Evaluation of the Asset Management Services: Real Property and Materiel Management and Procurement Services

Final Report
February 2012
Evaluation Directorate

Table of Contents

Key Acronyms

AMS
Asset Management Services
CCG
Canadian Coast Guard / Coast Guard
CFO
Chief Financial Officer
DFO
Department of Fisheries and Oceans / Fisheries and Oceans Canada
MMPS
Materiel Management and Procurement Services
NHQ
The national Headquarter
PWGSC
Public Works and Government Services Canada
RP
Real Property
RPSS
Real Property Safety and Security
3PL
Third-party logistics provider

Executive summary

Introduction

This evaluation presents the results of the evaluation of the Asset Management Services of Fisheries and Oceans Canada. This internal service was scheduled to be evaluated in 2011-12 Department of Fisheries and Oceans multi-year departmental evaluation plan. The evaluation focused on the extent to which the program demonstrates value for money by assessing the core issues of relevance and performance, including effectiveness, efficiency and economy as per the Treasury Board of Canada Secretariat's Policy on Evaluation (2009).

This evaluation covered the period of 2006-2007 to 2010-2011 and was undertaken between February 2011 and February 2012 by staff of the Evaluation Directorate of Fisheries and Oceans Canada. The evaluation is inclusive of the National Capital Region and the Department six Regions: Newfoundland and Labrador, Maritimes, Quebec, Central and Arctic, Pacific and Gulf.

Program Profile

Asset Management Services is a sub-activity under Internal Services in the Department's 2012-2013 Program Activity Architecture where Real Property, Materiel Management and Procurement Services are identified as sub-sub-activities of Asset Management Services.

As a program enabler, Asset Management Services role is to support the delivery of the Fisheries and Oceans programs in order to effectively deliver services to Canadians and ultimately contribute towards the achievement of the Department's strategic outcomes. The overarching legislative authority for Asset Management Services is the Financial Administration Act. Real Property, Materiel Management and Procurement Services also operate under other separate legislative authorities, regulations and policies.

For fiscal years 2006-07 to 2010-11, the total Real Property and Materiel Management and Procurement Services expenditures were respectively just over $581 million and $37 million.

Evaluation Methodology

A non-experimental design was used for this evaluation, in which measurements are taken after the program has been implemented with no control group. Establishing a control group was impossible given that the majority of the Department programs depend on Asset Management Services to undertake their activities, and therefore services could not be withheld from any Region or program. To increase the rigour of this evaluation, evidence was drawn from a variety of sources and was triangulated to establish the key findings and recommendations.

The following methodologies were used: document review; literature review; comparative analysis; interviews, survey and case studies. The evaluation triangulated multiple lines of evidence as a means to ensure the reliability of findings and conclusions.  

Within the methodologies employed, there are a few limitations and challenges. None of them was prejudicial to the validity and the exactness of the evaluation results as strategies were put in place to mitigate these limitations.

Evaluation Findings & Recommendations

Relevance

With approximately 25,000 assets worth an estimated replacement value of $19 billion, the asset base and policy requirements are such that there is a need for Asset Management Services for effective delivery of the Department and Coast Guard programs. Asset Management Services is a key enabler for effective delivery of the Department and Canadian Cost Guard programs which in turn contributes to the achievement of Departmental and Government of Canada priorities. The federal government is legally mandated to deliver asset management services, which include acquisition, materiel and real property services.

Effectiveness

Overall, Asset Management Services is achieving its intended outcomes. Clients interviewed and surveyed (64%) are satisfied with the services provided by Asset Management Services and assert that Asset Management Services usually addresses their program's requirements. The evaluation noted a number of areas where improvements could enhance the effectiveness of the program.

Real property is unable to maintain a sustainable level of operation and diverting resources away from planned maintenance activities to cover non-discretionary and fixed costs leads to neglected assets. This situation in turn leads to diminished infrastructure quality, limiting the useful life of assets that eventually fail to perform as originally intended. Additional factors such as an aging infrastructure, the physical environment and the wide dispersion of assets pose challenges in Fisheries and Oceans case to comply with effective life cycle management practices. The current situation is jeopardizing Real Property's ability to achieve the outcomes of providing assets that are safe and operational, and that meet programs needs and requirements within existing reference levels.

Recommendation 1: In order to maintain a sustainable level of operation, it is recommended, that the Assistant Deputy Minister of Human Resources and Corporate Services, in consultation with the Sectors Assistant Deputy Minister, Commissioner of the Coast Guard and the Regional Directors General, ensure that each Region develops a strategy aimed at reducing regional infrastructure expenditures.

There is a lack of current and approved departmental policies and procedures covering warehousing, inventory management, and general management of materiel as well as directions and leadership from National Head Quarter have created a climate of inconsistent delivery of services to clients. In fact, warehousing services are inconsistently provided in the Regions by both the Coast Guard and the Office of the Chief Financial Officer. Though the Coast Guard owns most of the materiel stored in warehouses, the Warehousing Report (2010) concluded that the provision of warehousing services should fall under the office of the Chief Financial Officer because it is consistent with its role as a corporate service. To date, no decision has been made as to which Sector is best suited to assume this responsibility.

Recommendation 2: To ensure a consistent provision of necessary services to clients, it is recommended that:

  1. The Chief Financial Officer undertake a process that leads to a Departmental decision as to which Sector is best suited to assume the provision of warehousing services on a national basis.
  2. Based on the decision made, the provider of warehousing services develop a national Action Plan for warehousing operations and inventory management system, including policies and procedures.

Efficiency

Asset Management Services is in general appropriately designed to produce the expected outputs but there are a number of areas where improvements could enhance its efficiency.

As per TBS's Guide to the Management of Real Property, effective management must inherently adopt a portfolio-based approach that incorporates a horizontal and department-wide perspective when planning investments in real property. Evaluators found that Real Property decisions are made on a project by project basis and not on a portfolio based approach as requested by the Guide to the Management of Real Property. Evaluators also found that there is an incomplete governance structure and approach for establishing regional infrastructure priorities for the purpose of making investment and divestiture decisions. This means that there may be a misalignment of program activities and priorities with respect to investment in infrastructure and the Department could be investing in assets not aligned with Regional program priorities.

Recommendation 3: It is recommended that the Assistant Deputy Minister of Human Resources and Corporate Services, in consultation with the Sectors Assistant Deputy Minister, Commissioner of the Coast Guard and the Regional Directors General, ensure that:

  1. Real Property Safety and Security revise and update the Real Property Accountability Framework including review of Sectors and Coast Guard accountability for the ongoing real property costs related to their respective programs;
  2. Real Property Safety and Security nationally and regionally develops and implements a formalized governance structure in order to integrate infrastructure requirements and investment decisions into the national and regional strategic planning processes.

Performance monitoring and evaluation play complementary and mutually reinforcing roles. Implementing effective performance measurement, in addition to supporting ongoing program monitoring, can also support program evaluations. Even though, Materiel Management and Procurement Services ongoing performance monitoring and reporting is done unsystematically through dialogue with clients; interviews and the document review confirm that Asset Management Services does not systematically collect performance measurement data. On the other hand, Real Property is the only area within Asset Management Services that has developed a performance measurement strategy. However, the Real property performance measurement strategy is not finalized and is not therefore implemented nationally.

Recommendation 4: In is recommended that the Chief Financial Officer, in consultation with the Regional Directors General, ensures that a performance measurement strategy for Materiel Management and Procurement Services is developed in consultation with the Evaluation Directorate of Fisheries and Oceans.

Recommendation 5: It is recommended that the Assistant Deputy Minister of Human Resources and Corporate Services, in consultation with the Regional Directors General, ensures that the Real Property performance measurement strategy is finalized, approved and nationally implemented.

Finally, there are efficiencies to be gained in the way inventory is managed across the Department. There is no common warehousing and inventory management system in use across the Department that operates effectively and efficiently from both operational and financial (accounting) perspectives, nor is there a common information management system.

Implementing common warehousing services and inventory management system will improve the management of materiel across the Department as well as establishing clear and consistent warehousing services to clients. A common inventory management system will also improve the control, integration, efficiency and effectiveness of logistics management.

The implementation of a common inventory management and warehousing information management system could take time. In the interim, however, there is still a requirement to have reliable inventory data for efficient materiel management and decision making. To address this need, and in the event of delays in implementing a common system, more immediate measures are required to address the deficiencies in inventory data. The existing Quebec Region warehouse system can provide that immediate answer. The Quebec Region developed an in-house warehouse system.  It is web based allowing for easy access and navigation. Presently the Quebec warehouse system is being used by Central and Arctic and Quebec Regions. The Newfoundland and Labrador Region started implementing it in the fall of 2010. Additionally, the Maritimes and Pacific Regions are currently evaluating the system.

Recommendation 6: As part of the recommendation 2.2, the national Action Plan should include a plan for implementing with the Regional Directors General, an automated inventory management system on a national basis. Pending such implementation the existing Quebec Region warehouse system should be considered by the Chief Financial Officer and the Commissioner of the Coast Guard, in consultation with in the Regional Directors General for interim use in all Regions to ensure the availability of complete and common inventory data at all warehouses.

Economy

Under the current financial and operational conditions, Asset Management Services is delivering its services as economically as it can. The evaluation found that there are possibilities to reduce costs while maintaining quality, quantity, timeliness and appropriateness in the achievement of outcomes

Some of the clients and program personnel interviewed believed that there is an opportunity to explore different approaches to the delivery of Asset Management Services such as private-public partnerships and outsourcing of the day-to-day management of facilities, divestiture and warehousing activities. Literature review conducted indicated that organizations have transitioned from fulfilling their asset needs internally, to outsourcing to individual service providers, and finally outsourcing to a third-party logistics provider. The driving force behind outsourcing was to allow organizations to concentrate their activities on their core business.

Moving towards using third-party logistics provider is beneficial on many ways as it allows organizations to focus on their core business as well as saving maintenance and operation costs. Therefore, the Department should explore this opportunity and determine to contract out some its activities as in the case for the management of its fleet of vehicles.

Recommendation 7: The Assistant Deputy Minister of Human Resources and Corporate Services, the Chief Financial Officer and the Commissioner of the Coast Guard, in consultation with the Regional Directors General, study the possibility of outsourcing portion of the transactional and custodial services provided by Materiel Management and Real Property such as warehousing operations, inventory management, facility management or real property divestiture.

