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1985 Report of the Auditor General of Canada

Introduction

9.1 This chapter reports the third phase of a continuing comprehensive audit of the Department of the Environment. The phased approach was adopted to give Parliament more opportunity to scrutinize each program or service of what is a complex department. In 1983 we reported on Parks Canada; in 1984 we reported on the Environmental Conservation Service and the Department's financial management and control system. This year we are reporting on the Atmospheric Environment Service (AES). Exhibit 9.1 displays in financial terms the significance of AES in relation to the Department's other major activities within the Environmental Services and Parks Canada Programs.

(Exhibit not available)

9.2 AES is the sole agency responsible for forecasting the weather over the majority of the Canadian land mass, adjacent sea areas and certain international air corridors. The pre-eminence of the federal government in weather forecasting dates back to 1871 when the Meteorological Service of Canada was established in the Department of Marine and Fisheries primarily to provide storm warnings for marine activities. Public weather forecasts were initiated in 1879. In 1936, aviation development led to the transfer of all weather services to the Meteorological Division of the Air Services Branch of the newly formed Department of Transportation. In 1971, the evolution of federal meteorological services continued when it became the Atmospheric Environment Service of the Department of the Environment.

9.3 Since 1971 AES has expanded the basic mission of public weather services to include new emphasis on the quality of the air, ice services, climatological services and the application of these to a broad range of environmental and socio-economic problems. These problems include acid rain, ozone depletion, climate change, environmental emergencies, interest in solar and wind energies and frontier energy exploration.

Audit Scope

9.5 The success of the Weather Services activity depends on the component (Exhibit 9.2) responsible for preparing the regional forecast. Other components such as data acquisition, communications, data processing and dissemination comprise more than 80 per cent of the Weather Services budget. However, their value would be significantly diminished if the assembly of the weather forecast was not well executed. We therefore decided to focus our review on this critical component. We also reviewed the dissemination of weather forecasts to the ultimate users. This too is a critical activity since the weather forecast has little value until it is received and understood by the potential user. We did not review the function in AES that provides weather information and forecasts for the Department of National Defence ($7.7 million or 3.4 per cent).

(Exhibit not available)

9.6 Activities in AES dealing with acid rain and climate change are socially and politically conspicuous. However, we did not review these activities because of their relative immateriality in budget terms compared to Weather Services. The Ice Services activity was not reviewed directly, but was subjected to scrutiny during our analysis of large financial transactions that included contracting for aircraft to observe ice conditions.

9.7 The audit was also extended into other departmental activities through the selection and review of major expenditures. This work encompassed a review of selected significant transactions, or groups of related transactions, with a view to assessing whether they were carried out in general accordance with relevant government authorities and with due regard for economy and efficiency. Because of this year's audit focus, the sample selection had a bias toward AES.

Understanding Weather Forecasting

Principles of Forecasting

9.9 Meteorologists can extrapolate the motions of weather patterns over short distances and for small time horizons, but their accuracy rapidly deteriorates as forecasts extend beyond one day. Over the last 20 years or so, meteorologists have applied a computerized technique to make theoretical predictions to assist with weather forecasting beyond 24 hours. This technique, known as numerical weather prediction (NWP), requires computers of immense power, knowledge of existing weather over a large part of the surface of the earth, and a specialized understanding of weather and its motions. The facility that produces Canadian numerical weather predictions is the Canadian Meteorological Centre (CMC), located in Montreal.

International Implications

The Task of Forecast Preparation

(Exhibit not available)

9.12 Regional weather forecasts are the most important products of AES. The process that yields these products consists of the five components displayed in Exhibit 9.2.

(Exhibit not available)

9.13 At any given time, there are nine teams of meteorologists, one in each of the regional forecast centres, forecasting the weather for the Canadian land mass, adjacent sea areas and all Canadian air spaces. Each team has one to four professional meteorologists led by a shift supervisor who has complete authority for issuing weather warnings and weather forecasts.

9.14 On any shift in a regional forecast centre, a typical forecast team comprises two senior meteorologists, one of whom is the shift supervisor, and two junior meteorologists, often including a trainee.

9.15 The senior meteorologists are generally responsible for performing the present weather analysis, producing the regional weather prognosis, writing public weather forecasts, and monitoring severe weather. Using the guidance provided by senior meteorologists, junior meteorologists handle aviation forecasts and other specific forecasts such as marine, roads and highways, and forestry.

