1989 Report of the Auditor General of Canada

Main Points

Emergency Preparedness Canada

27.1 We found that interdepartmental co-ordination had improved since our 1987 audit. Emergency Preparedness Canada (EPC) is providing general direction to departments, but not adequate guidance about their roles or levels of response in the event of a specific emergency (paragraphs 27.18 and 27.19).

27.2 EPC is using risk analysis in its planning for earthquakes in British Columbia. EPC is considering the use of risk analysis as a complement to existing approaches in planning for national emergencies, but does not yet routinely utilize this technique (27.23 and 27.24).

27.3 Goals and deadlines for national emergency planning by departments remain inadequately specified. For example, in August 1988 EPC requested departmental planners to provide achievable dates for completion of milestones. EPC could not provide us with any specific responses to this request (27.27 to 27.29).

27.4 We found planning for National Emergency Agencies (NEA) to be inadequate. Recently passed legislation assigns various powers to the Governor in Council to enact Orders and Regulations for emergency planning and for designated national emergencies. We are concerned that there is no master plan with milestones for enactment of Orders and Regulations and that there may be gaps or overlaps with resultant confusion between the individual Orders and Regulations. Several departments have also expressed concern along these lines (27.31 and 27.32).

Courier Services

27.5 Total expenditures on courier services could not be identified accurately (27.40).

27.6 Ad hoc contracting procedures in some departments do not ensure that courier services are acquired with prudence and probity (27.42 and 27.43).

27.7 The Department of Supply and Services (DSS) obtains substantial discounts on published tariff rates for courier services. Further reductions in rates could be obtained from certain firms by consolidating locations within departments for picking up and delivering items (27.45 and 27.46).

27.8 Departments have to call DSS or individual courier firms to find out the rates charged under existing agreements. If such information were readily available, departments could easily compare rates and select the least expensive firm (27.47).

27.9 Departments which negotiated directly with courier firms for specified services obtained better prices than those available under DSS Agreed Rate arrangements (27.48).

27.10 In the departments where we audited use of courier services, controls over the use of such services ranged from very good to non-existent (27.49 and 27.50).

27.11 Alternatives to courier services could be used more extensively (27.51).

Introduction

27.12 The Special Audits group examines specific programs and activities within a department or across several departments. These topics would normally not be examined by means of comprehensive audits or government-wide audits. This approach allows the results of Special Audits to be reported quickly to Parliament and, at the same time, increases the efficiency and effectiveness of the Office.

27.13 The topics included in this year's chapter are Emergency Preparedness Canada and Courier Services.

Emergency Preparedness Canada

Background

The state of affairs two years ago

27.14 In 1987 we audited Emergency Preparedness Canada (EPC), examining in particular its legislative authority and the extent of implementation of the 1981 Emergency Planning Order for planning for national emergencies in peacetime. We found:

• a lack of statutory authority for the federal government to declare a national emergency in peacetime;
• a lack of milestones and deadlines for completing plans to achieve a state of readiness;
• the absence of a national process to identify potential risks from specific hazards, as a basis for planning national responses and identifying the resources that would be needed;
• a lack of reporting and accounting to Parliament for the state of planning for national emergencies and Canada's capabilities to respond;
• the need to re-examine and redefine the duties of the major federal responsibility centres; and
• the need to designate a federal agency responsible for co-ordinating and testing specific national emergency plans among several federal entities, and between the federal government and the provinces.

Findings

We reviewed the actions taken by EPC in response to our 1987 Report recommendations

27.15 Two new Acts -- the Emergencies Act and the Emergency Preparedness Act -- were passed by Parliament in 1988. The Emergencies Act will be proclaimed by the Governor in Council only when required to deal with one of the four types of national emergencies defined in the Act. The Emergency Preparedness Act assigns specific responsibilities to EPC for civil emergency planning.

27.16 The 1981 Emergency Planning Order was revoked when the new Acts were introduced on June 26, 1987. However, Cabinet directed all departments and agencies to continue planning for emergencies in accordance with existing government policy and the provisions of the proposed legislation. This direction lapsed with the enactment of the legislation in 1988. Orders and Regulations associated with the new legislation and required to provide for National Emergency Agencies have not yet been approved.