1. Introduction

1.1 Context of the Evaluation

This evaluation presents the results of the evaluation of the Asset Management Services (AMS) of Fisheries and Oceans Canada (DFO). As stated in the Policy on Evaluation, all direct program spending such as AMS must be evaluated every five years. This evaluation was slated in DFO 2011-2012 multi-year departmental evaluation plan. Recommendations stemming from the results are formulated to allow for improvements to the services where necessary and to inform future decision making.

1.2 Scope

In accordance with the Treasury Board Secretariat (TBS) Policy on Evaluation (2009), the evaluation focused on the extent to which the program demonstrates value for money by assessing the core issues of relevance and performance, including effectiveness, efficiency and economy.  It assesses the extent to which AMS has achieved its outcomes stemming from activities outlined in the Logic Model. This evaluation covered the period of 2006-2007 to 2010-2011 and was undertaken between February 2011 and February 2012 by DFO's Evaluation Directorate. The evaluation is inclusive of the National Capital Region (The national Headquarter - NHQ) and DFO's six Regions: Newfoundland and Labrador, Maritimes, Quebec, Central and Arctic, Pacific and Gulf.

1.3 Structure of the Report

This report includes six sections, including the introduction. The next section (section 2) describes AMS and the context in which its activities take place. Section 3 describes the methodology that is used throughout the evaluation process. In section 4, main findings and recommendations of the evaluation are presented, while section 5 contains conclusions.

2. Program Profile

2.1 Mandate/Background/Objectives

AMS is a sub-activity under Internal Services in the Department's 2012-2013 Program Activity Architecture (PAA) where Real Property, Materiel Management and Procurement Services are identified as sub-sub-activities of AMS1.

As a program enabler, its role is to support DFO's program delivery in order to effectively deliver services to Canadians and ultimately contribute towards the achievement of the Department's strategic outcomes. The overarching legislative authority for AMS is the Financial Administration Act. Real Property (RP)2 and Materiel Management and Procurement Services (MMPS) also operate under other separate legislative authorities, regulations and policies.

Real Property Services

Real Property3 Services involve activities undertaken to ensure real property is managed in a sustainable and financially responsible manner, throughout its life cycle, to support the cost-effective and efficient delivery of government programs. Services delivered as part of Real Property relate to acquisition, operations and management, disposal of assets, and environmental coordination (the latter not being within the scope of this evaluation).  The real property portfolio is divided amongst Small Craft Harbours, Canadian Coast Guard and Real Property where Real Property is the custodian4 overseeing major facilities, minor facilities, vacant land, hatcheries and marine based infrastructure5

Materiel Management and Procurement Services

Materiel Management involve activities undertaken to ensure that materiel can be managed by departments in a sustainable and financially responsible manner that supports the cost-effective and efficient delivery of government programs. Materiel is defined as all movable assets, excluding money and records, acquired by Her Majesty in right of Canada. Materiel Management entails all activities necessary to acquire, hold, use, and dispose of materiel and includes the notion of achieving the greatest possible efficiency throughout the life cycle of materiel assets.

Procurement Services involve activities undertaken to purchase a good or acquire the services needed to support program objectives at the least overall cost possible. This includes clear definition of needs, solicitation and contract award.

1 This is the common terminology used by AMS, however the Program Activity Architecture denotes Procurement Services as Acquisition.

2 For additional information relating to DFO's Real Property Legislative and Policy Framework, refer to Annex B.

3 As defined by the Federal Real Property and Federal Immovables Act, real property means land whether within or outside Canada, including mines and minerals, and buildings, structures, improvements and other fixtures on, above or below the surface of the land.

4 As defined by Treasury Board's Policy on Management of Real Property a custodian is a department whose minister has administration of real property for the purposes of that department. Please refer to Annex C for a full description of the roles of Custodian, User, Tenant and Service Provider.

5 A complete description of each category can be found in Annex D.

2.2 Program Activities, Expected results and Objectives

The AMS Logic Model6 (Annex E) illustrates four activity streams for (1) Planning and Investment; (2) Acquisition; (3) Operations Maintenance and Repairing and; (4) Disposal. Each activity, output and outcome is labelled so as to clearly identify whether it belongs to the Real Property or Materiel Management and Procurement Services function. Overall, AMS is expected to provide services so that DFO Program Manager's assets are managed throughout their life cycle in a financially responsible manner. The long term outcome is for DFO programs to have the required assets to support the achievement of their respective mandates and objectives.

6The AMS Logic Model was developed in conjunction with program representatives for the purpose of this evaluation.

2.3 Program Partners & Clients

AMS provides services to all of DFO's Sectors e.g. Ecosystems and Fisheries Management; Ecosystems and Oceans Science as well as the Canadian Coast Guard. Clients may be located in any of the DFO Regions.

As for partners, Public Works and Government Services Canada (PWGSC), plays an important role regarding the acquisition, use and disposal of Real Property assets. PWGSC also acts as the key delivery partner for MMPS where managers are required to work with PWGSC on contract requests that surpass the department's authority thresholds.

2.4 Governance

MMPS falls under the mandate of the Chief Financial Officer (CFO). MMPS reports directly to the DG, Financial and Materiel Management Operations, who reports to the CFO, while MMPS has a functional relationship with its Regional counterparts. Regional Managers of MMPS have a line reporting relationship with the Regional Directors, Finance and Administration, who in turn report up to the Associate Regional Directors General.

Similar functional and line reporting relationships exist as well for Real Property that falls under the mandate of the Assistant Deputy Minister of Human Resources and Corporate Services. Real Property Safety & Security Regional Directors report directly to the Associate Regional Directors General (ARDG). 

The ADM, CFO and RDGs report directly to the Deputy Minister. The ARDGs report to the RDGs.

2.5 Program Resources/Expenditures

Real Property is comprised of approximately 190 FTEs. Real Property in the National Capital Region operates with 45.5 FTEs. As for the Regions, the number of FTEs can vary, ranging from 7.37 FTEs in the Gulf Region to about 71.09 FTEs in the Pacific Region. This is largely a function of the size of the Region.

The total Real Property expenditures for fiscal years (FY) 2006-07 to 2010-11 were just over $581 million. The majority of the budget was spent on operations and management, as well as minor and major capital costs. The following table provides a cost breakdown by Region.

Table 1: Total7 Expenditures for Real Property (FY 2006-07 to FY 2010-11)
Expenditures
(000 K)
PAC C&A QC MAR NFL Gulf NCR TOTAL
O&M $64,055 $54,345 $43,963 $62,876 $16,682 $15,397 $5,300 $259,271
Salary $15,594 $3,746 $3,633 $6,487 $4,986 $1,189 $8,700 $45,302
Minor
Capital
$7,736 $4,122 $3,031 $3,342 $4,348 $0 $0 $22,579
Major
Capital
$53,645 $18,205 $39,303 $90,003 $26,672 $13,509 $11,100 $244,365
Total $141,030 $80,418 $89,930 $162,708 $52,688 $30,095 $25,100 $581,969

With respect to MMPS, there are 117.28 FTEs across the Department. The total MMPS expenditures for fiscal years (FY) 2006-07 to 2010-11 were just over $37 million and salaries accounted for the majority of expenditures. The following table provides a cost breakdown by region.

Table 2: Total Expenditures for MMPS (FY 2006-07 to FY 2010-11)
Expenditures
(000 K)
PAC C&A QC MAR NFL Gulf NCR Total
O&M $105,0 $3,091 $361 $2,605 $21,0 $61,0 $1,165 $7,409
Salary $1,393 $5,276 $4,526 $4,989 $5,952 $1,028 $6,795 $29,959
Total $1,498 $8,367 $4,887 $7,594 $5,973 $1,089 $7,960 $37,368

7Financial information was obtained from the Regions. Variances in Regions can be explained by either additional funding from the Economic Action Plan (EAP); other federal initiatives such contaminated sites funds for major capital projects and/or; other specific needs/projects.

3. Methodology

This section outlines the approach, the evaluation design, evaluation questions, the methodological approach, analytical methods as well as the limitations of the evaluation.

3.1 Project Management

The evaluation was conducted by DFO Evaluation Directorate. KPMG LLP, an external evaluation firm developed the evaluation plan. The evaluation plan was reviewed by an external peer reviewer. The evaluation was carried by two evaluation Directorate evaluators. A working group was established, consisting of four AMS personnel (NHQ and Region representation) and two evaluators. The working group also reviewed and provided feedback on this report.

3.2 Evaluation Design

The evaluation employed a program theory-driven evaluation science approach. A non-experimental design was used for this evaluation, in which measurements are taken after the program has been implemented with no control group. This model was chosen because the services offered by AMS are delivered across all Regions. Establishing a control group was impossible given that the majority of DFO programs depend on AMS to undertake their activities, and therefore services could not be withheld in any Region or program. This approach and design are appropriate to examine issues of relevance, efficiency and economy. To increase the rigour of this evaluation, evidence was drawn from a variety of sources and was triangulated to establish the key findings and recommendations.

3.3 Evaluation Questions

The evaluation questions were determined on the basis of the Treasury Board Policy on Evaluation (2009), by reviewing documents, and the results of the planning phase interviews with key program contacts. An evaluation matrix organized by evaluation issue (relevance and performance including effectiveness, efficiency and economy) and outlines the evaluation questions is presented in Annex A.

3.4 Secondary Data Sources

A review of documentation was conducted to assess most evaluation issues. The following types of documents were reviewed: government-wide documents (Federal legislations, regulations and policies pertaining to real property, materiel management and procurement services, Auditor General's reports, federal Speeches from the Throne, Economic Action Plan, etc.) and; departmental-level documents (Departmental Performance Reports, Reports on Plans and Priorities, DFO policies, Capital Plans, etc.). The departmental documents also included administrative data from NHQ and all six Regions.

Internet and various academic databases were consulted to collect material on corporate real estate and materiel management as well as procurement services in the private sector. Internet sources were consulted to conduct a comparative analysis of three federal departments: the Department of National defence; Department of Foreign Affairs and International Trade; and the Royal Canadian Mounted Police. Academic databases were also consulted as part of a literature review of three private sector organizations (one transportation company, one university and one consulting company). This information was used to develop a list of best practices and lessons learned which may be able to apply to the Department.

Complete list of documents, books and links consulted is presented in Annex J.

3.5 Primary Data Sources

3.5.1 Interviews

Interviews were conducted with management and staff of Real Property and MMPS (key informants), as well as a select number of program managers (clients) who have accessed services from AMS. In total, 16 key informants were interviewed; 13 were from the Regions while three were from NHQ. As for clients, nine people were interviewed from the Regions, except for Newfoundland and Labrador8. Key informants were selected based on their role within Real Property and MMPS, whereas clients were randomly selected. In-person interviews were conducted at the NHQ. All other interviews were conducted by telephone. Interviews consisted primarily of open-ended questions. 

