PACP Committee Report

Government Response to the Second Report of the Standing Committee on Public Accounts

PASSPORT OFFICE — PASSPORT SERVICES

Introduction

Pursuant to the House of Commons Standing Order 109 as effective March 7, 2005, the Government of Canada is pleased to respond to the Report of the Standing Committee on Public Accounts entitled Passport Office — Passport Services. The Committee’s report reflects its consideration of Chapter 3 of the April 2005 Report of the Auditor General of Canada (Passport Office — Passport Services), and the Passport Canada Action Plan to address the Auditor General’s recommendations.

The Government of Canada thanks the Standing Committee on Public Accounts (the Committee) for its Report, and welcomes its interest in continuing efforts to strengthen the Canadian passport program. The Government of Canada agrees with the intent and principles that underlie the report and wishes to assure the Committee of both its firm commitment to the continuous improvement of the Canadian passport program and its willingness to continue to report on progress.

In the post 9-11 environment, Passport Canada has undergone rapid and significant transformation from a service based organization issuing travel documents to an enhanced security focused organization involved in identity confirmation and domestic and international safety measures. The passport itself has evolved, becoming a key signifier of identity and a basic requirement of participation in the global market place. Passports have become a primary asset for Canada and Canadians. They provide proof of identity and citizenship; evidence in support of entitlement to all manner of government services and benefits; facilitate international travel and commerce; support global cooperation in anti-terrorism efforts; and contribute to international and domestic security.

The Canadian passport program continues to experience challenges and pressures as a result of new expectations and the evolving role of passports. Demand for Canadian passports continues to rise, challenging Passport Canada’s operating capacity and infrastructure. The task of verifying identity in support of passport applications is increasingly complex. The cost of providing secure, world-class documents has risen in the wake of more stringent security requirements, while the fees charged for passport products and services have remained unchanged since December 2001. The Auditor General captured the essence of these difficulties, noting the difficulty in meeting both increasing security expectations and demands for service.

While Passport Canada has regularly reassessed and reconsidered its products and business practices over a number of years, the Report of the Auditor General provided a clear focus and additional impetus to evolve and improve. The audit produced findings in several important areas, including the need for more effective management of Passport Canada, our central role in security and identification, and the importance of service to the public. In response to the audit, Passport Canada prepared a comprehensive Action Plan to address the Auditor General’s findings, and to act as a tool to support continued improvement and ongoing evolution of the Canadian passport program.

The Committee itself noted that Passport Canada has responded well to the audit results and the Government of Canada assures the Committee that Passport Canada continues to move forward to implement the Action Plan. The updated Action Plan (attached) outlines all of Passport Canada’s progress in responding to the Auditor General’s concerns.

The highly complex and sensitive operating environment in which passports are issued requires that the Government work diligently with all partners to identify, agree on, and implement the most appropriate and efficient long-term solutions for the Canadian passport program. Our commitment to ensuring that Canadian passports remain internationally respected and that the Canadian passport program is managed in a manner that is sensitive to both the security and service needs of Canadians, has led to significant accomplishments over the last year including strengthening of security measures and continuous service improvements. The Government of Canada continues to support initiatives to improve the Canadian passport program, positioning it to better respond to transformational changes now and to come.

In reviewing the Report of the Committee, it was noted that recommendations touched on three main areas of concern: improved accountability for actions in response to the Auditor General, the Passport Canada Financial Framework and Funding Policy, and Passport Operations Overseas. The Government has chosen to respond to the Committee’s six recommendations by grouping information under these three main areas.

DETAILED RESPONSES TO THE RECOMMENDATIONS

Improved Accountability for Actions in Response to the Auditor General

Several of the Committee’s recommendations dealt with improving accountability under Passport Canada’s Action Plan in response to the Auditor General Report on Passport Services. General recommendations sought progress reports and required specific modifications to the Action Plan to improve clarity.

Recommendation 1

That Passport Canada report no later than 1 September 2006 to the Standing Committee on Public Accounts on the progress it has made in implementing actions outlined in its action plan drawn up in response to the recommendations and observations made by the Auditor General of Canada.

Recommendation 5

That Passport Canada strengthens its action plan by including the following clarifications:

• A target date for full implementation of an appropriate quality assurance system for the work done by examiners;
• The timeframe for the establishment of an operational system across jurisdictions to verify identity along with an indication where accountability will lie for its implementation;
• Target dates for the establishment of electronic links for security data sharing in place under new Memorandums of Understanding (MOUs); and
• A target date for implementation of an improved cost system along with an indication of when stakeholders will be consulted on the costs and benefits of consular fees and passport fees.

These elements must be incorporated into the action plan prior to 1 September 2006 and be referenced in the updated progress report to be given by Passport Canada at that time.

The updated version of the Action Plan is attached to this Response for information purposes only. It presents the status of action items with additional detail and time frames for completion of those items outstanding.

