In its February 2024 report entitled Value for Money: Development of Transitional Care Facilities, Nova Scotia’s Auditor General found a lack of due diligence in Nova Scotia healthcare facility procurements. The report raised concerns over value-for-money, delays and cost overruns, improper sole-sourcing, and inadequate conflict screening.
Lack of Due Diligence in Property Purchase
In reviewing the provincial government’s $34.5 million purchase of the Hogan’s Court property, which was acquired for conversion into a healthcare facility, the Auditor General found that Nova Scotia “did not demonstrate adequate due diligence to obtain value for money”. More specifically, the Auditor General found “an inadequate market scan of alternatives”, which reduced the province’s “ability to minimize costs” and that the property valuation was “not based on the condition of the building at acquisition.”
Overruns and Improper Sole-Sourcing
The Auditor General also found that “adaptability and design concerns” at the Hogan’s Court facility led to project delays and cost overruns. The report found “increases to construction and equipment costs totaling $17.4 million, and a reduction in service capacity” on the project, which was originally budgeted and approved for $15 million. Further, in its broader review of Nova Scotia Health’s transition care facility construction contracts, the Auditor General found $81 million worth of untendered contracts that “were not in compliance with provincial procurement protocols.”
Inadequate Conflict Screening
The Auditor General also raised concerns over a lack of conflict of interest screening in the portfolio. The report found that there were no conflict disclosure requirements for those who approved the use of alternative procurement methods. The Auditor General also found that evaluation team members were not required to provide conflict of interest declarations. Rather, the report found that Nova Scotia Health “relied on individuals self-declaring conflicts of interest”. As the Auditor General cautioned, “by placing the onus on the individual to declare a conflict of interest rather than requiring a declaration form be completed by all evaluation team members” Nova Scotia Health “increased risk of undeclared conflicts of interest.”
Future Considerations
While the audit recognized the “significant challenges and pressures that exist throughout the healthcare system”, the Auditor General concluded that public institutions “should not promote a culture where expediency takes precedence over appropriate due diligence and value for money.” This case study serves as a useful reminder to all public institutions of the importance of integrating due process into their procurement cycles to better ensure proper portfolio management.