8Many attempts were made to conduct some interviews but scheduling conflicts made it impossible.

3.5.2 Survey

An online survey of AMS clients was conducted to explore the level of satisfaction with the services provided by AMS and their perceptions about elements of AMS services.  The survey targeted the Department or CCG employees that used AMS within the last 5 years and had not worked for AMS during that period.

Of the 521 emails that were accessed by AMS clients, 245 AMS clients completed the survey. This represents an estimated response rate of 47%, which is generally considered a reasonably high response rate.

3.5.3 Case Studies

Two case studies were conducted to provide examples of the importance of assets in DFO and CCG programs' ability in achieving their objectives. Cases were randomly selected from contracts awarded since 2006-07. The first case is based on the Quai de la Reine: Wharf Partial Reconstruction project which cost $9.82 M, while the second is based on the Pollution Response Vessels II project which cost $3.29 M. Primary and secondary data sources were consulted.  Interviews were conducted with key players and included:

  • Requestor: the individual who made the initial request for the project;
  • Contracting Authority9: the individual who managed the project from a procurement perspective; and
  • Users: the individuals who utilizes the pollution response vessels.

9For these case studies, MMPS were not the contracting authority.

3.6 Data Analysis

The analysis methods used for this evaluation were tailored to the nature and availability of the data to be gathered, which were in turn linked to the evaluation questions. Extensive use of triangulation was used as an analytical method. In the social science field, triangulation means that two or more sources of evidence are used to corroborate findings. The document review, literature review, comparative analysis, interviews, a survey and case studies were used as methodologies to support triangulation in this evaluation.

As part of the analysis of the interview data, the scales in Table 3 below were used to report on the proportion and frequency of responses from respondents offering a particular perspective.

Table 3: Proportion of response terms
Proportion Terms Frequency Terms Percentage range
All Always 100%
Almost all Almost always 80-99%
Many Often, usually 50-79%
Some Sometimes 20-49%
Few Seldom 10-19%
Almost None Almost never 1-9%
None Never 0%

3.7 Methodological Limitations, Challenges & Mitigation Strategies

Within the methodologies employed, there are a few limitations and challenges. In order to minimize impacts on evaluation results, the different methods described above were combined to reach the same conclusions and thus reinforce our judgment with regards to their validity. None of these gaps was prejudicial to the validity and the exactness of the evaluation results.

For example, data and documentation around planned and actual maintenance costs, as well as costs associated with the activities that occur with the use of the wharf (case study), would assist in strengthening the findings. A lack of such data simply means that many findings are based on interview data, and cannot be confirmed with 100% certainty. It should be noted that despite this limitation, the documentation that was provided was robust enough to provide an understanding of the project.

Also, the interviewees may be guided by their will to be helpful or to look good in the evaluator's eyes, thus limiting the credibility of information provided. In order to mitigate these possible impacts, comments and findings were balanced with more "objective" data, namely the document review and the survey.

In addition, the limitations in interpreting the data from the survey stem from two challenges:  modest sample size and sampling error. For instance, a sample of this size (a sample of 245 respondents with an upper limit of 1142) does not lend itself to more complex analyses. Thus the data that inform this report were approached in a relatively conservative manner. In addition, the ability to reach potential respondents was limited by a numbers of factors (e.g. potential to be AMS clients, but were not necessarily AMS clients; unknown proportion of willing respondents would be ineligible). The result of both these challenges on the representativeness of the sample is unknown, though a degree of sampling error is possible10. In order to mitigate these limitations and challenges, three attempts were made to provide each contact with opportunities to respond. Given the challenges in contacting potential respondents, they were generally willing to provide their input, and the estimated revised response rate (47%) does help support the results of the survey as reasonably generalizable to the population of AMS clients.

10 The sample does appear to be proportionally representative with respect to regional distribution. However, the representativeness of the sample by other dimensions (e.g., frequency of AMS use or total value of requests) is unknown.

4. Findings and Recommendations

4.1 Relevance

Evaluation Issue #1: The extent to which AMS addresses a demonstrable need, is appropriate to the federal government and is responsive to the needs of Canadians

Key Finding: DFO is one of the federal government's most asset reliant and capital intensive departments. Asset Management Services provides policy driven life cycle management services enabling the cost effective and efficient delivery of the Department and the Canadian Cost Guard programs. The asset base and policy requirements are such that there is a need for Asset Management Services to support programs in the achievement of their expected outcomes.

With approximately 25,000 assets worth an estimated replacement value of $19 billion, DFO is one of the federal government's most heavily asset-reliant and capital-intensive departments, second only to the Department of National Defence.

Assets play a crucial role in the delivery of services, outputs and outcomes of DFO and CCG programs, so much so that the Department, by necessity, prioritizes its investment projects against its strategic objectives11. These objectives not only address the fishing industry and marine ecosystems but also the safety and security of Canadian waters, which are vital to many commercial interests, coastal communities, recreational interests and Canadians in general. Both case studies found that assets play an important role for the CCG's ability to fulfill its objectives, thereby responding to the needs of Canadians.

From a policy perspective AMS is also needed. Departments are expected to ensure real property and materiel is managed in a sustainable and financially responsible manner, throughout their life cycle, to support the cost-effective and efficient delivery of government programs12. For example, the need for public confidence and trust in the stewardship of resources, ensuring value for money, proactive public disclosure for contracts and management of new economic stimulus initiatives are all issues that are addressed by AMS.

As a whole, clients surveyed consider AMS to be essential to their work. Over two-thirds (69%) indicated that their programs, branches or sectors would not have been able to achieve their objectives without the services provided by AMS. Also, the Departmental risk profile stated that the Department could not achieve its objectives if it was unable to invest in or maintain the infrastructure necessary to achieve its objectives13.

All interviewed clients and program personnel confirmed that AMS is a key enabler to most Sectors, notably Science and the CCG. For example, AMS has facilitated the acquisition and property management of laboratories, hatcheries, buildings and so forth.

Key Finding: The federal government is legally mandated to deliver asset management services, which include acquisition, materiel and real property services.

The legislative frameworks that govern AMS activities provide a mandate for the federal government to assume the delivery of AMS for government assets. The Financial Administration Act gives a department the mandate to provide internal support services, specifically as it relates to real property services, materiel services and acquisition services. The Federal Real Property and Federal Immovables Act allows any Minister to authorize in writing an officer of his/her department or of any other department to be responsible for the acquisition, administration and disposition of real property and immovable assets. The Surplus Crown Assets Act gives a department that has surplus Crown assets the mandate to request the Minister of PWGSC to dispose of or deal with the assets. 

Overall, interviewees believed that the government plays an important role in the delivery of AMS. Indeed, this is supported by the fact that there is a federal government department, PWGSC, whose legislated mandate is to provide acquisition services and real property advice to other departments14.

Conclusive alternatives were not identified during this evaluation. Most clients believed that given the specialized nature of the Department assets, it would be challenging to contract out AMS activities. However, some clients and program personnel interviewed believe that there is an opportunity to explore a different approach to the delivery of AMS such as private-public partnerships or outsourcing of day-to-day management of facilities, divestiture and warehousing activities. The evaluation discusses possible delivery approaches in Section 4.4 of this report.

Key Finding: AMS is a key enabler for effective delivery of the Department and Canadian Cost Guard programs which in turn contributes to the achievement of Departmental and Government of Canada priorities.

AMS is a priority because it enables the Department and the Canadian Coast Guard to have the right assets to deliver their programs. Also AMS is needed to ensure that the Department and Canadian Cost Guard comply with government policies and directives concerning asset management.

As a program enabler, AMS contributes to all three DFO Strategic Outcomes, which for the scope of this evaluation were Healthy and Productive Aquatic Ecosystems, Sustainable Fisheries and Aquaculture, and Safe and Accessible Waterways15. These Strategic Outcomes in turn support the Government of Canada Outcome areas of (1) a clean and healthy environment; (2) an innovative and knowledge-based economy; (3) strong economic growth; (4) an innovative and knowledge-based economy and; (5) a safe and secure Canada.

All program personnel and clients confirmed that AMS is a key enabler of the Department and CCG programs delivery and therefore contributes to the achievement of programs departmental objectives, which in turn enables progress towards achieving the Department strategic outcomes.

The CCG's Environmental Response Program (ERP) is a good case in point to describe the special nature of Asset Management Services enabling functions for DFO. AMS supports this program through the procurement of pollution response vessels enabling CCG to carry out ERP activities. During the 1998 Swissair Flight 111 incident, many CCG pollution response vessels were dispatched to the airplane crash in St. Margaret's Bay, Nova Scotia to assist in the cleanup and search activities that continued for weeks following the disaster16.

11DFO Investment Plan for 2010-2011 to 2014-2015.

12 TBS Policy on Management of Real Property and Policy on Management of Materiel.

13 Departmental 2009 -2010 Corporate Risk Profile.

14 Department of Public Works and Government Services Act (S.C. 1996, c. 16).

15 2010-11 Report on Plans and Priorities.

16 Pollution Response Vessels II Case Study. DFO (2011)

4.2 Effectiveness

Evaluation Issue #2: Assessment of progress toward achieving outcomes.

Key Finding: Overall, AMS is achieving its intended outcomes.

Client satisfaction levels can speak to a program's ability to achieve its intended outcomes. In this case, where AMS is a service provided throughout the Department, client satisfaction is an important factor for this evaluation.

Clients interviewed are satisfied with the services provided by AMS and assert that AMS usually addresses their program's requirements. Many of the respondents who used the services of AMS in the past five years were very satisfied to somewhat satisfied with the services provided (See Figure 1).

Figure 1:  Level of Satisfaction with AMS Level of satisfaction with AMS

Source: AMS Satisfaction Survey. n=237 Does not include 'Don't know'.

A key strength identified by respondents appears to be the knowledge of AMS staff. Almost all of the respondents indicated that procurement officers at MMPS are usually knowledgeable about the procurement process. Another key strength appears to be the ability of MMPS officers to help clients through the procurement process. As many as 74% indicated that the procurement officers at MMPS usually helped them to understand the available acquisition options (See Figure 2). However, one in five clients indicated that they were dissatisfied with AMS services, indicating room for improving the timeliness of the process involved in using the services of AMS.