9.16 Typically, a regional forecast team produces the following types of forecast products (Exhibit 9.4):

(Exhibit not available)

- public weather forecasts for several sub-regions;

- marine forecasts for several specific areas; and

- aviation forecasts for several sub-regions and airports.

9.18 The teams function under rigorously imposed time schedules, and they produce weather forecasts and information in a format and style clearly specified by AES management. They are required to meet the schedules and the outputs dictated by the process of forecast operations.

9.19 Producing the actual prognosis and forecast is not a mechanical task. Since weather observations are limited and meteorological science is still developing, forecasting involves a good deal of art as well as science, particularly for the short-term forecast. Beyond 24 hours, computer modelling plays a more prominent role. Considerable professional judgement has to be applied in reviewing, assessing and synthesizing all the available weather data into a forecast. In this process, judgement is exercised mainly by the shift supervisors and the senior meteorologists on their teams.

9.20 The successful management of weather forecast preparation, focusing on the shift supervisor, is vital to the quality of the product finally used by Canadians. In cases of severe and volatile weather situations, the quality of the forecast can affect the survival and livelihood of Canadians, as the accompanying photos depict. Our review of the management of the weather forecast preparation function was guided by the fact that the weather forecast is the most important product produced by AES.

The Major Weather Forecast Products

- Weather warnings, where the safety of life and the security of property are threatened. Threats due to severe thunderstorm activity and potential tornado activity are local and the warning usually applies to a given community or group of communities. Threats from large winter storms apply to more general areas and a broader segment of the population. Severe storms at sea affect the lives and livelihoods of people engaged in fishing, oil exploration, merchant shipping, and recreational boating.

- Weather forecasts for use by weather-dependent activities such as aviation, shipping, and private and commercial road transportation.

- Weather forecasts for use by weather-dependent industries such as forestry, agriculture, and construction.

- Weather forecasts for the general public so that Canadians can make decisions in relation to the weather - for instance, whether to cancel a golf game, plan a trip to the beach, or buy snow boots.

Dissemination of the Forecast

9.23 The weather offices use a variety of means to disseminate information, including:

- communication with newspapers;

- communication with radio and TV stations, often involving direct appearances;

- direct briefings;

- direct telephone conversations or the use of recorded messages; and

- the operation of radio transmission facilities ("weatheradio") which broadcast continually on a dedicated VHF frequency.

Observations and Recommendations

- response to the demand for weather services;

- professional personnel resources in forecasting;

- quality assurance relating to the forecast products before public release; and

- information for the management of the assembly of the regional forecast products and for the forecast production process.

9.26 We visited eight of the nine regional forecast centres and conducted approximately 70 formal interviews. Each interview averaged two and one-half hours (with a range of from two to eight). Much of this took place in the evening, early morning and weekends because of the nature of shift work. We observed a consistent response to our questionnaires.

9.27 In addition, we had extensive discussions with the U.S. National Weather Service and private sector meteorological consultants in both Canada and the U.S.

Responding to the Demand for Specialized Weather Services

9.29 Our audit criteria recognized that for AES to manage successfully its response to the total demand for its weather forecast services, it needed a policy framework that clearly set out:

- what the role of AES was under its broad mandate; that is, what should be done by AES, what should be done by other agencies of government and what should be left to the private sector;

- what services should be provided at public cost and what should be subject to some form of cost recovery or revenue generation; and

- who should disseminate weather forecast information and how, and what relationship should AES have with the media, particularly radio and TV.

9.30 AES does not yet have such a comprehensive policy framework. It is dealing with demand for specialized services in an ad hoc and inconsistent manner.

9.31 The weather forecasting role of AES. The broad legal mandate of AES comes from the Government Organization Act of 1979 which extends to the Minister of the Environment the duties, powers and functions relating to a number of areas, including "meteorology". This is expanded in the Estimates as follows:

To ensure that Canada has adequate information on the atmosphere, ice and sea state for the safety of life, the security of property, the greater efficiency of economic activities and for the maintenance and enhancement of environmental quality.

9.33 AES has not defined its role within this mandate, and there has been no effective policy to guide what meteorological activity it should or should not be engaged in.

