Today, former attorney general Chris Finlayson has publicly (paywalled) made serious allegations against the professional reputations of a number of senior council staffers. He has implied that they failed to pursue a potential $65 million cost saving on the Te Matapihi central library strengthening project. The allegations form part of a complaint Mr Finlayson made to the Auditor General. Unfortunately Mr Finlayson tired of waiting for a response, and today took details of his accusations public.
I haven’t spoken about this publicly before because I considered it more appropriate to wait for a response from the Auditor General. Since Mr Finlayson has failed to do so, I now feel it is important respond to his accusations as well as I can given the commercial confidentiality I must legally respect. (I’ve had staff check this blog post to ensure I don’t cross any lines in that regard.)
Mr Finlayson makes a number of incorrect statements in the media article on this issue. As he has not had access to the details of this decision that is not surprising, however it is another reason he should have waited for the Auditor General to respond to his complaint. He claims council officers did not present the viscous dampers options to councillors (they did) and that officers told elected members viscous dampers were not viable (they didn’t).
To understand these accusations that staff deliberately refused to investigate a potential cost saving of $65 million on the Te Matapihi project we need to go back to the decision that was made by councillors. Five options for Te Matapihi went out for public consultation. Three of these options were to strengthen the building to low, medium and high resilience, the other two were options to build new. On 28 October 2020 councillors were to decide which option to go ahead with.
Viscous dampers are an established technology for seismic resilience in buildings. They are used in some buildings around Wellington. An expert engineering panel evaluated the options. Paragraphs 68 and 69 of the paper stated:
“However, the panel felt that the design team had not sufficiently explored using viscous dampers as an alternative methodology to the ones proposed. The design team was of the view that this type of solution would be a variation of the Option B scheme [medium resilience option] and although they agreed that such an approach could achieve suitable NBS [National Building Standards] levels, it would be unlikely to achieve the levels of resilience sought under Option C [high resilience option].
“They have subsequently tested this view by undertaking a conceptual analysis on a Fluid Viscous Damper (FVD) design by substituting FVD’s in for the current frames in the Option B and Option C schemes. Their initial analysis is that they could achieve an improvement on the performance of the Option B scheme but could not achieve the performance of the Option C scheme.”
In other words they concluded that viscous dampers would deliver medium resilience and that the only technology that would deliver high resilience was base isolation.
Let’s review Chris Finlayson’s claims. First, that the viscous damper option was not presented to councillors. The above paragraphs show it was explicitly considered. Second, that officers told councillors that viscous dampers were not viable. The officer advice clearly does not state this. It says that viscous dampers could improve the performance of the medium resilience option but would not achieve the high resilience performance of base isolators. Third, that viscous dampers could save ratepayers up to $65 million. The advice received on 28 October 2020 estimated that the cost difference between the medium resilience option (which could be delivered by viscous dampers) and the high resilience option (which could only be delivered by base isolators) was between $22.3-$24.7 million. A significant cost saving, but well short of the claimed $65 million.
Public views were pretty evenly split between remediation or a new building. In a representative survey 45% preferred a new building and 52% preferred remediation. By far the most popular remediation option was the high resilience option.
Councillors had a long debate that considered the trade offs of higher cost for a high resilience building. After that debate councillors voted to proceed with the high resilience option, in a 14-1 vote with only Councillor Sparrow against. Councillors felt that the additional cost of the high resilience option was worth the benefit. It would give confidence the building would not need to be strengthened again in future, as happened to the Town Hall. It meant the building would be usable as an emergency management hub, that could be used as a base in the central city to coordinate a response and provide support to those who need it. To act as an emergency hub the building needed to be high resilience – which means that it could be reoccupied within a few hours (rather than within a few months under a medium resilience option).
After this decision, Wellington engineering company Beca approached council staff to say that they had proprietary intellectual property that would allow them to deliver a high resilience building using viscous dampers. They believed this could deliver a similar level of resilience benefit for significantly less than base isolators.
Despite this pitch coming after the formal decision for a high resilience building had been made, staff agreed to look into the possibility, but only on the condition that it could deliver a high resilience option equal to base isolation as councillors had already ruled out a cheaper medium resilience option.
First, staff needed to be able to verify Beca's claim before they could consider this alternative construction methodology. This took some time to negotiate with Beca, as they were rightfully concerned about how that process would protect their intellectual property. It was negotiated with Beca that they would provide council with a proposal that include cost estimates and resilience performance modelling and this would be independently reviewed by an engineering company in Christchurch. Staff chose this firm particularly because they have a reputation for working with new seismic resilience technology. There was confidence that they would be open to innovative technology.
This is where commercial confidentiality comes in. I can’t say anything about the content of either the Beca proposal or the independent review. I have read both reports, although councillors were not given copies, due to the seriousness with which Beca regards the protection of their intellectual property. I spoke with council staff for several hours, discussing the procurement process that was followed and the detail of the reports. I am allowed to say that I’m extremely comfortable with the process that was undertaken and the decision staff made to stick with the proven base isolation technology.
NZ Herald states: “Finlayson said... another independent review sought by the council concluded there were (sic) no advantage.” I cannot comment on whether that is what the report found without breaching commercial confidentiality. I will note that as a member of the public Mr Finlayson should not know what that report contains. I would be curious to know why he believes he knows the contents of a highly confidential report?
Mr Finlayson may hold the view that we should have chosen a medium or low resilience solution and saved the ratepayers money. He has every right to disagree with Council’s decision to choose a more expensive, high resilience option for Te Matapihi. He has the right to ask for the Auditor General to look into the matter more closely. He does not have the right to publicly accuse staff of professional negligence without any evidence to support him.
I am confident that council staff are cooperating with requests for information from the Auditor General’s office. The commercially sensitive documents have been provided to them on the same condition that the information they contain cannot be made public.
I can reassure you that our staff care about spending your rates carefully. They have proven this in the past two years by finding $17 million in savings during a very challenging time, with another $15 million savings planned for this financial year. I have confidence that the procurement process followed by staff was prudent and appropriate. I expect the Auditor General will come to the same conclusion. I hope that they are able to respond to the complaint soon, so that our staff will no longer be subject to these accusations against their professional integrity.