PACP Committee Report

Attached, please find the Government Response to the Eighth Report of the Standing Committee on Public Accounts “Chapter 7, Acquisition of Leased Office Space of the May 2006 Report of the Auditor General of Canada” tabled in the House of Commons on October 3, 2006.

Public Works and Government Services Canada has worked with the Treasury Board Secretariat and consulted government departments and agencies to develop this response. The Government Response demonstrates that the Government has acted, plans to act or is seriously considering action on all three recommendations.

I would like to take this opportunity to thank you and the members of the Standing Committee for your valuable efforts in pursuing these issues. I look forward to working with you and the members of the Standing Committee in further improving the management of government office space.

Yours sincerely,

The Government of Canada is pleased to table its response to the Eighth Report of the Standing Committee on Public Accounts on “Chapter 7, Acquisition of Leased Office Space of the May 2006 Report of the Auditor General of Canada.”

The Standing Committee on Public Accounts considered Chapter 7 of the Auditor General’s May 2006 Status Report and heard testimony on the chapter from senior officials of the Office of the Auditor General, the Treasury Board Secretariat (TBS) and Public Works and Government Services Canada (PWGSC). The Eighth Report of the Standing Committee reflects its consideration of that chapter.

The Government of Canada thanks the Standing Committee on Public Accounts for its Eighth Report and welcomes its continuing interest in strengthening real property management in the federal government. This document provides the Government Response to each of the three recommendations from the Eighth Report. The Government Response demonstrates that the Government has acted, or plans to act on the recommendations.

PWGSC is the custodian of certain federal offices and manages the supply and demand of office accommodation for the federal government including acquisition, operation and maintenance, building repairs and disposal. PWGSC supports client departments and agencies in delivering programs and services to Canadians by offering safe, healthy, productive and environmentally sound workplaces for the Government of Canada.

The new TB Policy on the Management of Real Property dictates requirements for the management of real property. Management includes both custodian and tenant responsibilities. The policy’s reporting standard links property to financial data.

Generally, federal real property is managed according to one of three regimes:

1) Program departments/agencies hold real property only in support of federal program delivery. They are subject to the Federal Real Property and Federal Immovables Act and to the TB Policy on the Management of Real Property, related directives and standards. Within the above regime there are two types of custodianship:

• PWGSC is responsible for the mandatory real property program for the provision office and general-purpose accommodation to other government departments.
• Program departments and agencies must obtain their office and general-purpose accommodation through PWGSC. Program departments and agencies are the custodian of real property only when it is special purpose space required for their specific program(s);

2) Crown corporations and autonomous organizations (e.g. Canada Revenue Agency) hold federal real property according to the terms and conditions set out in their respective enabling legislation and the Financial Administration Act. They are generally not subject to TB real property policies; and,

3) Canada Lands are basically “fiduciary” lands held by the Government of Canada for current and future generations. They are defined by the Canada Lands Surveys Act and are administered according to the specific Act, which designates the land (e.g., Canada National Parks Act, Indian Act, etc.). Canada Lands are not subject to TB real property policies.

Ministers of the above organizations are custodians of the real property required to deliver their programs, i.e., they have been assigned the rights of use and disposal and are accountable for all decisions taken.

Considering the scope of past AG's and SCOPA's reports, the Government has chosen to focus its response on office space within PWGSC’s legislative mandate.

In regard to recommendation 1, the Government will undertake to review the current “quasi user-pay regime” it uses in association with charging for accommodation and realty services. The Government will review, in detail, issues associated with charging for accommodation and realty services. The Government plans to report on Recommendation 2 vis-à-vis that portion of property holdings for which it is responsible. PWGSC cannot within the existing Government reporting context provide oversight of the real property holdings of other departments. The Government is in compliance with Recommendation 3. As recommended, PWGSC developed a detailed action plan addressing the four recommendations of the Auditor General addressed to the Department and has submitted that plan to the Standing Committee that was tabled with the SCOPA on October 31st, 2006 and updated regularly.

In its Report, the Standing Committee shared its belief that a fundamental change in the relationship between PWGSC and its office accommodation clients was required before meaningful improvement and proper accountability could be achieved.

These recommendations and the Government’s responses follow.

Recommendation 1

Sole Proprietor and Leaseholder; Charging

“That Public Works and Government Services Canada be designated as the sole proprietor and lease-holder on behalf of the Government of Canada, of all office accommodation used by the departments, agencies, and other entities of the Government of Canada, thus giving the Department the authority to charge accommodation and realty services to its clients directly and to enforce Government accommodation standards.”

Response

Designation as Sole Proprietor and Leaseholder

The Government notes that Section 8.12 of the Policy on Real Property Management issued in November 2006 designates PWGSC as the custodian of general-purpose office accommodation; PWGSC provides this service on an obligatory basis to departments and sets the standards for client departments.

