To promote public policy objectives, the federal
government sometimes becomes involved in initiatives where a
private sector organization, another level of government or
another jurisdiction has the immediate management responsibility.
This happens regularly under some ongoing government programs.
For example, the Canadian International Development Agency's
involvement in individual initiatives is managed in the context
of an ongoing program. In these cases, the department or agency
is accountable for results achieved under the overall program as
well as those flowing from an individual initiative itself.
In certain instances, involvement is unique in
nature, such as for energy megaprojects. There is no ongoing
program under which such initiatives can be managed. Furthermore,
the management considerations that arise when federal departments
become involved in these initiatives tends to vary markedly from
case to case.
It would be difficult to specify a detailed
management framework for the federal government's involvement in
such initiatives. It is important however, that initiatives not
being carried out under an ongoing program, be managed within the
context of an approved framework. This framework includes the
following two elements:
- the government's involvement must be explicitly approved by
the sponsoring minister and, when required, by the Treasury
Board; and
- an approved management framework must be in place before any
binding commitments with financial implications are entered into
on behalf of the federal government.
To ensure that, when federal departments become
involved in private-sector or other outside initiatives (on a
unique basis), the interests of the federal government are
managed within an explicit management framework approved by the
sponsoring minister and, when required, by the Treasury
Board.
It is government policy that departmental
involvement in private-sector and other external initiatives
which are not a part of an ongoing program, take place only with
explicit approval of the sponsoring minister and, when required,
the Treasury Board. These activities are to be managed:
- in relation to clearly articulated objectives;
- under a well-defined management framework for achieving
objectives;
- in a manner sensitive to risk, complexity and economical use
of resources;
- under explicit performance monitoring, reporting and
evaluation requirements.
This policy applies to departments and agencies
listed in Schedules I and II of the Financial Administration
Act.
This policy applies to all departmental
involvement in private-sector or other outside initiatives that
is unique or special in nature and is not undertaken within the
context of an ongoing program. Legal agreements on behalf of the
Crown, that are already in place at the time this policy comes
into effect, shall take precedence.
More specifically this policy applies to cases
where the Federal Government:
- is not directly involved in procuring goods or services or in
operating any facility being supported.
- acquires significant financial assets to further government
objectives of a program nature (e.g. taking an equity position in
an otherwise privately owned company to foster the development of
infrastructure to exploit a natural resource);
- enters into arrangements where it assumes significant
contingent liabilities (e.g. providing loan guarantees to foster
particular industrial developments); or
- enters into certain business relationships without
necessarily providing any direct financial support. These
relationships concern infrastructure development to be undertaken
by other jurisdictions or a private-sector organization, and
involve significant degrees of financial or other types of risk
(e.g. allowing private-sector developments within or in
conjunction with a federally owned facility).
When departments fund initiatives undertaken by
private sector organizations or other jurisdictions through
contributions or other transfer payments, the Treasury Board's
Policy on Grants, Contributions and Other Transfer Payments
applies.
1. Departments must identify all initiatives
that fall within the applicability of this policy and manage them
accordingly.
2. Before a department enters into any
commitments with outside parties, its involvement in the outside
initiative must be explicitly approved along with a tailored,
effective and clearly defined management framework. Policy
Appendix A sets out generic requirements for the management
framework.
3. Departments involved in these types of
initiatives must also ensure that the other parties involved
fulfil the terms and conditions under which federal support is
provided and that public policy objectives are realized to the
maximum extent possible.
4. A department's involvement in any
initiative as well as the related management framework must be
approved by the sponsoring minister. In addition, the department
must obtain approval from Treasury Board when:
4.1 Potential federal outlays and liabilities,
whether budgetary or non-budgetary in nature, exceed $50 million.
For example, if the federal government's involvement is through a
joint venture, either explicitly or potentially, with a total
estimated and contingent cost in excess of $50 million, then
Treasury Board approval must be obtained. Because of the joint
venture status of the involvement, potential liabilities would
not be limited to the federal government's direct support or
equity participation;
4.2 The federal government is entering into a
business-type relationship with a private-sector organization or
other jurisdiction and there are significant financial or other
types of risks (e.g. leases of federal land to permit
private-sector developments within or in conjunction with a
federally owned facility);
4.3 A negotiated agreement is going to
deviate substantially from what had previously been approved by
Treasury Board in the management framework. A new framework and
objectives must be submitted to Treasury Board for approval
before the agreements are finalized; and,
4.4 Treasury Board directs that a management
framework be established for involvement in a specific outside
initiative.
5. When a Treasury Board submission is
required, it must contain the following elements:
5.1 A proposal seeking authority to enter into
negotiations with outside parties concerning involvement in the
outside initiative in accordance with the proposed management
framework; and,
5.2 A clear and explicit management framework
proposal.
6. Departments must ensure that an adequate
system is in place for internal approvals of involvement in all
outside initiatives subject to this policy and that the approvals
are subject to audit (i.e. some kind of formal system involving
adequate audit trails must exist). Approvals must be made at an
appropriate time, usually when it is decided to proceed seriously
with negotiations that will potentially involve entering into
firm commitments.
7. In reviewing a management framework, the
Treasury Board may refer the proposed involvement in an outside
initiative to Cabinet for further consideration.
8. The department with lead responsibility
for the federal government's involvement in an outside initiative
must report annually to Parliament. This report is made through
Part III of the Estimates and provides details on the progress
made towards achieving the approved objectives of the
involvement.