Specific improvements to the Action Plan requested by the Standing Committee have been made as follows:

• In January 2006, Passport Canada initiated a quality assurance activity that evaluates the quality of a Passport Officer’s identity authentication and entitlement decisions with respect to 9 critical elements linked to the identity page of the passport (Surname, Given Names, Date of Birth, City of Birth, Country of Birth, Sex, Citizenship and Surname variation). This quality assurance activity was developed in consultation with the Inspector General of Foreign Affairs and the sampling methodology was developed with the assistance of Statistics Canada. It will provide a mechanism for Passport Canada to better understand the quality of decisions being made during the entitlement process by reporting on the numbers of errors.
  
  Methodology for the passport entitlement assurance process will be completed by May 2007. The methodology will be based on standards set by International Organization for Standardization and will be revised as processes are improved. The system will be fully implemented by the end of fiscal year 2007-2008.
• Given its key interest in identity confirmation, Passport Canada continues to lead efforts to develop a multi-jurisdictional, multi-departmental system to support the exchange of data needed to confirm identity for a multiplicity of programs and services. In March of 2006, Passport Canada convened the Federal/Provincial/Territorial Identity Council, which included participation from multiple federal departments and provincial/territorial vital events agencies. While identity management is a complicated, cross-jurisdictional issue, efforts toward the standardization of vital events registration across Canada continue. A project to achieve this goal has been ongoing. The project, called the National Routing System (NRS) links to provincial and territorial bureaus of vital statistics to allow passport examiners to immediately verify birth data presented on passport applications, and check for death information to support the authentication of the passport applicant’s identity. The NRS project is complex, as it involves multiple stakeholders in both provincial/territorial and federal governments. While the NRS was the subject of a pilot project, it has yet received final policy or funding approval.
  
  Throughout 2006-2007, Passport Canada will continue efforts to develop a federal approach to federal/provincial/territorial vital events data sharing. As the lead organization, Passport Canada will develop a recommendation on the NRS project for the Government of Canada’s consideration.
• Passport Canada is making strides in improving data sharing with stakeholder agencies. A new Memorandum of Understanding (MOU) with the Royal Canadian Mounted Police has been concluded, to improve our ability to enforce SS. 9 and 10 of the Canadian Passport Order. Passport Canada will initiate discussions on new MOUs with the Canadian Security and Intelligence Service and Citizenship and Immigration Canada in 2006/2007. Work to conclude additional MOUs with partner agencies is underway, and the Action Plan has been updated to reflect progress and new target dates.
• Passport Canada developed an Activity Based Management costing model in December 2005. The model was tested and subsequently fully implemented in June 2006. Passport Canada continues to gain experience with this valuable tool, which will support stakeholder consultation on the costs and benefits of passport fees. Given that the Government of Canada is responding positively to the Committee recommendation to examine the funding policy for Passport Canada, as outlined below, stakeholder consultation on the costs and benefits of passport fees would be subject to the results of this review.
  
  The Government of Canada will ensure full consultation in accordance with the User Fees Act should any amendment to passport fees or the consular fee be actioned.

Recommendation 2

That Passport Canada include, in its performance report for the period ending March 31 2006, a detailed discussion of the problems raised by the Auditor General of Canada in her April 2005 report and the status of actions being taken in response. Where appropriate, a discussion of outcomes must also be provided, and this reporting must continue until all corrective measures have been implemented fully.

In addition to improving and updating the Action Plan, the Government of Canada will also improve overall performance reporting on the passport program, to include a detailed discussion of the problems raised by the Auditor General of Canada and the status of actions being taken in response. Where appropriate, a discussion of outcomes will also be provided. Reporting on progress will continue until all corrective measures have been implemented fully. This information will be included in the Department of Foreign Affairs and International Trade (DFAIT) Departmental Performance Report, beginning in fiscal year 2006-2007.

Financial Framework and Funding Policy for the Canadian passport program

The Standing Committee on Public Accounts offered two key recommendations concerning the financial framework and funding policy under which the Canadian passport program operates.

Recommendation 3

That Passport Canada design a financial contingency fund and identify a target date for the establishment of such a fund when it reports progress on the implementation of its action plan in September 2006.

A financial contingency fund has been created, within the broader context of a Passport Canada Budget Management Framework. The Budget Management Framework consists of active monitoring and regular review within an annual, established budgetary cycle. The contingency strategy identifies both potential cost containment measures and alternative sources of funding that could be employed in the event of cost overruns or to cope with emerging cost pressures. The contingency fund is based on a Corporate Reserve, which will be established by setting aside a minimum of 2.5% of forecasted revenues for the upcoming fiscal year. Access to the reserve will occur only when the contingency strategy is invoked as needed.

