Audit of the Industrial and Regional Benefits Management Control Framework

3.2.3 Citizen-Focused Service

Prior to the announcement of the changes to IRB Policy by the Minister of Industry in September 2009, the IRB Directorate consulted with key users and stakeholders of the IRB Policy.

Designated Industry Canada regional staff are involved in bi-weekly conference calls with the IRB Directorate. The Directorate solicited staff input and subsequently held an all-staff meeting where the draft Business Plan was presented.

The IRB Directorate has recently instituted a working group at both the Director General and Assistant Deputy Minister level with DND and PWGSC to discuss contracting and IRB issues.

The Industry Canada website contains a section regarding the IRB Policy and the IRB Directorate. The website includes information about the changes to the IRB Policy, an IRB information kit for small and medium-sized enterprises, and a listing of current procurements and their IRB managers.

Additionally, the draft IRB Business Plan has identified the following key outputs related to citizen-focused service for 2010–11:

• finalizing the IRB Communications Plan;
• developing a strategic outreach plan;
• producing a draft IRB annual report for internal use (expected approval in Fall 2010);
• developing content and messaging for an enhanced IRB website to support industry enquiries; and
• hiring a resource to redevelop the IRB website and communications strategy.

3.2.4 Public Service Values

The IRB Directorate adheres to the Values and Ethics Code for the Public Service. The code contains a Statement of Public Service Values, measures to prevent Conflict of Interest situations, post -employment rules of conduct, and methods of compliance and avenues of resolution for issues arising from the code.

This code is communicated to employees via the IC intranet. The Public Service Disclosure Protection Act provides a formal channel of communication for people to report suspected improprieties.

New IRB Directorate employees are alerted to the importance of the Values and Ethics Code and its requirements via their letter of offer. However, there is currently no requirement for IRB employees to periodically acknowledge compliance with the code. Such a procedure is considered a best practice to reinforce an organization's commitment to values and ethics.

3.2.5 Results and Performance

"Industrial and Regional Benefits" was added as a Sub-Activity to Industry Canada's Program Activity Architecture in 2009–10. As a result, the IRB Directorate's performance measures are included in IC's Report on Plans and Priorities (RPP), and the results achieved are documented against planned performance in the Departmental Performance Report (DPR).

The Directorate is working to modify the wording of the indicators specified in the 2009–10 RPP and DPR to more accurately reflect the performance of the IRB Policy.

The Directorate has been reporting to the Deputy Minister on a bi-weekly basis on the status of key current and upcoming IRB projects. Ad hoc reports are also prepared in response to requests from various levels of management.

In 2010–11, the IRB Directorate launched:

• a bi-monthly report to the Minister containing metrics regarding the IRB portfolio; and
• an internal annual report containing an analysis of current and future IRB opportunities and metrics regarding the IRB portfolio.

The IRB Directorate has initiated a project to create a Data Management System (DMS) to replace the current IRB database. The DMS is intended to improve the capture, reporting and verification of IRB information. In preparation for migration of data to the new database, the Directorate has begun a process to validate the project information contained within the current database. Our audit did not involve a detailed examination/assessment of the accuracy of project file information.

The draft Business Plan indicates that an evaluation of the IRB Policy will be conducted during the planning period.

Essentially, the IRB Directorate has taken several positive steps towards implementing a more robust performance reporting regime.

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3.2.6 Learning, Innovation and Change Management

The key document guiding the changes being implemented by the IRB Directorate is the three-year draft Business Plan, which includes a vision statement developed during a two-day planning session, as well as guiding principles and mandate.

The plan identifies seven strategic areas critical to enabling the Directorate to continue to meet its mandate, achieve its vision and address the risks and challenges facing it in the future. Change initiatives are identified by fiscal year. The IRB Directorate indicates that once the Business Plan is approved by senior management, these change initiatives will be mapped by fiscal quarter.

A key risk identified in the draft Business Plan is the implementation of new standardized processes. Mitigation strategies are indicated. According to IRB management, comments from staff have been incorporated into the draft plan, which was presented at an all staff meeting.

As noted above, there is a requirement for on-the-job training/learning for new IRB employees. The Directorate put in place a new organization structure partly to allow for such training of junior IRB managers, and for succession planning.

The Directorate has ensured that senior management communicates clearly on staff expectations; has established mentoring relationships between senior and junior IRB managers via the new organizational structure; and is developing standardized processes via their process mapping exercise.