9.34 In the absence of such definitions, there are inconsistencies in practices and in priorities:

- There is no uniform provision of services to municipalities throughout Canada. We noted that one forecast centre had a private telephone link to a major municipality to provide advice direct to snow removal crews. However, this service was not available to other municipalities. Another major municipality contracts for such services with the U.S. private sector. Several other municipalities receive winter weather information from a small Canadian meteorological consulting organization.

- AES has not treated the provision of specialized marine forecasts as a priority. This was noted for certain west coast fishing areas in a recent public enquiry. Although sea state information for marine interests would appear to be a priority according to the statement in the Estimates, AES is only now setting up to provide such information in a comprehensive way.

- Clarification of responsibilities is lacking in those areas where provincial agencies have been traditionally responsible for delivering services to certain sectors of the economy, such as forestry and agriculture. Several provincial agencies provide some special purpose meteorological services; others choose to depend on AES. Many joint activities are undertaken.

- Although AES has a policy that encourages the development of private sector meteorology, there is no evidence that it has been effectively implemented. AES has enjoyed a virtual monopoly in the practice of meteorology in Canada. The private practice of operational meteorology in Canada is restricted to very few Canadian practitioners.

9.36 AES should clearly set out its role, with reference to its mandate, in terms of what should be done by AES and what should be left to other agencies of government and the private sector.

Department's response: The Department agrees that this should be done more clearly and work is under way to this purpose.

9.37 Cost-recovery policies. Once it has been established what services are to be provided by AES, it is then important that there be a clear policy regarding who pays.

9.38 We found that AES has not adequately defined the core services it is obliged to provide at public cost and those special services provided at the request of specific clients who should be charged. Although AES has drafted a policy that recognizes this in principle, it is only now defining "core" and "special" services to assist in implementing further cost recovery.

9.39 Over and above the provision of basic weather forecast information, AES regional personnel function in a consultative capacity by providing information of an interpretive nature in response to special-purpose requests for a wide range of clients. Notwithstanding the specialized nature of these requests and the incremental costs involved, no charge is usually made for these services.

9.40 In the past, revenue generation has tended to centre on charges for clerical services (photocopies, prints, microfiche, etc.), involving relatively insignificant dollar values. In most weather offices we visited, even these small cash items were not collected on a consistent basis. In 1983-84, revenue derived from sources external to the federal government amounted to $1.7 million of which $0.5 million was derived from two large clients.

9.41 As a consequence of previous policies of very limited cost recovery, AES may have lost the opportunity to recover significant costs. However, since our audit work was completed, initiatives have been taken to define "core" services and to set in place revenue generation and cost-recovery activities.

9.42 AES should categorize those services to be provided at public cost and those that should be subjected to some form of cost recovery and define the extent thereof.

Department's response: Agreed. Under recent direction from Cabinet, AES has drafted a refinement of its policy defining those services to be provided to all Canadians from general tax revenue, those to be cost recovered, and those to be left for the private sector.

There is potentially some conflict between revenue generation (cost recovery) and encouragement of private sector meteorology. AES is drafting policies to clarify this issue. Recent government policy on revenue generation and cost recovery is assisting AES in this exercise. For the 1985-86 fiscal year and beyond, revenue generation targets in the Estimates are linked directly to the resources allocated to AES.

9.43 Dissemination of weather services. According to our audit criteria, AES should set out policy stating who should disseminate weather forecast information and how it should be disseminated.

9.44 Where there is a clearly identifiable client (such as in the case of aviation), we found that appropriate dissemination channels do exist. Communications are usually simple and dedicated, using private telephone lines, telex and direct briefings.

9.45 Where there are no clearly identifiable specific clients, such as in the case of the public weather forecast, mass media methods such as radio, television, pre-recorded telephone messages and "weatheradio" are relied on to assure dissemination. Most of this communication originates from a network of 59 weather service offices across Canada, staffed by technicians who are the contacts with the public and the media (particularly radio and TV).

9.46 Most Canadians obtain their weather information from radio and TV broadcasts; AES believes that this method works well. In fact, AES enjoys a special relationship with the media in that the media distribute the forecast at little or no cost to AES, and the media benefit from the listener and viewer attention attracted by the weather forecast. However, AES has little control over the manner in which the forecast is presented. Furthermore, the media are in a position to apply powerful pressure on AES relating to the level of service (for example, frequency of forecast revision) they perceive they need from AES.