We found improved interdepartmental co-ordination in planning. However, we have concerns about the adequacy of guidance EPC gives to departments

27.17 We found that EPC had improved co-ordination in a number of areas, such as the work currently underway by departments in reviewing and preparing the new Orders and Regulations, establishing the Major Industrial Accidents Co-ordinating Committee, and sponsoring the Federal Working Group on National Earthquake Preparedness. The draft plan for a national response to a catastrophic earthquake is an example of a co-ordinated planning approach to national civil emergencies which cuts across departmental lines and includes provincial and local participation.

27.18 Although EPC provides general direction to departments and agencies, we have not seen evidence of adequate guidance concerning their roles or levels of response in the event of a specific emergency. Also, we have not seen evidence that EPC provides adequate guidance on how departmental resources should be allocated to emergency planning. We also found several situations where EPC did not provide sufficient information or scenarios for departments or agencies to use as a basis for detailed emergency preparedness planning. Transport Canada and Industry, Science and Technology have informed EPC about the lack of information.

27.19 Furthermore, we found that EPC was providing minimal information to emergency planners in departments with respect to shortcomings or gaps in departmental planning. EPC indicates that it is now carrying out some preliminary evaluation work.

27.20 At the end of 1988-89 EPC management approved a modified annual planning and accountability system to be implemented in 1989-90. In our opinion, this should improve the effectiveness of EPC's operations.

EPC is considering the use of risk analysis as a complement to existing approaches in planning for national emergencies but does not yet routinely utilize this technique

27.21 Our 1987 audit found there was no formal system of "national" hazard or risk assessment, that would permit co-operative federal-provincial planning and federal interdepartmental planning for potential national emergencies in peacetime, for example major oil spills. In our opinion, risk assessment would be a useful complement to the all-hazard approach to planning used by EPC.

27.22 EPC did not accept this recommendation. EPC states that its "all-hazards approach" covers the standard requirements for assistance regardless of the cause or nature of an emergency, and that risk analysis is much more appropriately done by those responsible for responding at the local or regional level.

27.23 Our current examination found that EPC is considering risk analysis and a range of probable scenarios that could be useful planning tools for responding to civil emergencies at the national level. However, EPC does not yet routinely include this technique in planning. EPC relies on the individual departments to prepare plans against scenarios of their own choosing and to communicate those with each other.

27.24 EPC is co-ordinating the preparation of a national response plan for a major earthquake in British Columbia. This is a good example of the approach we recommended. Planning for a national response is on the basis of a specific hazard to a defined area, and we note that the Geological Surveys of Canada has identified this region as a high risk area. EPC expects to complete the plan by the end of 1990.

27.25 We did not find other examples of draft plans for specific peacetime national emergencies, for example, a major toxic chemical release like the one that occurred in Bhopal, India. Further, EPC has not provided scenarios, or probabilities of risk, that departments could use as a basis for developing their response plans and resource requirements for civil emergencies, either national or regional.

27.26 EPC believes that its new program planning and accountability system will assist in addressing these concerns, since it will require an ability to maintain a current appreciation of the full range of sectoral issues, including trends in the occurrence of hazardous conditions.

Goals and deadlines for national emergency planning by departments remain inadequately specified

27.27 In our 1987 examination we found it difficult to assess progress toward the development of NEA plans because no milestones had been established. EPC agreed with our recommendation that goals and deadlines should be established for the completion and testing of plans for the NEAs.

27.28 In August 1988 EPC distributed a draft paper to departments on planning milestones, with an overall target for completing departmental plans. These plans are to be ready prior to the national emergency preparedness exercise (CANATEX 90) scheduled for late 1990. EPC also requested departmental planners to provide achievable dates for completion of the milestones outlined in the document. EPC could not provide us with any specific responses to this request. We found that some departments had included target dates for specific items which could be components of the milestones in information provided to EPC. However, EPC has not compiled or aggregated these into the milestones they proposed nor have they set up a master listing or schedule of milestones and targets on the basis of the NEA annual reports.

