November 2004

Audit and Evaluation Branch

The Audit and Evaluation Branch Project Team, including Jeremy Hill of the HDP Group, under the direction of Satianan Debidin, would like to thank all those who contributed to this project and particularly the interviewees who provided insights and comments crucial to this review.

Executive Summary

In 1999 Environment Canada (EC) made a submission to the Treasury Board Secretariat (TBS) requesting authority to create and conduct the business of the Meteorological Service of Canada (MSC) as a Departmental Service Organization (DSO).  The submission described the DSO’s vision, mandate, the structure and accountability, planning and reporting. Specific financial flexibilities and performance indicators identified in the Business Plan were also proposed.

TBS approved EC's request (TB decision 827371) designating the MSC as a DSO within EC on a provisional basis and set a 5-year transitional period (FY 1999/00 to 2003/2004).  The decision listed the specific financial flexibilities given to EC and imposed certain conditions, including a review of the DSO transition.

A primary focus of this review was therefore to evaluate the use of these financial flexibilities within the first few transition years.  The four financial flexibilities were rarely used although their use was considered by senior management, other “more appropriate” tools were employed to achieve the desired results.  The reasons why the use of the flexibilities was lower than what could have been expected were identified by the participants in the evaluation.  They noted that:

1. The financial flexibilities were provided to support a transition to a DSO which largely did not occur during the proposed time frame;
2. The authority to employ the financial flexibilities rested with the Assistant Deputy Minister (ADM) MSC except for a competitive service contract awarded through the electronic bidding process with an amount not exceeding $4.0 million and an amount not exceeding $2.0 million payable under a service contract awarded through the electronic bidding process that could also be approved by senior officers at the Director General level and above. 
3. The flexibilities were designed to be used to ease financial planning issues related to the creation of the DSO, in respect of which financial resources were not provided.

We found that when the flexibilities were employed, they were employed consistent with the conditions imposed by the terms of the Treasury Board decision, however, they were only employed on 4 occasions during the past 4 years.

A secondary focus of the review was to comment on the appropriateness of certain defined transition period performance indicators.  These were to be used to gauge the degree to which the transition to a DSO structure was proceeding appropriately.  Participants noted that in their view the proposed transition period performance indicators (or some very similar to those proposed) would have been useful, however, because the transition did not take place in the manner proposed, they were of limited practical value.  Participants did note that as resources have now been received to assist a similar but not identical transition to support restructuring MSC service delivery that similar transition period performance indicators should be considered.