9.47 When weather warnings are issued, there is a need to rely on the special ability of key emergency centres in the community (police, fire fighters) as well as the electronic media. Furthermore, there is a need to ensure that the right information is received and correctly interpreted by Canadians affected by the forecast. We found that in issuing weather warnings, AES has clear priority procedures as to how the weather services offices are to react. However, because the present AES/media relationship is not well defined, the impact of the weather warning may be considerably reduced through:

- inadequate procedures governing how the media would set out the broadcast priority and air time to be given; and

- incomplete guidance to the media as to what information should be communicated so that potentially affected Canadians can take action to protect their lives and property.

9.49 Compared to most federal government services, the services provided by AES are conspicuous and affect many aspects of social and economic life. However, AES does not have a comprehensive policy statement, for example, like the one adopted by Parks Canada to explain its policy to all Canadians in terms of role, range of services, relationships with other agencies and costs.

9.50 Once AES has established a comprehensive policy framework setting out its role, cost-recovery policies and relationships with the media, it should produce a comprehensive document that clearly spells out this policy framework in practical terms.

Department's response: This will be done.

Professional Forecasting Resources

9.52 We concluded that forecasting is used more as a training ground for higher paid staff positions (non-forecasting) than for grooming future senior forecasters and shift supervisors:

- We found no plan, process or system in place to identify, within the total AES complement of professional meteorologists, those most skilled for the forecasting role, or to retain them in this role. On the contrary, forecasting staff are presented with strong incentives to leave the forecasting role. Many non-forecasting positions carry more status, higher pay, better working conditions (no shift work) than the senior forecasting position, that of shift supervisor. We noted that AES is aware of a low morale problem among forecasters that is a result of their perceived low status in the AES organization.

- Many meteorologists leave forecasting at a relatively junior level for various staff and management functions, but there is practically no movement back to forecasting. Therefore, the forecasting function incurs the cost and burden of training some of its best resources but benefits only indirectly from the diversified experience these people gain from working in other parts of the organization, such as in research and other staff activities.

- For those meteorologists who stay in forecasting, possibly because of a preference for operational forecasting, the average tenure for senior meteorologists and shift supervisors is approximately 20 years. Once they attain a relatively senior forecasting position, they seldom move out. This, combined with the fact that staff do not move into forecasting from other areas, means that there are opportunities missed to introduce new ideas and technology to the important forecasting function.

- The shift supervisor, who has sole authority to issue weather forecasts and warnings, has relatively low organizational status (Exhibit 9.5).

9.53 As a consequence, AES has no assurance that its most skilled professional meteorologists are in the critical weather forecasting role. This could adversely affect the quality of weather forecasting generally.

9.54 AES should take appropriate measures to ensure that the weather forecasting function is able to retain those professional meteorologists who are most skilled in weather forecasting.

Department's response: AES agrees with the finding that it is difficult to retain such meteorologists in the forecasting role. This is because of their present inadequate compensation for shiftwork - pay and classification level. AES will continue to press central agencies to improve the benefits for shiftworking meteorologists. Concerning the observation about identifying skilled forecasters, the Service, through evaluations after the initial training program and regular evaluations thereafter, believes it does have a good system for identifying the most highly skilled forecasters.

Quality Assurance

9.56 During our audit, we observed that there were many factors that could affect the quality of the weather forecast. However, there are only certain factors that can be controlled during a shift. These include:

- thoroughness of the diagnosis of present weather conditions;

- reasonableness of the regional weather prognosis;

- consistency among all the weather forecast products;

- adherence to schedules and prescribed formats;

- monitoring changing weather conditions; and

- prompt amendments of forecasts when conditions warrant.

- ample provision for expert scrutiny of the weather forecast before release;

- opportunity for including independent opinion;

- encouragement of timely feedback from weather dissemination offices; and

- encouragement of vigilance.

9.59 As indicated by our detailed audit work, AES management depends almost totally on the shift supervisor to scrutinize all forecast products to assure their quality. However, the shift supervisor is constrained in applying this scrutiny by the following conditions:

- The shift supervisor usually has significant forecasting duties.

- The team often has trainees that impose additional loads on the supervisor.