Also, the ranking activity completed during the interviews with both MMPS and RP highlighted areas where MMPS and Real Property were most effective: providing strategic planning to program managers across DFO; acquiring new immovable assets through major capital plan implementation; assisting and supporting DFO programs in the recording, maintenance replacement and disposal of assets; and assisting DFO programs in the solicitation and award of contracts in the most effective means possible17.

Figure 2:  Satisfaction with Elements of AMS Service

Satisfaction with elements of the AMS Service

Source: AMS Satisfaction Survey

Key Finding: The Department is not investing enough in the repair and the maintenance of its real properties.

The Department developed policies and guidelines for the planning, purchase, acquisition and disposal of materiel and services. For example, MMPS developed policies and guidelines to meet TBS's Materiel Management Policy requirements. Also, to align its investments with the priorities of DFO and CCG programs, Real Property has a capital planning process18 in place for the implementation of a five-year long term capital plan, which includes all major capital projects valued at greater than $1M.

Although program personnel (Real Property) reported that they are aware and understand the policies/regulations to which they need to adhere, evaluators learned that the lack of funds/capacity hinders their ability to always be compliant with TBS's Policy on the Management of Real Property, especially with regards to life cycle management.

Clients and program personnel revealed that life cycle management (LCM), principally repair19 and maintenance20 and to some extent asset divestiture of real properties are areas that could improve. It should be noted that the divestiture process depends on among other considerations and circumstances such as the type of asset (computer or chair is divested faster than a lighthouse or land); environmental consideration; geographic location; markets; contaminated sites; multiple stakeholders and; in some instances the approval of the Minister. All these variables, beyond AMS's control, are potentially time consuming and impact the divestiture process.

For most interviewees, the number of facility maintenance issues (mostly attributable to an aging infrastructure21), the physical environment and the wide geographical dispersion (footprint) of the assets leaves minimal resources for monitoring and assessment to ensure compliance with LCM and other health, safety and environmental regulations.

The TBS Guide to the Management of Real Property suggests that a minimum of 2% of the replacement value of a real property asset should be invested annually in maintenance and repair. We found that funding levels have not met portfolio requirements for several years and Real Property is unable to maintain its existing infrastructure portfolio within current budgets. For example, the Pacific Region's combined operations and maintenance and minor capital budgets covers 0.68% of its estimated $1.9 billion replacement value for the maintenance and repair of its real property, well bellow the 2% threshold indicated by the above mentioned policy22.

The Department has been converting its minor capital23 funding into operation and maintenance (O&M) expenditures (See Figure 3) in order to cover non-discretionary expenses and fixed costs such as energy, fuel, leases, fit-ups. In 2005 Real Property Management NHQ presented to the Departmental Management Committee a description of the annual O&M shortfall (annually, the shortfall was $37 M) for managing infrastructure on a life cycle basis. The conversion amount increases year after year resulting in a lack of minor capital funding intended to maintain departmental assets24.

The Real Property Task Force presentation also referred to the associated shortfall in major capital25. In fact, the DFO Investment Plan for 2010-11 to 2014-15 identifies a current back log of 44 unfunded major capital projects for which the approximate $350m in required funding might not be available for years. This significantly compounds the shortfall in O&M/minor capital with a resulting acceleration in "rust out".

Figure 3: Controlled Minor capital converted to O&M to meet day-to-day needs

Controlled Minor capital converted to meet day-to-day needs

Source: RP Task Force presentation to DMC, July 2011.

Diverting monies from the minor capital budget impedes a Region's ability to undertake larger repairs and make improvements to their assets. Furthermore, delaying or deferring maintenance26 and repairs diminishes the quality of infrastructure, reduces both the value of the asset base, reduces the design life, limits the useful life of the asset and affects the health, safety, and productivity of staff. Indeed, the effects of age and use on infrastructure often go unnoticed until their function is disrupted and deteriorating infrastructure combined with a lack of preventive maintenance27 is often more expensive to repair if failures occur28.

In addition, the Corporate risks Profile29 stated that "as a result of increasing maintenance costs, larger than anticipated capital investments required to restore aging infrastructure, and decreasing resource allocations, there is a risk that the Department may not be able to maintain its infrastructure and assets adequately or to ensure safety and security to staff in the delivery of its Programs". It should be noted that this risk has been carried over from the 2009 corporate risks. The Corporate Risk Profile 2009 mid-year mitigation review highlighted this risk as the only risk to be deemed "attention required" by senior management. This risk was considered a pressing concern for the Regions, and evidence showed a possible difference in perspectives between the Sectors and Regions on the severity of this risk.

As a result of the funding shortfall mentioned above, the Pacific Region is for example unable to carry out many of its planned repairs when it would be most cost effective to do so, resulting in a backlog of deferred maintenance. Also, the infrastructure in the Pacific Region is in fair to poor physical condition or deteriorating and has started to impinge on program delivery, posing a risk to employee and public health and safety30.

In order to manage this strained financial situation, the Pacific Region took the initiative to develop an infrastructure strategy that identified its major challenges, Regional profile, investment plan, governance structure, and seven key objectives for reducing operation and maintenance costs for the next five years. For example, one of the objectives is to "only hold, use, and maintain an infrastructure portfolio that is both affordable and aligned with the Department's program objectives" 31. By achieving this objective, Pacific Region could be in position to reduce its maintenance costs and ultimately manage infrastructure in a sustainable manner. This practice is deemed to be a good one and should be shared with NHQ and other Regions32.

The regular maintenance of assets is paramount to maximising their life cycle. Diverting resources away from planned maintenance activities to cover non-discretionary and fixed costs leads to neglected assets. This in turn leads to diminished infrastructure quality, limiting the useful life of assets that eventually fail to perform as originally intended. A number of factors such as an aging infrastructure, the physical environment and the wide dispersion of assets pose additional challenges in DFO's case to comply with effective life cycle management practices.

The current situation is jeopardizing Real Property ability to achieve the outcomes of providing assets that are safe and operational, and that meet programs needs and requirements within existing reference levels. 

Recommendation 1: In order to maintain a sustainable level of operation, it is recommended, that the Assistant Deputy Minister of Human Resources and Corporate Services, in consultation with the Sectors Assistant Deputy Minister, Commissioner of the Coast Guard and the Regional Directors General, ensure that each Region develops a strategy aimed at reducing regional infrastructure expenditures.

Key Finding: Warehousing operations and materiel management are not consistently conducted.

To manage materiel effectively, organizations must know what materiel they possess and where it is inventoried33. MMPS demonstrates stewardship and leadership of moveable assets. They have incorporated numerous best practices in conducting their sourcing activities. Their supplier base is large and diverse, especially within the top commodity groups, ensuring that the department can obtain the best pricing when sourcing for its goods and services34.

However, lack of current and approved Departmental policies and procedures covering warehousing, inventory management, and general management of materiel as well as directions and leadership from NHQ has created a climate of inconsistent delivery of services to clients35. The Readiness Assessment performed by Ernst & Young also identified deficiencies in the area of inventory control.

Warehousing services are inconsistently provided in the Regions by both the CCG and the Office of the CFO leading to client frustrations. Clients expressed the need for a consistent service delivery model, particularly as it relates to the services they receive from MMPS. The same observation was made in the Warehousing Report where it indicated that clients should expect the same services at each warehouse across the country. Though the Coast Guard owns most of the materiel stored in warehouses, the Warehousing Report concluded that the provision of warehousing services should fall under the office of the CFO because it is consistent with its role as a corporate service. To date, no decision has been made.

Clients procure materiel which is shipped to warehouses where staff from the latter are requested to store the materiel until it is required by the client. Clients are generally responsible for managing the materiel entering and stored in warehouses. That is, they are responsible for determining what materiel is to be stored and in what quantities. However, evaluators learned that while warehouse staff perform the receiving function and provide the client with copies of the shipping and supplier documents, clients do not verify shipments against what was procured.

The practice, in some locations, of clients storing materiel in "cages" with little or no assistance or direction from the warehouse staff gives rise to health and safety concerns as well as other operational risks36. During the interviews, it was indicated that clients and warehouse staff are not always aware of what materiel is stored in cages. Additionally, examples of material stored off the racking, racking filled beyond its capacity, and the possible improper storage of materiel was mentioned by interviewees and the Warehousing Report.

Also, the duration that materiel is stored varies considerably, and is sometimes difficult to determine. This increases the possibility that materiel is not used, or not disposed of in a timely manner, resulting in additional costs and lost revenue opportunities through the sale of surplus materiel. Examples were mentioned where materiel was held in a warehouse for years to the point the materiel had reached the end of its life cycle37.

There is a need to inventory and manage movable assets. The inconsistent approach to life cycle management has led to client frustrations. This is reflected through the lack of policies and procedures covering warehousing operations, inventory management, and general management of materiel. It is important to establish consistent warehousing and materiel management operations across the Regions. However, a critical step in this process will be to decide as to which Sector is best suited to assume this responsibility. It should be noted the following recommendations are consistent with the recommendations formulated by the Warehousing Report. In fact, the Warehousing Report has been presented to the CCG Management Board and the Chief Financial Officer on October 21st, 2010.

Recommendation 2: To ensure a consistent provision of necessary services to clients, it is recommended that:

  1. The Chief Financial Officer undertake a process that leads to a Departmental decision as to which Sector is best suited to assume the provision of warehousing services on a national basis.
  2. Based on the decision made, the provider of warehousing services develop a national Action Plan for warehousing operations and inventory management system, including policies and procedures.

17Please go to Annex G for additional information.

18TBS's Policy on Long-Term Capital Plans.

19Restoration of a facility or component to such a condition that it may be effectively utilized for its designated purposes by overhaul, reprocessing, or replacement of constituent parts or materials that have deteriorated by action of the elements or usage and have not been corrected through maintenance.

20The act of keeping infrastructure in acceptable condition. It includes preventive maintenance, normal repairs, replacement of parts and structural components, and other activities needed to preserve the asset so that it continues to provide acceptable services and achieves its expected life. Maintenance excludes activities aimed at expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater than, those originally intended.

21According to the Pacific Region Infrastructure Strategy, much of the Region's infrastructure is over 40 years old and has exceeded its design life.

22Real property Audit report, 2011.

23Minor capital budgets cover maintenance and betterment projects valued between $10K and $1M.

24Real Property Task Force presentation to DMB, July 20, 2011.

25Ibid.

26Maintenance that was not performed when it should have been or was scheduled to be and which, therefore, is put off or delayed for a future period.

27Planned scheduled periodic inspection, adjustment, cleaning, lubrication, parts replacement, and minor repair of equipment and systems.

28Older infrastructure requires more frequent and longer repair and service periods creating further negative impacts on a Region's financial position.