PWGSC shares responsibility for office accommodation with TB, TBS and other departments, agencies and Crown corporations. The Government Response reflects these roles and responsibilities.

PWGSC currently controls the majority of the government’s office space under the Office Accommodation Program, which excludes property managed by Crown Corporations and under the Canada Lands Survey Act. It would probably not be appropriate for PWGSC to manage the property of other federal entities. This would require machinery of government changes.

PWGSC continues to support use of the space envelope model, known as the “quasi user-pay regime”, as an alternative to user pay as indicated in its Departmental Performance Report of 2004-2005. This standards-driven space allocation regime already features an element of user pay. This type of regime, along with related components of the real property management and funding framework, provides the same consumer discipline benefits associated with user pay - without the administrative burden. The space envelope approach complements the whole of Government direction of real property renewal; a user pay regime does not support this focus. However, the government will undertake to review this regime to further improve its effectiveness.

PWGSC has the authority to enforce Government accommodation standards in situations where it serves as the real property custodian. It does so using the space allocation regime where clients pay for space in excess of that provided under the standards.

Recommendation 2

Cost Reports on Accommodation and Realty Services

The Standing Committee recommended: “That Public Works and Government Services Canada 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 table this report in Parliament on an annual basis. The first of these reports should contain data from fiscal year 2007 – 08. Public Works and Government Services Canada must, by 31 December 2006, provide the Committee with an action plan for the implementation of this financial reporting regime. The Department must report to the Committee in April and September of 2007 on its progress in implementing this plan.”

Government Response to Recommendation 2

PWGSC will undertake the reporting envisaged vis-à-vis that portion of property holdings for which it is responsible. It would not be appropriate for the department to lead work to enhance reporting on government-wide holdings. PWGSC is of the view that the development and implementation of the suggested government-wide reporting regime would exceed its mandate and interfere in the area of responsibilities of other federal entities. PWGSC is assigned administration of only general-purpose facilities and certain other facilities only, such as the Parliament buildings and engineering assets, which represent only approximately a quarter of the government's overall real property holdings. Furthermore, the department does not provide oversight of the real property holdings of other departments.

The new TB Policy on the Management of Real Property dictates requirements for the management of real property. Management includes both custodian and tenant responsibilities. This policy’s reporting standard links property to financial data.

With respect to SCOPA’s recommendations, there are some key requirements to consider in the context of this review. Unless otherwise stated, the policy applies to Deputy Heads, which include both custodians and tenant departments. These three sections target all Deputy Heads who are responsible to ensure that:

• An appropriate Real Property Management Framework is in place, this includes both custodians and tenants;
• Where there is custodian/tenant relationship (such as the PWGSC's Office Accommodation Program), there is a requirement for a formal agreement which includes mutual understanding of the respective accountabilities, operational requirements, policy responsibilities and financial commitments to optimize real property outcomes; and,
• Management of information enables integration of real property and financial information.

These strengthened requirements provide policy direction for clear and documented understanding of the respective roles and responsibilities of custodians and tenants, improved planning and clarity of the financial commitments of both custodians and tenants for accommodation, so that there is a complete picture of the cost to government for the PWGSC Office Accommodation Program.

It should also be noted that the Management Accountability Framework process flagged the requirement for tenants to ensure they have management frameworks in place and other tools to ensure due diligence on their part. TBS will evaluate tenant responsibilities using this instrument.

A cost reporting action plan for all office accommodation under the purview of PWGSC will be prepared and presented to the committee by April 2007. The detailed of the plan will be further defined after TBS consultations with Central agencies, other departments and SCOPA.

PWGSC will take the lead in providing cost reporting plan updates requested by the Standing Committee for April and September 2007.

Recommendation 3

Management Action Plan

“That Public Works and Government Services Canada develop a detailed action plan that addresses each of the Auditor General’s recommendations as contained in Chapter 7 of her May 2006 Status Report. This plan must make reference to the actions that will be taken, include specific timelines and performance indicators, and be submitted to the Committee no later than 31 October 2006.”

Government Response to Recommendation 3

Public Works and Government Services Canada developed a detailed action plan that addresses each of the Auditor General’s recommendations from Chapter 7 of her May 2006 Report addressed to it. Further, as recommended by the Committee, PWGSC submitted the action plan to the Committee at the end of October 2006. This plan referred to the actions that will be taken to address the Auditor General’s recommendations and includes specific timelines and performance indicators

More specifically, PWGSC will:

• With TBS, enforce standards for space and fit-up of accommodation;
• With TBS, ensure that funding methods support selection of the most cost efficient option that meets the long-term accommodation requirements;
• Improve the availability, accessibility and reliability of information to support decision making for real property investments; and
• Develop guidance and implement continuous risk management as part of the process for acquiring office accommodation, and provide staff with the necessary training.