3.2.7 Accountability

The IRB Directorate undertook a verification exercise (completed in January 2010) to determine areas of concern within IRB operations. One of the findings was that roles and responsibilities of IRB management were not clearly defined. The exercise also found that IRB did not have a clear process or definition of roles when a "red flag" concerning a transaction occurs.

The results of the verification project, coupled with the changes to the IRB Policy announced in September 2009, led the Directorate to undertake significant changes to its management control framework. Changes planned for 2010–11 include:

• Updated work descriptions for IRB Directorate positions;
• A process to review performance on a quarterly basis for those IRB staff that report directly to the Director;
• A new team-based organizational structure; and
• Standardization of operational and business processes and a project management framework to ensure consistency among IRB teams.

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3.2.8 Governance and Strategic Direction

In reviewing the governance structure, we expected that the IRB Directorate would have clearly defined and communicated strategic directions and strategic objectives, aligned with its mandate, and operational plans and objectives aimed at achieving IRB Policy objectives.

As part of the changes it made to its management control framework, the IRB Directorate has developed a three-year draft Business Plan (2010–2013), developed in July 2010, that:

• Communicates the vision, mandate and mission of the Directorate;
• Aligns strategic directions and strategic objectives with its mandate and related risks;
• Includes draft operational outputs and objectives aimed at achieving its strategic objectives; and
• Includes an analysis of external and internal risks that may affect the objectives, policies and/or control environment of the Directorate as well as proposed responses and mitigating strategies.

At the time of our audit, the IRB Business Plan had not received approval from IC senior management. Furthermore, the plan did not identify a specific process/mechanism to monitor its implementation or an estimate of resources that may be required for implementation and related accountability.

The IRB Directorate is included in both the Industry Sector (IS) Business Plan, and the IS Integrated Human Resources Plan (2010–2013). Both plans have been shared with all IS staff via the intranet.

Overall, we found that strategic directions and operational plans, operational outputs and objectives to support the achievement of IRB objectives, and linkages between high-level IRB business priorities and operational work objectives were identified in the draft Business Plan. However, we did not find an explicit process to monitor the implementation of the Business Plan to ensure success.

Recommendation 1.0: The Director, IRB Directorate should ensure the approval of the draft Business Plan and institute a formal process to monitor implementation of the Business Plan initiatives and the IRB MCF.

Core management controls include an expectation that an oversight body/mechanism/function, composed of sufficiently skilled members, would exist to monitor the effectiveness of the application of IRB Policy, receiving timely and accurate information and effectively exercising its oversight function.

The Procurement Review Policy, whose objective is to enhance the use of procurement in support of industrial and regional development, states that Industry Canada is responsible for the coordination and management of the Canadian Annual Procurement Strategy (CAPS), the process by which the government determines its overall strategy for the use of procurement in support of industrial and regional development. The IRB Directorate indicates that the CAPS process has not been used for the past decade.

Several government committees exist to review individual or aggregated procurements. These include:

• The Procurement Review Committee (PRC) (one committee for each procurement), chaired by the contracting authority, which conducts a review of the socio-economic aspects of individual or aggregated procurements, recommends to the operating and contracting departments appropriate procurement strategies, and where industrial and regional benefits or other national objectives form part of the bid evaluation, receives briefings on the results of bid evaluations;
• The Senior Procurement Advisory Committee (one committee for each procurement), which carries out the procurement review functions of the PRC for projects over $100 million as set out in the Treasury Board policy on Major Crown Projects;
• The Major Crown Projects — Interdepartmental Overview Committee, which is an ad hoc committee that provides a forum to discuss issues and concerns related to CFDS procurements. The committee includes representatives of various government departments including Industry Canada; and
• Working groups at each of the Director General and Assistant Deputy Minister levels, instituted recently by the IRB Directorate with DND and PWGSC to discuss contracting and IRB issues. Both of these groups have held initial meetings and are establishing terms of reference.

Although the above-mentioned committees are monitoring aspects of the procurement process, no single oversight body or mechanism is tasked with monitoring the effectiveness of the application of the IRB Policy.

The profile of the IRB Policy has increased significantly in recent years because of CFDS and increases in defence-related procurement. In addition, recent organizational and verification reviews in IRB have identified a number of areas for improvement. An oversight mechanism would significantly enhance monitoring of the application of the IRB Policy and related accountability obligations and provide strategic advice.

Recommendation 2.0:  The Director General, ADMB should explicitly identify an oversight mechanism to monitor the effectiveness of the application of the IRB Policy.