29Corporate risks Profile, 2012-13; draft version of June 6, 2011.

30Interviews and the Pacific Infrastructure Strategy, 2009.

31See Annex G for the complete list of objectives.

32Interviews and the Real Property Audit report, 2011.

33TBS Materiel Management Policy (section 9.1- Inventory and Materiel-in-use tracking). Please note that TBS policy 9.1 has been rescinded.

34Materiel Management assessment by Ernst & Young and PWGSC, Spend Analysis: Department of Fisheries and Oceans, May 2009.

35Interviews and the Warehousing Report, 2010.

36Idem.

37The Warehousing report, 2010.

4.3 Efficiency

Evaluation Issue #3: Assessment of the process in relation to the production of outputs and progress toward expected outcomes.

Key Finding: The current Real Property governance structure does not facilitate cost-effective decision making on a department-wide basis or allow for real property to be managed using a portfolio approach.

AMS is in general appropriately designed to produce the expected outputs. All clients agreed that most aspects of AMS are done well and that the current design and delivery of AMS is appropriate to produce expected outputs. Nevertheless, most program personnel and clients assert that there is room for increased efficiencies with respect to governance, the information management system and finally performance measurement.

Governance

As per TBS's Guide to the Management of Real Property, effective management must inherently adopt a portfolio-based38 approach that incorporates a horizontal and department-wide perspective when planning investments in real property.  Managing real property holdings based on a portfolio approach, rather than on an asset-by-asset basis, allows a department to maximize the level of utilization, minimize the need for new assets and share associated costs. Adopting a portfolio-based approach also implies that real property decisions cannot be made in isolation; they have to be made as part of the overall departmental decision making framework and be considered along with departmental strategic planning.

Evaluators found that Real Property decisions are made on a project by project basis and not on a portfolio based approach. Reports and interviews confirmed that the Real Property Management Framework for managing the Department's real property is incomplete as there is no governance structure that supports internal processes, decision making or the development of policies and procedures39. The TBS's Management Accountability Framework (MAF) round VIII assessment also noted that the Department lacks a complete Real Property Management Framework. Real Property Safety and Security Branch developed a plan in the spring of 2011 to address the recommendations presented by TBS after MAF Round VIII40.

Evaluators also found that there is an incomplete governance structure and approach for establishing regional infrastructure priorities for the purpose of making investment and divestiture decisions. According to the interviews, Regions lack a set of policies, roles, responsibilities, and processes to guide, direct, and control the investment in divestiture of infrastructure.

The lack of a formalized infrastructure governance structure means that there may be a misalignment of program activities and priorities with respect to investment in infrastructure and the Department could be investing in assets not aligned with Regional program priorities41. For example, Rosewall Hatchery and Hells Gate Fishway were earmarked in the Long Term Capital Plan (LTCP) for an investment of $18.6 M in total. Yet, no Sector had identified these projects as a program priority during a review of the regional LTCP.

In addition, Regions42 could be holding more properties in their portfolios than required which may result in unnecessary expenses. According to interviews and the Pacific Infrastructure Report, programs are often uncertain about their future real property needs, and are reluctant to declare unused/underutilized facilities as surplus. It was often mentioned during the interviews that programs have no direct incentive to make cost-effective decisions on real property matters, such as divesting unused properties, as the facility costs are not borne by them, but by the Real Property Safety and Security Branch. In other words, there is currently no incentive for programs to reduce their real property holdings.

Therefore, a detailed and complete Real Property Infrastructure Management and Accountability Framework as well as a formalized governance structure will facilitate cost-effective decision making and will allow real property to be managed using a portfolio approach.

Recommendation 3: It is recommended that the Assistant Deputy Minister of Human Resources and Corporate Services, in consultation with the Sectors Assistant Deputy Minister, Commissioner of the Coast Guard and the Regional Directors General, ensure that:

  1. Real Property Safety and Security revise and update the Real Property Accountability Framework including review of Sectors and Coast Guard accountability for the ongoing real property costs related to their respective programs;
  2. Real Property Safety and Security nationally and regionally develops and implements a formalized governance structure in order to integrate infrastructure requirements and investment decisions into the national and regional strategic planning processes.

Performance Measurement

Key Finding: Performance measurement data is not systematically collected.

Performance monitoring and evaluation play complementary and mutually reinforcing roles. Implementing effective performance measurement, in addition to supporting ongoing program monitoring, can also support program evaluations43. It is therefore important that programs develop and implement a performance measurement strategy that will support program managers in: continuously monitoring and assessing the results of programs as well as the efficiency of their management; making informed decisions and taking appropriate, timely actions; providing effective and relevant departmental reporting on programs; and ensuring that the information gathered will effectively support an evaluation.

Interviews and the document review confirm that AMS does not systematically collect performance measurement data. We found that MMPS ongoing performance monitoring and reporting is done unsystematically through dialogue with clients. MMPS interviewees explained that this was the situation due to the number of keys policies related to Materiel Management that exist only in draft form and are neither approved nor signed44. On the other hand, Real Property is the only area within AMS that has developed a performance measurement strategy45. However, the Real property performance measurement strategy is not finalized and is not therefore implemented nationally. Also Regions are not always able to monitor and assess real property performance because of the physical environment and wide geographical dispersion of the Region's capital assets which sometimes make it challenging to obtain adequate information on the physical state of the infrastructure.

Recommendation 4: In is recommended that the Chief Financial Officer, in consultation with the Regional Directors General, ensures that a performance measurement strategy for Materiel Management and Procurement Services is developed in consultation with the Evaluation Directorate of Fisheries and Oceans.

Recommendation 5: It is recommended that the Assistant Deputy Minister of Human Resources and Corporate Services, in consultation with the Regional Directors General, ensures that the Real Property performance measurement strategy is finalized, approved and nationally implemented.

Information Management Systems

Key Finding: There are efficiencies to be gained in the way inventory is managed across the Department.

Evaluators also learned that the current Real Property Information System (RPIS) is not reliable and useful. The Real property Audit report has already explored this issue and the evaluation agrees with the proposed recommendation46. In addition, RPSS is already implementing the recommendation. Indeed, the existing RPIS will be replaced by a new Real Property Information Management System (RPIMS) which is expected to be implemented in 2012.

There are efficiencies to be gained in the way inventory is managed across the Department. According to interviews and document review, there is no common warehousing and inventory management system in use across the Department. For example warehouse operations in some Regions operate with Excel spread sheets, or in-house systems.

In addition, interviewees expressed an interest in having a common information management system. For example, the Coast Guard is presently implementing two asset management systems: MAINTelligence (for large vessels only) and MAXIMO (for shore side and ship's electronics assets). While MAINTelligence and MAXIMO are asset maintenance driven, both have the capability for inventory management. Observations have been made since 2004 regarding the need for an inventory management system that would operate effectively and efficiently from both operational and financial (accounting) perspectives. The Warehousing Report also concluded that a common inventory management and warehousing information management system that meets operational and financial requirements is urgently required.

The implementation of a common inventory management and warehousing information management system could take time. In the interim, however, there is still a requirement to have reliable inventory data for efficient materiel management and decision making. To address this need, and in the event of delays in implementing a common system, more immediate measures are required to address the deficiencies in inventory data. The existing Quebec Region warehouse system can provide that immediate answer.

The Quebec Region's warehouse system was developed in-house by the Region.  It is web based allowing for easy access and navigation. The Warehousing Report and interviews indicated this to be a good practice as it permits all CCG Clients to review/manage their holdings in the system via an online link47. The system can also produce various reports for reporting and management requirements. Presently the Quebec warehouse system is being used by Central and Arctic and Quebec Regions.  There are plans to install the Quebec Region's internet-based warehousing system in the other Regions in the interim to facilitate Departmental reporting on inventories until the permanent system solution has been defined and implemented. The Newfoundland and Labrador Region started implementing it in the fall of 2010. Additionally, the Maritimes and Pacific Regions are currently evaluating the system.

Implementing common warehousing services and inventory management system will improve the management of materiel across the Department as well as establishing clear and consistent warehousing services to clients. A common inventory management system will also improve the control, integration, efficiency and effectiveness of logistics management.

Recommendation 6: As part of the recommendation 2.2, the national Action Plan should include a plan for implementing with the Regional Directors General, an automated inventory management system on a national basis. Pending such implementation the existing Quebec Region warehouse system should be considered by the Chief Financial Officer and the Commissioner of the Coast Guard, in consultation with in the Regional Directors General for interim use in all Regions to ensure the availability of complete and common inventory data at all warehouses.

38In other word, efficiencies are attained by managing real property holdings rather than managing the inventory on an asset-by-asset basis.

39Real property 2011 Audit report; The Pacific Region Infrastructure Strategy.

40In line with the MAF recommendations, RPSS has over the past month completed several actions to dully implement the recommendations. For example, the necessary corrective measures, both relative to data integrity and the existing central agency reporting process, were implemented.

41Real property 2011 Audit report; The Pacific Region Infrastructure Strategy.

42The regional real property functions are responsible for managing their regional real property holdings based on the programs' needs.

43Also, the Directive on the Evaluation Function outlines the responsibilities of program managers in terms of "implementing ongoing performance measurement strategies for their programs, and ensuring that credible and reliable performance data are being collected to effectively support evaluation" (Section 6.2.1). Also, program managers should consult with heads of evaluation on the selection of indicators to help ensure that the indicators selected will effectively support an evaluation of the program.

44We discussed in depth this lack of approved policies in the Section 4.2.

45Performance measurement strategies were developed for Divestiture and Capital Investment and for Operations & Maintenance as well as an overarching strategy will be developed by February 2012.

46Recommendation 6: It is recommended that the Assistant Deputy Minister of Human Resources and corporate Services ensure that the department has and maintains real property information that is relevant, accurate, timely and complete and which can be used as a valuable tool for the management of real property.

47Additional information on the system is provided in Annex H.

4.4 Economy

Evaluation Issue #4: Assessment of resource utilisation in relation to the production of outputs and program expected outcomes

Key Finding: AMS delivers its services economically but further cost savings could potentially be achieved.

This evaluation identified areas to improve efficiencies. The recommendations in Section 4.2 and 4.3 will lead to cost savings. Under the current financial and operational conditions, AMS is delivering its services as economically as it can.

However, there are possibilities to reduce costs while maintaining quality, quantity, timeliness and appropriateness in the achievement of outcomes.

