins is refusing to answer any of our questions on the shed, but it is indicative of a number of things, not least the secrecy surrounding these dealings and the lack of transparency around the use of ratepayers’ money.

Only three councillors – Brian Kelson, Peter Hulin and Peter Sycopoulis – have raised questions about this shed within council and tried to unravel what went wrong.

And where is this shed headed? Here comes the final twist:

The shed is off to the council depot in Scott St where it will – alongside a brand new shed – partly replace the massive storage shed sold to Midfield Meats as part of the controversial land deal to allow the building of its milk processing plant.

That deal was supposed to give the council a $290,000 profit to invest back into the shrunken depot, but it appears that Porter’s shed alone will now soak up most of that “windfall”.

The Vault – Carol Altmann

The $63,000 relocation of the former Porter’s shed – sold to the Warrnambool City Council by developer and former councillor Graeme Rodger for $40,000 – has begun.

A Bluestone subscriber tipped us off this afternoon that the deconstruction of the Wangoom Rd shed had begun, but we are yet to learn exactly where it is being moved to and for what purpose.

It is also not yet known how much it will cost to reassemble the shed, which the council attempted to auction shortly after the council purchased it early last year, but the auction failed to attract a bid and the shed was passed in for half what the council paid for it – $20,000.

The shed was bought on behalf of the council by its director of City Infrastructure, Peter Robertson, who by way of his position has the authority to make purchases up to $149,999 under the council’s procurement policy.

The ultimate cost of the shed, however, is expected to be far more than that.

In addition to the $103,000 that will be paid to Mr Rodger for the shed and its relocation, there are the reassembly and fit-out costs including insulation, electricity, water etc.

As it happens, we posed a series of questions about these very issues to the council’s media spokesman Nick Higgins on Tuesday (Dec 8).

The questions include:

1. Where is the shed being relocated to and for what purpose?
2. How much will the council spend on reassembling the shed at this new site?
3. Will the council be reassembling the shed on a concrete slab and, if so, how much will this slab cost? If not, what will the shed be reassembled on?
4. What is the estimated cost of the complete refit for the shed upon its relocation, including insulation, power, water, toilets etc as required?
5. Did the council compare the cost of purchasing, disassembling, relocating and reassembling Porter’s shed with the cost of building a new shed and, if so, what was the difference?

We are yet to hear back from Mr Higgins on this ongoing saga, but you will be the first to know when we do.

(And we know the council – while not a subscriber to Bluestone – is reading stories in The Vault via access to someone’s password, so if you are reading this one, Mr Higgins, I am hoping we can have those answers soon to pass on to our subscribers.)

Remember this shed?

It is the former home of Porter’s cabinetry and was bought in February this year by the Warrnambool City Council from its new owner, developer and former councillor Graeme Rodger, for $40,000.

As we reported exclusively at the time, there was a catch – the $40,000 shed would cost up to another $90,000 to remove and relocate, making it far from a bargain. No wonder the council tried to re-sell it at auction a month later, in March, but it was passed in for $20,000.

A few weeks later, in answer to questions from Cr Brian Kelson, council CEO Bruce Anson revealed the shed was destined for council land in west Warrnambool, where it would be placed on an existing concrete slab update: bitumen flooring. Building another concrete slab would, of course, add to the rising cost of this “bargain” shed.

As we write, the shed is still sitting on Graeme Rodger’s land off Wangoom Road while a housing estate takes shape around it.

But we can tell you this:

the council received a quote of $170,000 to pull apart, relocate and rebuild the shed in west Warrnambool which, added to the $40,000 it paid, would have made the total cost of this used shed $210,000.

it didn’t accept the quote.

instead, the council will pay Graeme Rodger $63,000 to pull apart and relocate the shed. This is shaping up as a great result for Mr Rodger, who will now receive more than $100,000 for a shed that nobody else wanted. Now that is a deal!

the attempted auction of the shed through Brian O’Halloran & Co, including a newspaper advertisement promoting its sale, was blamed on a breakdown in internal council communications.

the shed is due to be moved early next year.

One question which remains is how much the shed will cost to reconstruct and refit at its new location. We will get back to you.