PACC Committee Report
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GOVERNMENT RESPONSE TO THE
NINETEENTH REPORT OF THE STANDING COMMITTEE ON PUBLIC ACCOUNTS
ON CHAPTER 8 OF THE DECEMBER 2002 REPORT OF THE AUDITOR GENERAL OF CANADA (PUBLIC WORKS AND GOVERNMENT SERVICES CANADA - ACQUISITION OF OFFICE SPACE)
The December 2002 Auditor General’s Report includes a chapter on the results of an audit of the planning, acquisition and management practices for office accommodation of Public Works and Government Services Canada (PWGSC).
The Standing Committee on Public Accounts (SCOPA) considered that chapter of the report and heard testimony March 24, 2003 on this matter from senior officials of both the Office of the Auditor General and PWGSC.
Subsequently, SCOPA tabled its Nineteenth Report in the House of Commons on June 6, 2003.
The Government has taken note of the observations and recommendations in the Nineteenth Report and is firmly committed to acting upon the recommendations found therein. It agrees with the recommendations for improving the planning, acquisition, management practices and reporting to Parliament for office accommodation services. Furthermore, the Government agrees to examine the implementation issues of direct charging in detail.
The Government has introduced significant changes to manage office accommodations in a business-like fashion over the past decade and will do much more to build on these successes.
In responding to the recommendations, the Government reaffirms its commitment to ensuring value to taxpayers for real property resources by providing office accommodation effectively, efficiently, economically and in an environmentally sound manner. PWGSC, together with its client departments, provides essential, productive workplaces to support the daily operations of government in meeting the needs of Canadians.
The Government of Canada appreciates the contribution of SCOPA to ensuring that the acquisition and management of office accommodation is carried out efficiently, effectively, fairly and in the public interest.
RECOMMENDATION No. 1
That Public Works and Government Services Canada prepare a detailed description of the progress achieved in developing and reviewing community
and regional investment plans and strategies. That this information be provided to the Public Accounts Committee no later than 31 March 2004.
Response
PWGSC agrees to provide a status report by March 31, 2004 containing a detailed description of the progress achieved in developing, reviewing and maintaining community and regional investment plans and strategies.
The status report will cover how various strategic plans have been developed, coordinated and implemented in a consistent manner. These strategic plans include the Community-Based Investment Strategies (CBISs), Regional Investment Strategies (RISs) and the National Investment Strategy.
By December 31, 2003, all RISs will be in place.
By March 31, 2004, all CBISs will be up-to-date.
Treasury Board Ministers approved the updated National Investment Strategy in 2001 that establishes the objectives, guiding principles and overall direction for real property investment activities.
The status report will also indicate how well investment decisions required in the plans are being documented and supported by timely information on market conditions for both the supply and demand for office accommodation.
The report will also describe the process by which CBISs, RISs and the National Investment Strategy routinely updated, monitored and reported. The process will indicate how milestones, deadlines, resources and results identified in the plans are controlled, monitored and reported.
Recommendation No. 2: That Public Works and Government Services Canada prepare a document containing a detailed description of the progress achieved with client departments in developing long-term accommodation plans. That this information be provided to the Public Accounts Committee no later than 31 March 2004.
Response
PWGSC agrees to provide a status report by March 31, 2004 on the progress achieved with client departments in developing long-term accommodation plans.
PWGSC, in consultation with its clients and stakeholders, will develop, implement and monitor a plan to have Master Occupancy Agreements (MOAs) or other appropriate formal business arrangements in place for all its clients. Master Occupancy Agreements, approved by Deputy Ministers, formalize the partnership between PWGSC and its client departments and agencies regarding the provision and utilization of office accommodation. They identify and clarify the responsibilities and accountabilities of office space users and providers.
The progress report will provide an update with respect to meeting the targets of the plan. Detail will be also be provided on the specific MOAs and other business arrangements in place or under negotiation.
Recommendation No. 3: That Public Works and Government Services Canada prepare a document containing a detailed description of the progress of initiatives designed to strengthen long-term options analysis. That this information be provided to the Public Accounts Committee no later than 31 March 2004.
Response
PWGSC agrees to provide a detailed description by March 31, 2004 of the progress of initiatives designed to strengthen long-term options analysis for office space acquisition.
PWGSC, in cooperation with Treasury Board Secretariat, its clients and other stakeholders, will examine its planning practices, administrative measures and funding approaches to reinforce the application of its community and regional investment strategies. Initiatives will be identified which help increase lead-times for consideration of the full range of long-term options for office space acquisition. Such options typically include purchase, build, lease or lease-to-purchase. This longer period for analysis should help increase the opportunities where PWGSC can take advantage of the most cost-effective alternative for securing office accommodation.