According to the interviews, AMS can achieve economies by identifying assets that are needed as opposed to those that are "nice to have" within the Department; ensuring a faster disposal of surplus real property assets (ultimately reducing the footprint and the portfolio); and provide consistent warehousing and inventory services48. Also, some of the clients and program personnel interviewed believed that there is an opportunity to explore different approaches to the delivery of AMS such as private-public partnerships and outsourcing of the day-to-day management of facilities, divestiture and warehousing activities. However, most believe that given the specialized nature of DFO assets it would be challenging to contract some of these functions externally.

AMS performs a strategic business function as well as carries out the day to day operations of logistics management (Warehousing, fleet vehicles) 49. This does not follow the trend in the private sector which is to outsource the day-to-day operations to a third-party logistics provider (3PL)50 in order to focus solely on the strategic functions of asset management51. For example, MMPS still retains the management of warehouses while in the private sector firms of comparable size and reach would have probably handed this over to a 3PL.

In a 2007 study, Wunderlich52 described the major changes in facilities management behaviour in recent the years. Organizations have transitioned from fulfilling their needs internally, to outsourcing to individual service providers, and finally outsourcing to package service providers. The driving force behind outsourcing was to allow organizations to concentrate their activities on their core business. Outsourcing facilities management through a competitive process to individual service providers achieved initial cost savings. Further cost savings were obtained by moving towards package services providers because it allowed organizations to minimize complexities and the amount of management work involved with outsourcing.

In the future, service providers for facilities management will offer a systems approach, meaning that they will not only take care of the operations of the facilities management but will also cover upstream activities such as planning, financing and construction as well as downstream activities such as disposal. For example, the Wunderlich study demonstrated how a service provider with a team of 30 people using an integrated facilities management approach, successfully managed an automobile plant with 5,500 employees. The facilities management team was responsible for commercial and technical facilities management such as tenant support, space management, and the maintenance, service, repair, operation and management of the facility.

The main challenge with using an integrated facilities management systems provider is the possible loss of knowledge and the ability to reliably assess and control the service provider in the medium to long term. This challenge can however be overcome by using key performance indicators (such as success-based remuneration) as well as a fair spreading of business risk in order to build up both trust and a long-term partnership.  

As discussed, moving towards using 3PL is beneficial on many ways as it allows organizations to focus on their core business as well as saving maintenance and operation costs. Therefore, the Department should explore this opportunity and determine to contract out some its activities as in the case for the management of its fleet of vehicles.

Recommendation 7: The Assistant Deputy Minister of Human Resources and Corporate Services, the Chief Financial Officer and the Commissioner of the Coast Guard, in consultation with the Regional Directors General, study the possibility of outsourcing portion of the transactional and custodial services provided by Materiel Management and Real Property such as warehousing operations, inventory management, facility management or real property divestiture.

48We discussed the shortfall and others issues Section 4.2 and 4.3 that will improve AMS effectiveness and efficiency.

49AMS logic model - Annex E.

50Literature review and comparative analysis with three private sector companies.

51Rahman, Shams (2011), "An exploratory study of outsourcing 3PL services: an Australian perspective", Benchmarking: An international Journal, Vol. 18, No. 3, pp. 342-358.

52Wunderlich, Stefan (2007), Chapter "Facilities Management" in the book "Real Estate Investment in Germany", page 221.

5. Conclusion

The evaluation found that Asset Management Services is relevant. It responds to the needs of Canadians and is overall achieving its intended outcomes. A number of areas were noted however where improvements could enhance the efficiency and effectiveness of the program.

Real property is not able to maintain a sustainable level of operation due to aging infrastructure, wide dispersion of assets and shortfall in repair and maintenance funding. A detailed, complete and formalized Real Property Infrastructure and Accountability Framework will facilitate cost effective decision making and will allow real property to be managed based on a portfolio approach. There are inconsistencies in the administration of warehouses within the Department due to a lack of national policies and procedures to govern warehousing operations and inventory management. In addition, a decision has to be made as which Sector is best suited to deliver nationally. Potential improvements were also noted in the area of performance measurement, particularly in the inventory management. Finally cost savings could potentially be achieved by outsourcing some of the transactional and custodial services provided by Materiel Management and Real Property.

The report made several recommendations to improve Fisheries and Oceans Canada's ability to manage Asset Management Services more efficiently and more effectively while achieving some cost savings.

Annex A: Evaluation Matrix

This evaluation matrix summarizes the indicators and data collection methodologies required to address each of the nine evaluation questions developed for this evaluation.

Summarizing evaluation matrix
1. Relevance: the extent to which AMS addresses a demonstrable need, is appropriate to the federal government and is responsive to the needs of Canadians
1.1 To what extent does AMS continue to address a demonstrable need and enables programs to respond to the needs of Canadians? - Evidence of the consequences if the AMS did not exist
- Perceptions of AMS, by clients, as an enabler of successful program implementation
- Documentation review
- Interviews
- Survey
1.2 Is the current role of the federal government appropriate in delivering AMS? - AMS demonstrates a constitutional need or a link with federal legislation - Documentation review
- Interviews
1.3 To what extent is there alignment between AMS and federal government priorities and Departmental Strategic Outcomes? - Degree of alignment between the objectives of the program and Government of Canada Priorities
-Degree of alignment between the objectives of the program and DFO objectives, priorities, vision and mission.
- Documentation review
- Interviews
2. Performance – Effectiveness: Assessment of progress toward achieving outcomes
2.1 To what extent are the intended outcomes (immediate, intermediate and long term) being achieved? - Evidence of achievement of outcomes i.e. Real Property investments / assets meet program needs within existing reference levels; Goods, services and real property acquired for DFO programs respond to client requirements; Required real property assets are safe and operational; Real Property assets are disposed/transferred; Timely disposal of assets; DFO assets are life-cycle managed in a financially responsible manner; and DFO programs have the required assets to support the achievement of respective mandate / objectives
- Client and partner satisfaction with RP and MM&PS
- Documentation review
- Interviews
- Case studies
- Survey
2.2 To what extent is asset programming consistent/compliant with TB policies and key DFO and federal legislation, guidelines and standards related to Asset Management Services? - Evidence that DFO meets its obligations relevant to TB policy for investment planning and management of projects
- Reported health and safety issues
- Compliance related to RP infrastructure
- Overall condition rating of assets
- Documentation review
- Interviews
- Case studies
2.3 What lessons learned and best practices have emerged from the implementation and development of activities associated with the program from within DFO, across the Canadian Federal Government, internationally, or in the private sector, which may enhance AMS effectiveness? - Practices and lessons learned across DFO regions
- Practices and lessons learned in OGD
- Practices and lessons learned from within private sector
- Documentation review
- Literature review
- Comparative analysis
- Interviews
- Case studies
3. Performance – Efficiency: Assessment of the processes in relation to the production of outputs
3.1 To what extent is the design and delivery of AMS appropriate to produce outputs? - Evidence of output planned and produced
- Client's satisfaction of quality of acquired assets
- Perceptions of key informants and stakeholders on AMS design and delivery
- Perceptions about the reliability of RP Information System
- Perceived adequacy of asset inventory system(s)
- Evidence of implemented changes regarding MAF assessments
- Existence of key performance measurement components
- Use of performance data in decision making
- Processes, practices or systems that could be streamlined, simplified or eliminated
- Interviews
- Documentation review
- Case studies
3.2. To what extent are the risks identified in Departmental risk profiles that have a bearing on AMS performance managed or factored into AMS planning and management practices? - Evidence of a risk profile tailored to AMS is in place
- Evidence of risk mitigation measures
- Evidence of risk mitigation in planning and management practices
- Number and type of new challenges/risks identified
- Documentation review
- Interviews
4. Economy: Assessment of resource utilization in relation to progress toward expected outcomes
4.1 In what ways can AMS reduce costs while maintaining quality, quantity, timeliness and appropriateness?  - Cost of delivery
- Evidence of established cost minimization procedures in place during planning and investment (e.g. major capital plan) as well as operations (e.g. minor capital plan)
- Evidence of cost minimization in procurement of goods and services for RP and MM&PS
- Identified challenges to minimize costs
- Regional variations in terms of costs
- Comparison between current practices/budgets and those of OGD and agencies with significant number of assets (e.g., Canada Post, PWGSC, DFAIT)
- Documentation review
- Literature review
- Comparative analysis
- Interviews
- Case studies

Annex B: DFO Real PRoperty Legislative and Policy Framework

DFO real Property - Legislative and Policy Framework

Annex C: Role of the Custodian, User, Tenant and Service Provider

Role of the Custodian:

  • Ensures that real property is available for and properly allocated for purposes of program delivery;
  • Ensures the effective and efficient management of the real property portfolio, through financial planning and management;
  • Ensures the implementation of government and Treasury Board policies relating to real property management, including policies relating to environmental, Aboriginal and heritage matters;
  • Ensures that real property ownership rights are exercised or delegated in the best interests of the owner; and
  • Is responsible for maintenance of property records, allocation of resources and performance measurement.

In addition to managing relationships among other real property stakeholders, the custodian exercises four distinct functions. These are: demand management, asset management, investment management and portfolio management.

  • Demand management is concerned with the occupancy of real property. It includes all custodial activities associated with meeting the real property needs of users, namely understanding and planning for real property needs and providing options and advice related to those needs.
  • Asset management is concerned with the maintenance and use of real property. It includes all custodial activities associated with the physical management and use of real property, including planning, policy development and policy implementation. It also includes performance measurement regarding assets, comprising financial performance, physical performance and performance in meeting the functional requirements of users.
  • Investment management is concerned with fiscal support for real property. It entails those activities associated with meeting the existing and anticipated costs of real property, including operating and maintenance costs, major repairs and capital investments, and taxes. The development of a long term capital plan for real property, including an investment strategy, a refresh strategy and a divestiture strategy, falls under investment management, as does the recapitalization and distribution of the real property dividend.
  • Portfolio management is concerned with the strategic management of real property assets. It includes the sum of all custodial activities falling under demand management, asset management and investment management that deal with the management of real property holdings considered as a whole. It also includes the negotiation of strategic alliances with other custodians and external parties.

Role of the User:

  • While occupying real property, respects its value and fabric;
  • Advises the custodian of RP needs, including required occupancy standards, within the required timeframes, as assessed from both short and long-term perspectives;
  • Assesses the quality of service provided by the service provider;
  • Assesses the degree to which the agreement between user and custodian meets program requirements.

The user carries out operational and strategic planning exercises related to program delivery, to identify ongoing and anticipated real property needs. The user also interacts with the service provider on a day-to-day basis, to discuss specific service requirements and, on a continuing basis, assesses satisfaction with the services being provided.