Recommendation 4

That Passport Canada review the adequacy of its current funding arrangement in light of rising costs associated with the need to develop, install, and operate new security technologies and that it use this review as a basis for discussions with Foreign Affairs Canada regarding potential changes to its funding policy. The review should examine the possibility of issuing passport renewals for 10-year periods.

Currently, the Canadian passport program is built on a funding framework established prior to the events of September 11th, 2001, and prior to the current trend of rapid technological advance. To protect Canada’s national security interests and international commitments to secure travel, the Government of Canada believes Passport Canada funding arrangements require review to assess whether they remain the most effective and appropriate means of financing the Canadian passport program.

As understood by the Committee, Passport Canada finances operations almost entirely from the revenues generated by fees charged for passports and other Canadian travel documents. It operates under a revolving fund, which authorizes Passport Canada to make payments out of the Consolidated Revenue Fund for working capital, capital acquisitions, and the temporary financing of operating deficits. Passport Canada is permitted to accumulate an annual surplus or draw down of the revolving fund of up to $4 million, subject to approval under the Annual Reference Level Update. Surpluses or deficits may occur from year to year, but are expected to balance out over a business cycle.

In 2005-2006, Passport Canada reported an operating deficit of $3.4 million. During that time, passport revenues rose 17.1% while operating costs rose by 19%. Passport Canada’s current fees no longer cover its costs.

For this reason, and in response to the Committee recommendation, a comprehensive study of Passport Canada funding issues will be undertaken. The study will examine and quantify operational pressures facing the passport program, including examining cost impacts of security initiatives, infrastructure demands and service delivery pressures. In addition, in response to comments made by the Auditor General to the Standing Committee, the study will consider the policy question of whether, in a new age of security concerns and technological advance, elements of the Canadian passport program benefit the common good, and as such might be more appropriately funded through mechanisms other than directly through passport applicant fees. Passport Canada anticipates results from this study by the fall of 2006, and the Government of Canada will carefully consider the results in the context of its priorities and the needs of Canadians.

The Government is always trying to improve the security and integrity of the Canadian passport in line with international best practices. Although most G8 nations issue passports on a 10-year validity period, a 5-year validity period is an international best practice in secure documents. The Technical Advisory Group on Machine Readable Travel Documents as well as the New Technology Working Group of the International Civil Aviation Organization endorse the use of 5-year validity periods to ensure better verification of identity and the faster introduction of new advances in secure documentation.

As part of its comprehensive funding study, the Government of Canada will examine financial and security implications of a 10-year validity passport. The study will assess whether or not such a passport would provide financial efficiencies or benefits to the Canadian passport program. A further review will have to consider the broader impact of a 10-year validity passport on other Government of Canada programs and services, such as border control programs or entitlement programs that accept passports as proof of identification, in recognition of the fact that Canadian passports do not exist in a vacuum, but are integrally linked to the identity continuum.

Passport Operations Overseas

Recommendation number 6 dealt with particular concerns in the issuance of Canadian passports to citizens abroad:

Recommendation 6

That Passport Canada ensures that local staff processing passport applications in Canadian embassies and consulates satisfy the same security standards that examiners must meet in Canada, and that they receive the same quality and frequency of training.

In Canadian missions and consulates overseas, passport services are often delivered by locally engaged staff of DFAIT. These employees must meet the level of screening required by the Government Security Policy (section 10.9) and are granted a Reliability Status. Employees of Passport Canada, on the other hand, are granted security clearances and cleared to a minimum Secret level.

The disparity is a difficult one to rectify. The vast majority of locally engaged staff at Canadian missions and consulates are not Canadian citizens. Part of the criteria for Secret level security clearance includes an assessment of loyalty to Canada, which is not easily assessed in the case of non-Canadians. Risks inherent in delivering programs to Canadians overseas apply to all programs, not just the Canadian passport program. Canadian missions apply a consistent and universal process in screening potential staff in accordance with the Government Security Policy.

Potential risk in delivery of passport services overseas has been reduced by the recent implementation of the Mission Passport Printing System (MPPS). Under MPPS, the production of regular Canadian passports was repatriated to domestic operations. Security of temporary passports for urgent travel needs was also improved through local print capacity for machine readable temporary passports containing a digitized photo image. These measures mean that there are no blank regular Canadian passport books stored in embassies and consulates, and no temporary passports being produced with a glued-in photo. Risk in the delivery of passport services overseas could be further reduced through the full repatriation of entitlement processes, reducing the involvement of locally engaged staff in consular offices to merely receiving applications and verifying that they are complete. Passport Canada and DFAIT are studying this option.

Overseas training is being revised and improved in response to the Auditor General’s report. In 2005-2006, Passport Canada focused on the development of a distance-learning module, which was deployed in June 2006 on a pilot basis. By January 2007, training modules will be fully available on the Consular Intranet and participants will be required to complete a final exam. Training modules on entitlement policy were completed in the spring of 2006. These improvements will result in improved comparability in training provided to both domestic and international staff responsible for passport transactions.