Sponsoring departments
Sponsoring departments must appoint through a
designated official (where appropriate) a federal government
leader. The leader is responsible for:
- managing the federal government's involvement in the outside
initiative;
- identifying and notifying other federal departments and
agencies having general or specific interests in the government's
interests in an outside initiative; and
- inviting these departments and agencies to participate in an
active or coordinative role as appropriate.
Participating departments
- Participating departments are responsible for:
- selecting a designated representative; and,
- defining, to the sponsoring department, the nature and extent
of their proposed participation, in the federal government's
involvement in an outside initiative.
The leader and designated representatives are to
be selected according to their experience and abilities as well
as the significance, scope, complexity, risk, and visibility of
the federal government's involvement in the outside
initiative.
Treasury Board Secretariat
Treasury Board Secretariat is responsible
for:
- advising departments on the practical application of this
policy;
- advising departments on appropriate management frameworks,
taking into account the risks involved, the scope of interests
held by other departments and agencies, and the uniqueness of the
government's involvement in the outside initiative;
- advising the Treasury Board on the merits of submissions
under this policy (including the Secretariat's view of the risks
and proposed risk management strategies);
- communicating the decisions of the Board to the submitting
department;
- recommending a reporting schedule, if required, to keep
Treasury Board ministers informed of the status of federal
involvement; and,
- carrying out a liaison function to ensure that the sponsoring
department provides appropriate management information required
by the Board.
Treasury Board Secretariat will use the following
criteria to assess departmental performance in meeting the
objectives of this policy:
- consistency between initiatives proposed for approval by the
Treasury Board and all other government objectives;
- timeliness of consultations with the Secretariat and other
interested departments and, where required, submissions to the
Treasury Board;
- quality of the management framework proposed for those
initiatives requiring Treasury Board approval. Quality is
considered to cover the degree to which the framework establishes
clear objectives for the initiative and associated
accountabilities; adequately recognizes and addresses any
potential risks and provides strategies for dealing with those
risks; and presents parameters that accurately monitor the
initiative and support assessments as to whether it is on track
or not.
This policy is issued under the authority of
section 7 of the Financial Administration Act.
This policy should be read with the other
policies in this volume as well as those policies involving
grants, contributions, other forms of transfer payments, risk
management and loan guarantees.
On Policy interpretation
Executive Director, Procurement and Project Management Policy Directorate, Comptrollership Branch, Treasury Board Secretariat.
On Treasury Board Submissions
Departments should contact their analyst within the Treasury Board Secretariat Program Sectors.
Private-sector or other outside initiatives will
normally involve three phases: a negotiation phase culminating in
formal agreements; an investment phase (not always involving
federal expenditures) culminating in completed infrastructure;
and an operational phase. While different management issues will
usually be associated with each phase, it is important that a
management framework be approved and in place before any
negotiations begins. As involvement in an outside initiative
moves into its later phases, this framework is often adjusted to
meet changing expectations and circumstances. With respect to
negotiations with outside parties, the framework must clearly set
out a negotiating strategy and mandate. The framework must also
address how decisions about whether to proceed will be handled
during all stages of the negotiations, including the criteria
that will be used.
Commensurate with the amount of funding being
provided, the degree of financial and other risks, and the
complexity of the federal involvement, the management framework
should:
- clearly and comprehensively state the objectives of the
proposed involvement in an outside initiative;
- justify the proposed involvement, including reviewing
alternative means for pursuing the objectives associated with
it;
- identify and assess potential risks on a comprehensive basis
and provide strategies for dealing with them;
- provide a proposed mandate and strategy for translating the
objectives of the involvement into concrete agreements with the
other participants; and,
- present a proposed framework for managing the federal
government's interests during all phases of its involvement in an
outside initiative. The proposal should:
- specify a leader to manage the federal government's
involvement;
- state the role for the leader (see the Major Crown Projects
policy in this volume for guidance);
- specify the membership of a Senior Advisory Committee in
managing the federal involvement where Treasury Board approval is
required and in other cases as appropriate. The committee which
should include members from all departments potentially affected
by or having a program interest in the outside initiative. A
proposed statement of role for the Committee should also be
provided. Refer to the Major Crown Projects policy in this volume
for guidance;
- specify which departments or agencies are accountable for
achieving the approved objectives of the involvement in the
initiative; and,
- present parameters, including financial, to serve as a
monitoring baseline in assessing whether involvement in the
initiative is on track. The framework should include a monitoring
and review process that triggers a requirement to seek approval
for an amended management framework when parameters are
exceeded.
The management framework should respect the
following primary considerations:
- all objectives associated with the federal government's
involvement in an outside initiative should be clearly
articulated and concretely reflected, to the extent possible, in
the agreements reached with other participants. The presumption
is that the key objectives usually will not be strictly financial
in nature, but rather, be related to program-type objectives such
as industrial and employment benefits and impacts on economic
viability;
- the federal government's involvement in such an initiative
should be managed so that there is a single, clearly identified
locus of management responsibility for the achievement of all
objectives at any given time and, preferably, through all phases.
This consideration is essential for ensuring adequate
accountability. Exceptions should be considered only for
compelling reasons; and,
- since the key focus for furthering and protecting federal
interests usually lies in the formal agreements entered into by
the participants, the agreements should be as specific and
concrete as possible about the responsibilities and
accountabilities of the various participants. Informal
understandings and best efforts undertakings should be
avoided.
|