Role of the Tenant:

The tenant has the same role as a user however; the respective role, responsibilities and obligations of Tenant and Custodian have been formalized using a written agreement, such as a Memorandum of Understanding or a Service Level Agreement, which describes the roles, responsibilities and obligations of the Custodian and Tenant.

Role of the Service Provider:

  • By agreement or contract with the custodian, maintains and operates real property assets, including continuous assessment of the condition of the assets;
  • By agreement with the custodian, provides other real property services to the custodian;
  • Provides planning and performance information to the custodian for purposes of operational planning, budgeting and performance measurement;
  • By agreement with the user, provides specific services in support of program delivery as required.

In accordance with the contract with the custodian, the service provider plans and delivers facilities management and property management services to real property assets. In so doing, the service provider demonstrates a high level of responsiveness to the day-to-day operating requirements of the asset and the program needs of the user. The service provider may also provide other real property services to the custodian, such as project management and real estate services.

Annex D: DFO Real Property Categories

  • Category 1 (Major Facilities)
    • Air-Cushion Vehicle (ACV) Base
    • Base
    • Ferry Terminal
    • Hangar/Helo
    • Laboratory
    • Office
    • Specified Major Facility
    • Training facility
    • Warehouse
    • Land
    • Buildings - structures
    • Infrastructure as required
  • Category 2 (Minor Facilities)
    • Airfield
    • Area Office
    • Bait Unit/Depot
    • Boat Shed
    • Boathouse/Haulout
    • Commercial Building
    • Community Stages
    • Crews Quarters
    • Dumping Site
    • Field Camp/Cabin
    • Fuel Dump
    • Garage
    • Gauging Station
    • Gravel Pit
    • Lightstation
    • Marine Facilities
    • MCTS Station
    • Minor Shore Light (Que)
    • Moorage
    • Parking
    • Radar/Communications (Que)
    • Residential Site
    • SAR/RER Station
    • Service Centre
    • Storage
    • Test Site
    • Vessel Traffic Control Centre
    • Workshop
    • Land
    • Buildings - structures
    • Infrastructure as required Category 3 (Vacant Land)
    • Undeveloped Land
    • Vacant Land
    • Vacant for Surplus
    • Water Lot
  • Category 4 (CCG - all Land Based Infrastructure; RPSS - hatcheries only)
    • Helicopter Fuel Tank
    • Peripheral VHF Site
    • Radar/Communications (AIS)
    • Surveillance Camera Site
    • Triangulation Point Site-
    • Surveyor Bench Mark
    • Infrastructure as required
    • Hydrographic Site
    • Hatchery, Incubation Facility
  • Category 5. (CCG - Marine Based Navigation)
    • Daymark/Daybeacon
    • DGPS Station
    • Fog Signal
    • Infrastructure as required
    • LORAN-C Station
    • Major Shore Light
    • Minor Shore Light
    • Radar Reflector
    • Range Site
    • Tie Up Marker
  • Category 6 (Marine Based Infrastructure)
    • Aeration Tower
    • Artificial Island
    • Bridge
    • Canal
    • Containment Cells - Fish Barrier
    • Counting Fence
    • Drawdown
    • Enhancement
    • Enumeration Station
    • Fishway
    • Front Range (Que)
    • Harbour Reserve
    • Ice Boom/Flood Control
    • Ice Operations Station Category 6 (cont'd.)
    • Lake Weir
    • Minor Shore Light (Que)
    • Net Pen
    • Pond
    • Rear Range (Que)
    • Rearing Channel
    • Sea Pen
    • Side Channel
    • Slipway
    • Spawning Channel
    • Spillway
    • Waterway
    • Wharf
  • Category 7 (Small craft Harbours)
    • Land
    • Waterlots
    • Buildings
    • Breakwaters
    • Channels
    • Floats
    • Launching Facilities
    • Mooring Buoys
    • Retaining Walls
    • Shore Protection works
    • Wharves
    • Parking Lots
    • Roads
    • Electrical Systems
    • Sanitary Systems
    • Fire Prevention Systems
    • Water Systems
    • Basins
    • Access Ramps

Annex E: AMS Logic Model

The AMS Logic Model

Annex F: Ranking RP and MMPS Activities - Least Effective (1) to Most Effective (4)

Real Property
RP Activities Overall observations from interviews
(3) - Providing strategic planning to program managers across DFO Even though the capital planning is well established in general, it seems that the strategic planning sometimes face challenges that varies from region to region. For example, some struggles are related to the lack of human resources to properly plan and sometimes when they were able to plan, they are unable to fully implement it due to lack of funds i.e. the size of the portfolio (# of assets) and the budget don't match.
(4) - Acquiring new immoveable assets through major capital plan implementation The acquisition of properties is made trough the major capital planning and according to the respondents, the major capital plan is usually well implemented.
(1) - Operate and maintain real property  to maximize the life cycle of assets as well as to improve their marketability for divestiture According to the interviewees, the maintenance is not 100% possible within DFO due to the fact that the department seems to have more properties it can maintain/operate (lack of funds) and therefore they are unable to properly maintain the property's life cycle. The regions are often not proactive in the LCM instead they are almost always reactive to the problems that are constantly arising (i.e. always in a "fix it" mode). Also many regions have no alternative but to convert their minor capital funds into O&M in order to respond to failing infrastructures. In addition, some infrastructures have been shut down due to their deterioration which has in some cases affected programs.
(2) - Divesting surplus real property assets Overall, there is a limited success on the divestiture given the various factors that come into play (communities, environmental laws, contaminated sites, etc.) and the lack of resources to quickly divest surplus properties. However, depending on the properties and the number of stakeholders involved the request can take more or less time.

Materiel Management and Procurement Service
MMPS Activities General observations from interviewees ranking
(2) - Assisting and supporting DFO programs in the recording, maintenance replacement and disposal of assets Overall, the respondents assert that they struggle with the recording and are usually successful with the disposal. It should be clarified that MMPS is responsible to maintain/track/record assets but they are not the custodians. They are responsible to keep and update the Assets database usually with the information received from the custodians. The challenge is that the custodians do not always keep track of their inventories. For example, programs sometimes dispose assets but they are still on the books. To change this situation, some interviewees recall that there is a need for MMPS to educate, inform and coach the programs as they are not always aware of their roles and responsibilities. As for the disposal, MMPS plays a role in the disposal of assets if they have been informed by a custodian. Usually, the disposal process can take less or more time depending on the asset.
(1) - Ensuring the effective life-cycle management of material capital and moveable assets as per relevant government policies Usually, MMPS is not involved in asset life-cycle management; it is the responsibility of the custodians. But when they do, it is usually at the acquisition and the disposal stage. However, they are involved in the vehicle life cycle management and this is well managed in general according to almost all interviewees.
(4) - Assisting DFO programs in the solicitation and award of contracts in the most effective means possible Base on the interviews, the solicitation and award of contracts is the most effective activity from MMPS respondents' point of view. The reasons usually provided were that they have the tools, guidelines and procedures in place as well as experienced and well trained personnel. In addition, no significant issues were identified.
(3) - Ensuring that DFO complies with a range of government policies that apply to the acquisition of goods and services The policies compliance is effective in general but there is a room for more enforcement according to some respondents. For example, the policy requiring the auditing of the acquisition cards to ensure that all regulations are being followed, that acquisitions with cards are cost-efficient and that there is no contracting splitting are not always done. Usually, they do some monitoring and reporting but there is a need for a more formal and regular process. Lack of resources is the main reason to explain this situation. In addition, improvements are needed for assets policies and a consistency for the services provided for materiel management across the country.

Annex G: Pacific Region RP Infrastructure Strategy

The Region will undertake to achieve seven key objectives (next steps) over the next five years to address its infrastructure management challenges, including:

  • Reduce regional infrastructure O&M expenditures.
  • Only hold, use, and maintain an infrastructure portfolio that is both affordable and aligned with the Department's program objectives.
  • Integrate infrastructure requirements and investment decisions into the Region's strategic planning processes.
  • Develop and implement a tracking, performance management, and compliance monitoring information system.
  • Within available resources, ensure that all Regional infrastructures are maintained in a state that does not jeopardize its functionality, human health and safety, or the environment.
  • Develop a detailed regional infrastructure management and accountability framework.
  • Manage infrastructure in an environmentally responsible manner.

Annex H: Quebec Region Warehouse System

The Quebec Region's Warehouse system tracks all warehouse contents under the responsibility of Finance and Administration – Assets Division, involved in shipping, receiving, and storage operations. It employs bar coding technology (applied to materiel upon entry to and exit from the warehouse) to ease tracking operations. System data includes transportation information, client and destination information, quantity and type of packages, and product and other related information.

The system permits all DFO/CCG Clients to review/manage their holdings in the system via the online link. The system can produce various reports for reporting and management requirements.

The Quebec Region's Warehouse system was developed in-house by the region, and is web based for easy access and navigation.

Annex I: Management Action Plan

Annex H: Quebec Region Warehouse System Recommendations
Recommendations

Real Property is unable to maintain a sustainable level of operation as the Department is not investing enough in the repairs and the maintenance of its real properties. Diverting resources away from planned maintenance activities to cover non-discretionary and fixed costs has lead to neglected assets. Additional factors such as an aging infrastructure, the physical environment and the wide dispersion of assets, pose challenges for Fisheries and Oceans to comply with effective life cycle management practices.

Recommendation 1: In order to maintain a sustainable level of operation, it is recommended, that the Assistant Deputy Minister of Human Resources and Corporate Services, in consultation with the Sector ADMs, Commissioner of the CCG and the Regional Directors General, ensure that each Region develops a strategy aimed at reducing regional infrastructure expenditures.

Strategy
The national infrastructure strategy, aimed partially at reducing regional infrastructure expenditures, will need to be developed in the context of the department's rationalization plans as it relates to Budget 2012 announcements and subsequent departmental decisions. Based on the outcome, the department will be in a better position to develop and formalize the national infrastructure strategy in line with departmental priorities, and establish a multi-year work plan aimed partially at reducing regional infrastructure expenditures. The development of such a strategy will need to be deferred to a later date.
Management Actions Actions Completed Actions Outstanding Target Date Supporting Evidence
Establish the real property financial baseline in order to understand total and ongoing cost of providing real property HRCS presented the departmental real property, safety and security interim action plan towards financial stability at the IBM-SOC and at DMB in February 2012. Establish the real property financial baseline. March 2013  
Based on the results of the above mentioned financial baseline analysis, implement cost reduction initiatives including:        
a) The development and implementation of the Policy on the Management of the Real Property and Space Portfolio aimed at clarifying funding accountabilities between programs and the real property program. Policy has been drafted and is currently in consultation within RP (January 2012). Finalize and implement the Policy. September 2013  
b) The development and implementation of a charging model for non DFO employees  The Memorandum of understanding (MOU) to establish or update formal agreements with non-DFO users of space is included in the draft policy (January 2012). Develop and implement the charging model for non DFO employees. September 2013  
Recommendations

Warehousing operations and materiel management are not consistently conducted in the Department due to a lack of current and approved departmental policies and procedures covering warehousing, inventory management, and general management of materiel as well as directions and leadership from National Headquarter.