- During severe weather, the shift supervisor is otherwise occupied with monitoring changing weather conditions and has even less time to scrutinize the products of junior forecasters when the need for scrutiny is greatest.

9.61 We also found that, in some teams, there is limited rotation of duties among the various forecasting desks - public, aviation and marine - and there is, therefore, limited opportunity for independent review of each team member's work by other team members.

9.62 Although there is no formal system or procedures in place, we noted that forecast centres receive timely feedback and comments from the weather service offices which are the front line for dissemination.

9.63 Generally, forecasts are produced on schedule and in the format prescribed by AES management. With the system that management has for monitoring forecast operations, late forecasts become very conspicuous. However, we noted that the pressure to meet schedules can be detrimental to forecast quality. We were advised that a late or missing forecast is unacceptable, but amendments to the forecast can be disseminated at any time.

9.64 As a consequence of the weaknesses discussed above, AES cannot be assured that it is producing forecasts of the quality that it is capable of producing.

9.65 AES should explicitly recognize the importance of quality assurance as an integral part of weather forecast preparation, through better organization and use of its existing personnel currently involved in forecast preparation.

Department's response: The accountability and responsibility of forecast centre managers and shift supervisors for quality assurance is clearly defined. This is written into their job descriptions. In addition, senior management rates these officers on the performance of their offices.

AES will take steps to reaffirm the responsibilities of forecast centre managers and shift supervisors for quality assurance, both during the shift and in post- evaluations of forecasts. Verification of several northern hemisphere countries' forecast weather maps, undertaken in a World Meteorological Organization study (reference WMO/CAS Data Study and Intercomparison Project - L. Bengtsson/Antti Lange, 1979-80) indicates that AES forecasts compare very favourably to the best forecasts issued.

Management Information

- client/user information on what the accuracy and the usefulness of the weather forecast products are; and

- diagnostic information on the assembly and production processes so as to be able to differentiate among the various factors contributing to the overall accuracy and usefulness of the forecasts.

- forecaster skills;

- workstation environment;

- numerical weather prediction guidance;

- weather observations (accuracy and completeness);

- radar installation;

- satellite imagery; and

- communications.

- They indicate to the regional forecast centre only when a forecast was wrong and not why a forecast was wrong and how things could be improved in the future.

- Most operational forecasters do not find information generated by the forecast verification scoring system useful in their day-to-day work.

- Where records exist for over 20 years or so and are considered to show a gradual improvement in the accuracy of regional weather forecasting, AES does not know whether to attribute this improvement to NWP guidance, weather satellite imagery, forecaster training or workstation support.

9.69 AES has no formal systems to determine whether forecasts are useful to users. Of the informal sources of management information that we reviewed, including minutes of meetings with specific clients, surveys of public forecast users, unsolicited correspondence received by AES, and technical notes prepared by forecasting staff, we found no significant information from the clients that would allow shift supervisors and chief meteorologists to know how well they are doing or how they could do better.

9.70 AES management has very limited diagnostic information relating to how various factors such as forecaster skill, workstation environment, NWP guidance, weather observations, satellite imagery or communications contribute to the accuracy of the weather forecasts.

9.71 AES should review its information systems to determine those that yield appropriate management information on the contribution made, by the following inputs, to forecast accuracy and utility:

- forecaster skills;

Other Observations

- Building leased for the installation of major computer equipment;

- Major computer acquisition; and

- Contract for the supply of aircraft for ice reconnaissance.

9.74 The Canadian Meteorological Centre is a component of AES, based in Montreal. It operates computer facilities that process all the atmospheric data of Canada and provides meteorological information across the country and internationally.

9.75 Since 1973, the Centre had been a tenant in a building leased from a privately owned company. The lease was due to expire in September 1980.

9.76 The Centre had for some time been contemplating a significant increase in its computing capability. In June 1981, the Treasury Board approved in principle a computer procurement plan that was estimated to cost $23 million for the period 1981-85 and was to include the acquisition of two large computers in the fall of 1981 and a much more powerful computer in the fall of 1983.

9.77 The Department of the Environment specified, in writing, AES's space requirements to Public Works in January 1980 eight months before the lease expired. The Department of Environment's request did not indicate any space modification requirements.

9.78 Prior to signing a five-year lease in December 1980 for October 1980 to September 1985, various alternatives were considered by Public Works and Environment, including recommendation for expropriation of the Centre's present site and potential relocation to the old Post Office building. Both were abandoned.