27.29 Our review of the 1988 NEA annual reports to EPC showed that five agencies reported overall target dates for completing certain projects, while four agencies did not provide this information. Only one agency -- National Emergency Construction Agency -- provided detailed information on milestones.

Information for Parliament: first report in preparation

27.30 The Emergency Preparedness Act requires the Minister responsible for EPC to report annually to Parliament on the operation of the Act during the year. At the time of our examination EPC was collecting and compiling information on the status of NEA plans for inclusion in the first report, which will be tabled within 15 sitting days after June 30, 1989. We were informed that EPC will provide some general comments with respect to the NEA planning activities.

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We found the process for designating lead agencies for planning for emergencies to be inadequate

27.31 Our 1987 audit noted a need for designating lead departments for specific national emergencies and for updating these designations and their responsibilities on a regular basis.

27.32 The new legislation assigns various powers to the Governor in Council to enact Orders and Regulations for emergency planning. The departments concerned and the Department of Justice are currently reviewing what should be provided for in such Orders and Regulations. This work is being co-ordinated through EPC. However, we are concerned that there is no master plan with milestones for enactment of Orders and Regulations and that there may be gaps or overlaps, with resulting confusion between the individual Orders and Regulations. Several departments have also expressed concern along these lines.

27.33 In the case of four exercises scheduled for 1989-90, lead agencies have been identified for planning and testing.

Courier Services

Introduction

27.34 Government departments and agencies use commercial and departmental courier services extensively and increasingly: $14.5 million was spent for courier services in 1988-89, compared to $6.9 million in 1982-83.

27.35 Courier services range from small local operators using cars and bicycles to major international corporations which own and operate their own aircraft and other major transportation facilities. They also include the use of Priority Post Services of the Canada Post Corporation.

27.36 The services used by government departments and agencies include:

• inter-city services connecting all large and most smaller urban centers in Canada, and having connections or services to the United States, Europe, Japan and other countries.
• services within cities, that pick up and deliver either on request or on a schedule.
• contracted regional or local mail and messenger service with regular pick up and delivery, with or without provision for additional services on demand.

27.37 Departments obtain courier services by:

• awarding contracts with fixed terms and prices for services.
• accepting offers from firms to provide services at the rates specified by the firm. These offers may be formal agreements or informal arrangements whereby services are requested and invoiced.
• calling up couriers who have entered into agreed rate arrangements with the Department of Supply and Services.

Audit Objectives and Scope

27.38 The objectives of this audit were:

• to identify the extent and cost of courier use by departments and agencies;
• to determine if these services are acquired and managed with due regard for economy; and
• to determine the availability and use of alternatives to courier services, such as facsimile transmissions, electronic mail, etc.

27.39 We reviewed the Department of Supply and Services' (DSS) procedures to obtain negotiated government-wide rates for courier services. We also examined procedures for the acquisition and management control of courier services in the departments of Fisheries and Oceans, Justice, External Affairs, and Energy, Mines and Resources. We did not review DSS' use of courier services for its own operational purposes. We interviewed four courier firms that provide services in the National Capital Region, and Canada Post officials responsible for Priority Post Services. The operation of the diplomatic courier service in the Department of External Affairs was not examined.

Observations

Total expenditures on courier services could not be identified accurately

27.40 The Receiver General's Financial Reporting Statements are based on data provided by departments. The statements include a category for expenditures for courier services. However, the term "courier services" is not defined. As a result, departmental reporting practices may not be consistent or complete. For example, the departments we audited identified expenditures for Priority Post as postage rather than as courier services. One department believed it was appropriate to include travel expenses of departmental staff engaged in courier services.

27.41 The lack of reliable reporting makes it difficult to identify expenditures and make comparisons.

Ad hoc contracting procedures in some departments do not ensure that courier services are acquired with prudence and probity

27.42 Treasury Board Officials informed us that the acquisition of courier services is covered generally in existing contract directives. In two of the four departments we examined, procedures for selecting couriers were clearly set out for specific services. In the other two departments there were no procedures stipulated for acquiring courier services. In one department, the person acquiring courier services had not been formally delegated the authority to do so.

