Quebec's Auditor General Renaud Lachance responds to media questions after he presented his annual report Wednesday, Nov.18, 2009 at the Quebec legislature in Quebec City. The Parti Quebecois Opposition has demanded the resignation of two ministers after reading the report, mainly in the attribution of contracts in road works. THE CANADIAN PRESS/Jacques Boissinot

QUEBEC - Quebec's auditor general lambasted the province's handling of the construction industry Wednesday, fuelling a scandal that has already prompted numerous demands for a public inquiry.

The public watchdog accused the government of several shortcomings - like not properly vetting contracts, not following up on apparent industry collusion, and not doing enough to improve a shoddy tendering process.

Those failures are all part of a system wrought with cost overruns in public-works projects, Renaud Lachance declared in a report tabled in the national assembly on Wednesday.

The province is already roiling over allegations of a complex scheme where construction companies collude to drive up the price tag on projects, share a commission with the Mafia, and fund political parties with some of the money.

Those reports have triggered a multimillion-dollar police investigation and a move to reform the province's political fundraising laws.

But Lachance's report had opposition politicians renewing calls for what they and numerous pundits have demanded: a public inquiry into the construction industry.

"In many instances, the management of the examined contracts, from the standpoint of the risks taken into account, is unsatisfactory in relation to the rules and procedures as well as to sound management practices," the auditor general's report noted.

The report analyzed a total of 191 contracts worth $209 million. The Transport Department is a top employer in the province and spent about $2.9 billion in 2008-2009 alone.

Lachance recommended that the department take better care of public funds by keeping better tabs.

"Due to the scope of the sums involved and the risks associated with the awarding of numerous contracts, the department must show more initiative to tighten its procedures," the report found.

He noted that in at least one instance, an internal investigation by the department found evidence of collusion in a 2004 contract. But Lachance said provincial police and the Public Security Department weren't immediately notified and the Competition Bureau was only told in 2006.

Lachance also found that only one bid was submitted in 17 of 32 audited files and that the department never asked other suppliers why they didn't put in a bid - even after those suppliers had obtained the documents required to make a bid.

Investigative reports have said construction company bosses are frequently threatened by competitors linked to organized crime, and warned to stay out of Quebec's public bidding competitions.

But the governing Liberals have resisted calls for an inquiry, implementing instead a series of legislative measures and creating a provincial police team to probe the issue further.

The opposition was emboldened by Lachance's discovery that three contracts had been awarded without tenders to ABC Rive-Nord, a company in which former labour minister David Whissell had financial interests.

Lachance said there's no evidence Whissell intervened in the process.

Still, there were immediate calls for Premier Jean Charest to sack two of his ministers.

Parti Quebecois Leader Pauline Marois called for the immediate dismissal of Transport Minister Julie Boulet and junior transport minister Norman MacMillan.

"The auditor general makes his case without any doubts that the rules were broken and the transport minister did not tell the truth to the auditor general," Marois said.

"Will the premier take responsibility and ask for the resignations of his two ministers?"

In response to Lachance's scathing assessment, Boulet said 10 of the report's 18 recommendations were already being applied the others would be implemented shortly.