Inquiry Reveals Winnipeg Overpaid Tens of Millions for Police Headquarters Construction

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A public inquiry has uncovered that Winnipeg overpaid Caspian Construction by approximately $42 million for the police headquarters project, leading to significant recommendations for procurement policies.

WINNIPEG — A public inquiry into the construction of Winnipeg’s police headquarters has determined that the city was significantly overcharged, resulting in tens of millions of dollars being overpaid to Caspian Construction, the lead contractor on the project. In his final report, Commissioner Garth Smorang stated that evidence collected throughout the inquiry, which commenced earlier this year, indicates that Caspian Construction received around $42 million in excess claims. Additionally, an employee of a consulting firm was improperly paid $1.3 million for project costs that were misappropriated.
The inquiry has focused on the city's development of a new headquarters for the Winnipeg Police Service, which ultimately exceeded its budget by more than $70 million by the time it reached completion in 2016. Smorang noted that had the city not faced these overcharges, the final costs of the project would have aligned more closely with the budget approved by the city council in 2011.
The investigation into the project has a backdrop of serious allegations, including a fraud investigation conducted by the RCMP, although no criminal charges were ever filed. In a related civil case initiated by the city, a judge ruled in 2022 that Phil Sheegl, the former chief administrative officer of Winnipeg, accepted a bribe from the owner of Caspian Construction. This payment was purportedly linked to an unrelated real estate transaction in Arizona, where the contractor acquired equity and shared the profits with former Mayor Sam Katz, who was a co-investor in that property.
Katz testified during the inquiry, asserting that he should have disclosed the transaction. He maintained that the financial gain from the land sale did not influence his decisions related to the police headquarters project, expressing disappointment over the characterization of the transaction as a bribe.
In light of the findings, Smorang issued 25 recommendations aimed at reforming the city’s procurement practices and enhancing the management of major projects. These recommendations include improvements to the city’s request for proposals process for large-scale undertakings, intending to safeguard against similar issues in the future.

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