9.79 The commitment to a five-year lease as well as the installation of valuable computing equipment in the leased space severely limited the future flexibility of AES to pursue alternative accommodation.

9.80 Three months after the Department of Public Works signed the lease, the Department of the Environment informed it of its need for additional space, although it had known of its requirements much earlier. In September 1981, Public Works contracted with the landlord to make modifications to the building in the amount of $245,000, mostly to accommodate cooling and power supply equipment, even though Treasury Board approval was not received until April 1982, after the work had been completed. One of the conditions of Treasury Board's approval was that Public Works re-evaluate the long-term strategy of the Centre's space requirements.

9.81 In February 1983, Public Works made a cost comparison between the purchase of the property and the landlord's proposal to renew the lease from 1 October 1985 to 30 September 1994. It recommended, with Environment's support, that the property be purchased at its fair market value of between $2 million and $4 million. However, the landlord did not want to sell.

9.82 In June 1983, a new 20-year lease was entered into with pre-determined rents for the first 10 years, ranging from $525,000 per annum in the first year to $744,722 per annum in years 7-10. The lease contained an option to purchase in the years 1994-95 and 2001-02 at a price equal to 11.8 times the annual rent at that time. Another condition of the lease was that the landlord reserved the right to be the prime contractor for major improvements to the building or its systems.

9.83 In June 1981, Treasury Board approved in principle an amount of $1.7 million for capital expenditures relating to site preparation for the large computer ($1.2 million) and the acquisition of uninterruptible power supply units (UPS) ($0.5 million), to be spent during the period 1981 to 1985. In June 1983, Treasury Board gave formal approval for these expenditures that had by then increased to an amount of $3 million, representing $1.3 million for site preparation and $1.7 million for the purchase of the UPS units. Prior to approval by Treasury Board, the Department of the Environment had spent or committed most of the funds required for site preparation. Inadequately defined requirements, lack of appropriate approval, insufficient funding and protracted negotiation with the landlord over the fee to be received have caused delays in installing the UPS units. As a consequence, the computing facilities have been susceptible to power failures and the additional costs resulting from them.

9.84 Major computer acquisition. In 1981, AES prepared a needs analysis looking to update its numerical weather prediction facilities. This needs analysis was seeking approval in principle to enter into a leasing process that ultimately resulted in a commitment of $32 million for computer services over a 10-year period. The computer equipment was eventually housed in a leased building in Montreal that holds the Canadian Meteorological Centre. The building lease was dealt with previously; here we deal only with the need for computer services.

9.85 The needs analysis discussed many uses of the computer services in AES in the areas of climate and environmental research as well as other areas not related to AES. However, our audit was limited to reviewing the need for AES to update its numerical weather prediction facilities - the stated purpose of the needs analysis.

9.86 Based mainly on our audit work covering weather forecast preparation, we concluded that the needs analysis was not sufficiently complete and reliable for the purpose of approving an expenditure of this magnitude to generate numerical weather predictions.

9.87 Numerical weather prediction (NWP) is a product of the Canadian Meteorological Centre located in Montreal. CMC is devoted to producing weather analyses and prognoses by computer for the whole of Canada for up to five days into the future. These prognoses or numerical weather predictions require enormous computer power and access to global weather data. Numerical weather predictions are used by the regional forecast centres as guidance in producing local weather forecasts up to 36 hours and represent the only means of forecasting weather beyond 36 hours to five days.

9.88 The needs analysis stated that the prime objective of AES was to forecast the weather and that current services provided by AES contributed $1 billion a year to the Canadian economy. What the needs analysis failed to point out was that short-range (up to 24 hours) Canadian weather forecast products do not yet depend critically on numerical weather prediction. Where forecasts do depend on NWP, we found that at the time of the audit, U.S.-produced guidance was a major input into regional forecasts. However, AES did not know whether obtaining NWP from the U.S., adequate to Canadian needs, would cost less because cost estimates were not obtained.

9.89 The needs analysis points out that improvements in forecasts of atmospheric conditions over the last two decades can be attributed to improvement in numerical weather prediction. The paper failed to mention that there is some professional controversy about whether some significant improvements for forecasts up to 24 hours, which are the most important forecasts, could be attributed equally to U.S. weather satellite imagery.