Recommendation No. 4: That Public Works and Government Services Canada prepare a document disclosing the progress of its initiatives designed to strengthen and upgrade its financial information systems, policies and practices to support project management. That this information be provided to the Public Accounts Committee no later than 31 March 2004.
Response
PWGSC agrees to prepare a document by March 31, 2004 to disclose the progress of its initiatives designed to strengthen and upgrade its financial information systems, policies and practices to support project management.
The progress report will show how PWGSC addresses, on an ongoing basis, the issue of ensuring an adequate cost-effective financial and reporting system with the capacity to provide credible, relevant, timely, accessible, complete and accurate full-cost information for managing and controlling the budgets of client projects. Specific new modifications will be highlighted and their significance to enhancing performance and the overall business environment will be explained.
Work is underway to develop a strategy to integrate the data contained in the Department’s existing systems and to ensure that all necessary management information is recorded and accessible. Results in this context will also be reported.
Recommendation No. 5: That Public Works and Government Services Canada ensure that its Departmental Performance Report contains information on the progress (achievements versus planned targets) of the Action Plan initiatives designed to improve the Department’s planning, acquisition and management of office space. That the Department begin reporting this information in its Departmental Performance Report for the fiscal year ending 31 March 2004.
Response
PWGSC agrees to start reporting on the progress of the response initiatives in the Action Plan that address the recommendations of the Auditor General’s 2002 Report.
The Auditor General made recommendations to improve several aspects of the planning, acquisition and management of office space. They cover matters such as the need to have better planning and information systems to properly manage both the supply and demand of office space. The Auditor General also noted that PWGSC has to find a way to be able to consistently consider long-term options for office space acquisition. There was concern about the lack of good financial information about how much it costs to provide office accommodation.
PWGSC agreed with all the recommendations and prepared a comprehensive Action Plan to respond to the recommendations and to remedy the shortcomings.
This annual progress reporting to Parliament on the Action Plan will begin with the Departmental Performance Report for the fiscal year ending March 31, 2004.
Recommendation No. 6: That Public Works and Government Services Canada urge the Government of Canada to amend the Real Property Management Framework Policy, the Common Services Policy and other relevant policies to allow the department to charge accommodation and realty services directly to all departments and agencies, and that the Department report back on this issue to the Public Accounts Committee no later than 31 March 2004.
Response
PWGSC will examine charging office accommodation directly to departments and agencies and report to SCOPA by March 31, 2004. This examination will include consultations with stakeholder departments and agencies.
Without limiting the scope of the examination, PWGSC will study issues such as accountabilities, resource allocations, governance and sustainability. A thorough comparative analysis of the advantages and disadvantages between the current accountability regime and a direct charge regime will be conducted.
At present, office accommodation stands out as the one major area of spending in government without apparent accountability by user organizations. The current Space Envelope Regime and the Expansion Control Framework which includes a user pay component, were implemented with the expressed purpose of achieving greater accountability. There are good arguments in favour of direct charging. With the introduction of a market-type business arrangement, between the provider and user of office space, greater discipline in the supply and demand of office accommodation would be fostered. The user would be more accountable because the cost of rent would be more visible and the demand for space and amenities would be better rationed. At the same time, PWGSC would be revenue dependent and even as sole provider would stay better focused on the needs of each and every client and how it allocates operating and capital resources. There are challenges, of course, such as maintaining economies of scale for real property services and expertise and ensuring a whole-of-government portfolio approach.
Recommendation No. 7: That Public Works and Government Services Canada collect from its client departments and agencies all relevant financial and managerial information related to accommodation services and prepare, on a full accrual basis, a single financial report containing detailed information on the cost of accommodation and realty services across the federal government and that the Department table this report to Parliament on an annual basis beginning 1 April 2004.
Response
The Government will conduct consultations with appropriate stakeholder departments and agencies to define the information requirements in terms of relevance, usefulness and level of detail for a single, annual report. It will then develop a cost-effective process to ensure that the financial and management information on accommodation and realty services across the federal government is collected and disclosed fully to Parliament annually.
PWGSC is not the only custodian department and not all government accommodation costs are included in PWGSC’s centrally managed appropriations. Any department or agency can incur costs from their own appropriations for office
accommodation. Therefore, each department and agency will be asked to contribute to this initiative, whether it is a custodian department or not.
By March 31, 2004, the Government will report back to the Committee on the results of its consultations about the information requirements definition and on the development and implementation timetable of a process to satisfy Parliament’s information needs in this context.
The set of solutions presented here to respond to the Committee recommendations will contribute significantly to meeting departmental performance outcomes and to reporting fully to Parliament on office accommodation. While each recommendation is considered individually, they should be thought of as an integrated package which will build upon the Government’s approach to accommodation management.