Recommendation 2: To ensure a consistent provision of necessary services to clients, it is recommended that:

  1. The Chief Financial Officer undertake a process that leads to a Departmental decision as to which Sector is best suited to assume the provision of warehousing services on a national basis.
  2. Based on the decision made, the provider of warehousing services develop a national Action Plan for warehousing operations and inventory management system, including policies and procedures.
Strategy
The strategy will be to assess current structure and practices and determine most effective means to provide warehousing services throughout the department.  This assessment is to be done in concert with all key holders of inventory.
Management Actions Actions Completed Actions Outstanding Target Date Supporting Evidence
The Chief Financial Officer will undertake a process that leads to a Departmental decision as to which Sector is best suited to assume the provision of warehousing services on a national basis. None
 
Set up committee April 2012  
Engage participants in discussions, meetings May 2012  
Reach a decision     Fall 2012  
Develop and implement a national Action Plan for warehousing operations and inventory management system, including policies and procedures. Current business practices, including resource levels will be defined. March 2013  
Define and evaluate options to deliver warehouse services. June 2013  
Develop implementation strategy. September 2013  
Implement plan March 2014  
Recommendations

The current Real Property governance structure does not facilitate cost-effective decision making on a departmental-wide basis or allow for real property to be managed using a portfolio approach. The lack of effective coordination between programs and Real Property is resulting in the Department investing in assets not aligned with Regional program priorities.

Recommendation 3: It is recommended that the Assistant Deputy Minister of Human Resources and Corporate Services, in consultation with the Sector ADMs, Commissioner of the CCG and the Regional Directors General, ensure that:

  1. Real Property Safety and Security revise and update the Real Property Accountability Framework including review of Sector and CCG accountability for the ongoing real property costs related to their respective programs;
  2. Real Property Safety and Security nationally and regionally develops and implements a formalized governance structure in order to integrate infrastructure requirements and investment decisions into the national and regional strategic planning processes.
Strategy

1. The review of accountabilities as it relates to the management of real property will need to consider impacts of Budget 2012 announcements and subsequent departmental decisions. Once the review of real property impacts is completed, the department will be in a position to review its accountabilities as it relates both to the three custodians involved in the management of real property, as well as management and funding accountabilities between Sector ADMs, the Commissioner of the CCG and Regional Directors General via HRCS.

2. a) As part of its transformation agenda, Real Property, Safety and Security (RPSS) reviewed and renewed its national governance structure including its committee mandates and memberships. The National Real Property, Safety and Security Management Committee (NRPSSMC) was created to address horizontal governance by providing a national forum for the identification, communication, discussion and resolution of strategy management issues, policies and standards affecting the stewardship and life cycle management of real property assets under its responsibility. There are three Subcommittees specific to the three business lines within RPSS that directly support the NRPSSMC.

2. b) The Departmental Management Board (DMB) will provide the required governance as it relates to strategic real property management issues that will need to be discussed over the next few fiscal years. Program representation is sought at the Integrated Business Management-Strategic Outcome Committee when real property issues are discussed.

It is recommended that the review of accountabilities and existing governance structures as it relates to the management of real property be assessed and reviewed in light of Budget 2012 announcements and subsequent departmental decisions. As such, this activity will need to be deferred to a later date. 
Management Actions Actions Completed Actions Outstanding Target Date Supporting Evidence
Develop and implement the Policy on the Management of the Real Property and Space Portfolio aimed at clarifying funding accountabilities between programs and real property custodians (connecting costs with users).  Policy has been drafted and is currently in consultation within RP (January 2012). Finalize and implement the policy. September 2013  
Continue to actively integrate real property infrastructure requirements and related funding within the renewed departmental governance structure and annual COE investment process.  This will include the DG Investment Committee, the IBM-SOC and the CCG Investment Management Board in order to ensure program relevance of proposed real property projects. The Director General, Real Property, Safety and Security is a standing committee member of the Director General, Investment Management Committee and the Canadian Coast Guard Investment Management Board.  The Director General, Real Property, Safety and Security or the Director, Long Term Capital Management attend Departmental Management Board meetings to discuss investment plans as required.   September 2013  
Recommendations

Materiel Management and Procurement Services ongoing performance monitoring and reporting is not done systematically through dialogue with clients.

Recommendation 4: It is recommended that the Chief Financial Officer, in consultation with the Regional Directors General, ensures that a performance measurement strategy for MMPS is developed in consultation with the DFO Evaluation Directorate.

Strategy
 The strategy will be to update the current MMPS policies with the required performance measurement data.
Management Actions Actions Completed Actions Outstanding Target Date Supporting Evidence
The moveable assets, acquisition card and motor vehicle policies will be updated to include performance measurement data.
 
Review and revise performance measures with advice and guidance from DFO Evaluation Directorate and Regions.  The moveable assets, acquisition card and motor vehicle policies will be updated to include performance measurement data. Fall 2012
 
 
Recommendations

Real Property is the only area within Asset Management Services that has developed a performance measurement strategy. However, the Real property performance measurement strategy is not finalized and is not therefore implemented nationally.

Recommendation 5: It is recommended that the Assistant Deputy Minister of Human Resources and Corporate Services, in consultation with the Regional Directors General, ensures that the Real Property performance measurement strategy is finalized, approved and nationally implemented.

Strategy
The National Director, Long Term Capital Management will be responsible for coordinating the completion of individual performance measurement strategies for the capital investment and divestiture programs in addition to an overarching performance measurement strategy for all real property functions under Long Term Capital Management.
Management Actions Actions Completed Actions Outstanding Target Date Supporting Evidence
The performance management strategies for capital investment, divestiture and overarching real property issues were drafted and regional consultations have taken place.   Based on feedback received from regional consultations and DFO Evaluation Directorate, the performance measurement strategies will be finalized, approved and nationally implemented. July 2012 The Evaluation Directorate is involved in these performance measurement strategies and has reviewed them.
Based on feedback received from regional consultations, the strategy documents and associated logic models will be modified prior to final approval. The performance measurement strategies for capital investment and divestiture have been completed in October 2011. The Overarching Performance Measurement Strategy for the Management of Real Property is currently in final approval as of January 31, 2012.  Consultations with Regions for the Overarching strategy was done electronically between November and the end of January.       
Recommendations

There are efficiencies to be gained in the way inventory is managed across the Department as there is no common warehousing and inventory management system in use across the Department that operates effectively and efficiently from both operational and financial (accounting) perspectives, nor is there a common information management system.

Recommendation 6: As part of the recommendation 2.2, the national Action Plan should include a plan for implementing with the Regional Directors General, an automated inventory management system on a national basis. Pending such implementation the existing Quebec Region warehouse system should be considered by the Chief Financial Officer and the Commissioner of the CCG, in consultation with in the Regional Directors General for interim use in all Regions to ensure the availability of complete and common inventory data at all warehouses.

Strategy
The strategy will be to roll out the Quebec region's warehouse inventory management system in those regions which are not using it.
Management Actions Actions Completed Actions Outstanding Target Date Supporting Evidence
Implement the Quebec Region warehouse system for interim use in all Regions to ensure the availability of complete and common inventory data at all warehouses. The Quebec warehouse system has been rolled out in the Central & Arctic and the Newfoundland and Labrador regions.      
  The Maritimes and Pacific regions are currently evaluating the system.
 
  Fall 2012  
    Full implementation of the Quebec region application in the Maritimes and Pacific regions.   March 2013  
Institute a feasibility study to assess if a unique inventory management system is the optimal approach for DFO.     March 2013  
Recommendations

Asset Management Services delivers its services economically but further cost saving could potentially be achieved by outsourcing their asset needs to a third-party logistics provider. Moving towards using third-party logistics provider could be beneficial in many ways as it allows organizations to focus on their core business, in addition to achieving savings on maintenance and operation costs.

Recommendation 7: The Assistant Deputy Minister of Human Resources and Corporate Services and the Chief Financial Officer, in consultation with the Regional Directors General, study the possibility to outsource a portion of the transactional and custodial services provided by Materiel Management and Real Property such as warehousing operations, inventory management, facility management or real property divestiture.

Strategy

Real Property
The Manager, Life Cycle Management – Divestiture will develop a document which analyzes options for outsourcing work required to facilitate the sale of surplus real property assets outside of Fisheries and Oceans Canada. Recommended options would need to be compliant with the requirements of the Treasury Board Directive on the Sale or Transfer of Surplus Real Property.

The Manager, Life Cycle Management – Investment Planning will develop a document which analyzes options for outsourcing work required for facility management for real property assets of Fisheries and Oceans Canada. Recommended options would need to be compliant with the Treasury Board Policy on the Management of Real Property and meet program requirements.

Materiel Management and Procurement Services
The strategy will be to consider as an option the feasibility of outsourcing warehousing services or a portion thereof as part of the department's review of warehousing services.

Management Actions Actions Completed Actions Outstanding Target Date Supporting Evidence
Real Property
As it pertains to outsourcing divestiture and facility management, Treasury Board Policies and associated standards and directives will be gathered, reviewed and analyzed.  A draft analysis document will be prepared.  None   Treasury Board Policies and associated standards and directives will be gathered, reviewed and analyzed, as it pertains to outsourcing divestiture and facility management. A draft analysis document will be prepared. September  2012  
Consultations will be undertaken as required with program authorities, TBS real property analysts, private sector service providers, PWGSC and Canada Lands Company.   Meetings will be arranged with relevant program authorities, TBS real property analysts, private sector service providers, PWGSC and Canada Lands Company.  Information received will be integrated into the draft analysis document. March 2013  
A final document will be developed and written with options and recommendations for consideration by senior management.   A final document will be developed and written with options and recommendations for consideration by senior management September 2013  
Materiel Management and Procurement Services
Study the possibility of outsourcing a portion of the transactional and custodial services provided by Materiel Management   Departmental Senior Management will study the value of pursuing the potential of outsourcing these activities. December 2012