9.90 In its discussion of maintaining the present level of service, the needs analysis states that the AES weather forecast system is now totally dependent on the analyses and prognoses provided by the Centre. We found that the regional forecast centres, on the whole, preferred the U.S. NWP model prior to the introduction of new models at the Canadian Meteorological Centre on the more powerful computer. Furthermore, because the factors affecting forecast quality are so unrelated, AES does not know the effect of any NWP model on the accuracy of the regional forecast.

9.91 The needs analysis states that with the new, updated NWP facilities, global models can be run for forecasts out to five days. However, it did not discuss the alternative of accessing the European global model available to Canada through membership in a European consortium.

9.92 Consistent with criteria relating to the audit of capital assets, AES should report on the marginal effect of the acquisition of the computer services. This report should indicate the improvement in the accuracy and the utility of regional weather forecasts and the economic value of longer-range forecasts, that can be attributed to the acquisition. This report should be completed before AES embarks on any further commitments relating to computer equipment for numerical weather prediction.

Department's response: The CRAY computer has been used extensively for research by AES on acid rain, climate change and numerical modelling of the atmosphere as well as by 25 university and other users who would otherwise have had to use foreign facilities. AES will report on the operational value of the CRAY computer before new facilities are requested, and will also report on the research value to AES and to the Canadian research community at large. Early operational results with the CRAY indicate substantial improvements in forecast weather maps for 36 and 48 hours.

In connection with the observation concerning the "needs analysis", it should be recognized that this was only one source of information for management and ministerial decisions on the Centre's computer.

9.93 Contract for the supply of aircraft for ice reconnaissance. Since 1972, under several successive contracts, a major regional airline has provided Environment Canada with the aircraft, crews and equipment necessary to conduct year-round ice surveillance in support of AES's Ice Reconnaissance Program. Payments made under the actual contract are based on a price-per-aircraft flying hour (minimum utilization is 2,200 hours per year) plus all other costs related to the flights (fuel and oil, travel, accommodation, and meals for the crew and government personnel).

9.94 Our audit focused on the system of control established to monitor the terms of the contract and payments made under the contract, covering the period 1 June 1982 to 31 March 1985.

9.95 Payments of $6.7 million for use of aircraft (65 per cent of the annual cost of $10.2 million of the contract) were made in accordance with the terms and conditions of the contract. Similarly, fuel costs of $2.8 million (28 per cent) were properly incurred, although there were some weaknesses in control over refuelling that were brought to the attention of management.

9.96 Under the terms of the contract, DOE is required to reimburse the carrier for travel and accommodation expenses that are reasonably and properly incurred by the crew with no allowance for overhead or profit. For the period January 1983 to September 1984, the carrier billed for crew airfares amounting to $130,000. Of these, $80,000 was for the crew travelling on the airline's regular scheduled flights.

9.97 In connection with these charges, we observed that:

- When travelling on the carrier's regularly scheduled flights, the carrier billed according to prevailing airline fee structures rather than on the basis of actual incremental costs incurred.

- When using other airlines, the amount billed by the carrier sometimes exceeded the actual billings from the other airlines.

- There was no control to ensure that all billings were applicable to ice reconnaissance activities.

9.99 In addition, AES staff improperly claimed a full daily meal allowance regardless of any meals provided during flight. Over a three-year period, these additional payments would have amounted to $50,000 to $175,000, depending on the number of meals provided per flight.

9.100 The above costs have been calculated by the audit team, since management had made no such calculation and was therefore unaware of the costs in this area.

9.101 The contract contains certain bonus and liquidated damages provisions that are applicable under specific conditions. It also stipulates that the bonus is to be waived during periods of modification, overhaul and major maintenance to the aircraft. Although major maintenance required that planes be taken out of service at least twice a year, the bonus payments were made on an uninterrupted basis over a three-year period. The minimum amount of overpayments was approximately $96,000.

9.102 We concluded that the contract has generally been well managed except for reimbursement of travel and meal expenses and the payment of bonuses, which have been poorly managed, resulting in overpayments and questionable practices.

9.103 The Department has taken measures to recover the overpayments from the carrier and to ensure that, in future, payments will only be made in accordance with the terms of the contract. It has also ceased paying the daily meal allowance to employees.