This Web page has been archived on the Web.

1994 Report of the Auditor General of Canada

1994 Report

Appendix E—Taking Stock of Special Operating Agencies—A Summary of Conclusions of Joint Public and Private Sector Steering Committee

This report, and the study on which it is based, was commissioned by the Auditor General of Canada and the Secretary of the Treasury Board through an exchange of letters in early 1993.

The study was directed by a Steering Group of public and private sector members. Under their direction, and with the co-operation of SOA heads and departmental officials, a joint project team assembled, organized and analyzed the data set out in Parts 1 and 2 of the report. With input from the joint project team, members of the Steering Group developed the main conclusions and recommendations set out in Part 3 of the report and reflected in the Summary of Conclusions.

The resulting report reflects a consensus view on the main conclusions to be drawn from the experience to date, on the way forward for the SOA and on the measures needed to move forward. These views are provided to the Secretary of Treasury Board and the Auditor General for their use in informing ministers and Parliament respectively.

Mr. L.D. Desautels, FCA

Auditor General of Canada

and

Mr. R. Giroux

Secretary of the Treasury Board and Comptroller General of Canada

Gentlemen,

TAKING STOCK OF SPECIAL OPERATING AGENCIES:

SUMMARY OF CONCLUSIONS

You asked that we take stock of the Special Operating Agencies initiative. We are pleased to summarize our main conclusions and recommendations.

Introduction

Economic and political forces are causing the Government of Canada to change the way it works. Continuing deficits and mounting debt pose hard choices about the services the government should provide, about how to manage the various organizational structures that have been created or inherited, and about how to improve service and do more with less. The Special Operating Agency initiative is a part of this broad agenda for reform.

SOAs may be granted certain freedoms from government-wide rules in return for undertaking to achieve specified results. They are located on a continuum that stretches from traditional government departments through Crown corporations to privatized entities. The essential elements of SOAs -- increased authority, development of strategic and business plans, responsibility for results, and disclosure of performance -- have been recognized for many years in Canadian administrative reform. Although difficult to implement, they represent good management practices that are as applicable to the public service at large as to the organizations selected to be SOAs.

On 15 December 1989, the President of the Treasury Board announced that the government was introducing special operating agencies as pilot projects. By the end of 1993, fifteen SOAs had been approved, employing about three percent of public servants. Their activities vary: five provide services primarily to other government departments; two provide specialist services to the departments in which they are situated; and eight serve the public on a limited basis. Also, their manner of operation differs: some are optional -- they provide goods or services to the government in competition with other suppliers -- while others are mandatory; some depend on parliamentary appropriations while others are self-sustaining; and two have separate employer status, although most do not.

The government has learned a great deal from operating these SOAs and from this stocktaking study. A fundamental issue running through the experience that must be addressed is the relationship between SOAs and ministers of the Crown. For practical purposes, the Steering Group has assumed that SOAs will continue to operate within the framework of traditional ministerial accountability. However, the additional freedoms granted SOAs will create tensions in the system. Support by ministers will be essential if SOAs are to work.

Conclusions

The Steering Group has concluded that, for certain government activities, SOAs should be able to provide better service at lower cost, and should therefore be continued if Treasury Board ministers, ministers and deputy ministers of departments in which SOAs are situated, and agency heads:
  • provide clearer focus and direction for the SOA initiative as a whole;
  • build greater acceptance and support for the SOA concept among stakeholders -- public servants, unions, suppliers and competitors, the general public and parliamentarians;
  • improve the criteria for determining which government activities should be converted into SOAs, and which SOAs, if any, should be moved into an alternative structure;
  • set clearer, more concrete performance goals and improvement priorities for SOAs and include them in agency charters with appropriate permanence, establish more clearly the respective responsibilities of SOA heads and deputy ministers under the umbrella of ministers and match these responsibilities with appropriate authority and discretion, and monitor agency performance with respect to the goals and priorities established;
  • establish a framework for public reporting using existing departmental accountability reports (Part IIIs of the Estimates) with appropriate safeguards to deal with confidentiality;
  • develop and adhere to clear guidelines for SOAs that compete to supply government departments and that compete for markets in the private sector; and
  • provide for subsequent stocktaking of the SOA initiative to assess progress and make appropriate adjustments as may be required.

Government activities for which SOAs would seem best suited are those whose objectives and outputs can be reasonably measured, that do not require significant ongoing ministerial involvement and, although this is quite subjective, that operate in a relatively stable policy framework. While not a prerequisite, another useful criterion might be revenue dependence -- activities that are self-financing on the basis of their outputs.

A Final Word from the Steering Group

Hard data to support our conclusions have been difficult to come by and somewhat contradictory (see detailed report), partly because of unclear objectives for individual SOAs, partly because SOAs have not been required to develop the data, and partly because of their limited life span. We recognize that our conclusions represent judgments based on interpretation of available facts, supported by reasoning derived from the experience of other jurisdictions and the private sector.

We hope that the results of our work will be useful to Treasury Board ministers and their advisors in deciding the future of special operating agencies.

Respectfully submitted,