27.43 As a result of these differences in the departments we audited, the adequacy of acquisition and management practices varied. We found instances where courier companies were utilized without competitive contracting procedures. In some instances there was no contract and the decision as to which courier(s) to use was left to the shipper or mail room personnel.

Departments that negotiated directly with courier firms for specified services obtained better prices

27.44 The Department of Supply and Services enters into agreed rate arrangements at the request of any courier firm that meets DSS requirements with respect to licensing and financial solvency. It assesses the proposals submitted by each firm for the reasonableness of its proposal relative to the type of service and volume of business likely to be available. DSS' mandate to negotiate such agreements is derived from its role as a common services agency.

27.45 We found that DSS receives a substantial discount on published tariff rates. Depending on such factors as volume and competition, various types of discounts, including ones similar to or better than those obtained by DSS, are available to businesses.

27.46 Our discussions with certain courier firms indicated that rates could be further reduced if departments were to consolidate locations for picking up and delivering items.

27.47 We also found that departments have to call DSS or individual courier firms to find out the rates charged by firms under existing agreements. If such information were readily available, departments could easily compare rates and select the least expensive firm.

27.48 We found that departments which negotiated directly with courier firms for specific services obtained better prices than those available under DSS agreed rate arrangements. DSS calls for tenders or competitive bids when a department requests it to tender for a specified courier service.

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In the departments where we audited use of courier services, controls over use of such services ranged from very good to non-existent

27.49 We found that the Department of Fisheries and Oceans in Ottawa had satisfactory procedures for contracting and monitoring the use of courier services. The Department has developed and implemented a low-cost computerized system for their Ottawa registry operations, including mail and special services. The Department also had an active program to employ disabled persons in courier service activity.

27.50 In contrast, in one of the departments we audited, individuals could use their own discretion as to whether to call a courier service or use departmental personnel to deliver envelopes or packages. The use of departmental staff for this purpose was not monitored.

Alternatives to courier services could be used more extensively

27.51 Facilities such as facsimile transmission equipment and electronic mail are used extensively in the departments we examined, particularly for inter-city and international purposes. However, they are not as extensively used locally, such as in the National Capital Region (NCR) where long-distance charges are not involved. One department estimated that increasing the use of such equipment in the NCR would reduce its requirement for local courier services by up to 50 percent, for an annual cost saving of about $18,000. Another department estimated its savings would be in the order of 20 percent, but the department's information on costs was not reliable enough to translate that saving into dollars.

Recommendations

27.52 DSS should make readily available to departments comparative information on courier rates charged by different firms.

27.53 Departments should encourage and promote the use of less expensive alternatives to courier services wherever feasible and economic.

27.54 Departments should develop clear directives for using courier services and should consolidate pick-up and delivery locations.

27.55 Rather than relying solely on DSS agreed rate arrangements, departments should assess the cost-effectiveness of using a competitive process to acquire courier services, particularly where they can specify the nature of the service required.

27.56 Where cost-effective, departments should develop low-cost systems to monitor the use of courier and related services.

27.57 The Office of the Comptroller General should define the term "courier services" for financial reporting purposes.

Departmental Responses

Office of the Comptroller General

The Office of the Comptroller General has informed us that "a definition of courier services for financial reporting purposes has been included in the revision of the List of Descriptions for Economic, Source and Class Objects issued in July 1989".

Department of Supply and Services

With respect to the availability of information on courier rates, DSS states:

Departments are made aware of these rates through Traffic Management Bulletins and seminars on an irregular basis, as well as through the results of Central Freight Services audits. Clients can also receive comparative rate information by telephone from the Transportation Advisory service. DSS intends to increase the frequency of Traffic Management Bulletins, including rate notices, and is examining other means by which comparative information on rates could be more widely disseminated.

With respect to the obtaining of better prices through tendering:

The department has had underway, since June of 1988, a comprehensive review of its role as a service agency, under the general title of service line studies. The acquisition service line forms a major part of those studies which are in process, and specifically scheduled for review as a service line in its own right is the area of traffic management, including courier service. In essence, through this study, which will involve other government departments and central agencies, we will address the issue of method of supply most appropriate to the interests of government as a whole for the acquisition of traffic management services.