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1991 Report of the Auditor General of Canada

Main Points

13.1 The Central and Arctic Region of the Department of Fisheries and Oceans (DFO) is faced with more demands than it can meet, particularly in a continuing period of restraint (paragraph 13.75). These include delegation of responsibilities to the provinces and territories (13.18), participation in the settlement of aboriginal land claims (13.37), expansion of DFO's role in environmental assessment (13.30), implementation of a national fish habitat management policy (13.25), and responding to significant scientific and environmental issues such as toxic contamination, acid rain and climate change (13.50).

13.2 We found that the Region is moving to meet these demands through practices such as establishing informal co-operative arrangements with the provinces (13.24), developing habitat referral procedures (13.31), participating in co-operative management boards in the Arctic (13.47), identifying priority Arctic fish stocks (13.43) and using more outside funding to support science projects (13.57).

13.3 Delegation to provinces. The question of the extent and nature of responsibilities to be delegated to the Central provinces remains largely unsettled, awaiting clarification of fish habitat and related environmental responsibilities. With this unclear division of responsibilities, the Department risks being unsure of the extent to which fisheries and habitat management activities are being carried out (13.15 to 13.18).

13.4 Fish habitat management. Progress has been slow in implementing the Policy for the Management of Fish Habitat (13.25). It has been hindered by delays in reaching delegation agreements with the Central provinces, and by additional pressures placed on the program by the Department's expanded role in environmental assessment (13.27 and 13.30). In the meantime, the provinces have been carrying out habitat management responsibilities based on informal agreements, and without monitoring by DFO (13.23 and 13.24). Another constraint on the implementation of the habitat policy and program has been the fact that information systems and data bases are limited (13.29).

13.5 Arctic fisheries management. The Central and Arctic Region's management of northern fisheries has been hampered by an extended period of change and indecision, largely outside DFO's control (13.37 and 13.38). In this context, the Region is having difficulty implementing an Arctic program (13.39 and 13.40). More data and information are needed to meet both the Region's requirements and the Department's obligations under land claim settlements (13.41 to 13.45).

13.6 Science priority setting. Science is the Region's main strength and underpinning, and the scientific work done in the Region is highly regarded (13.49 and 13.55). In the context of fiscal restraint and major coastal fisheries problems, the Region's ability to influence the national priority-setting process is limited (13.52 to 13.56). The increasing outside funding that supports much of the science activity is subject to client-driven priorities and schedules, which can undermine the Department's priority-setting process (13.57 to 13.61).

Introduction

13.7 The Department of Fisheries and Oceans (DFO) supports Canada's economic, ecological and scientific interests in the oceans and inland waters. It provides for the conservation, development and sustained economic use of the nation's fisheries resources and co-ordinates the Government of Canada's oceans policies and programs.

13.8 DFO's Central and Arctic Region has a budget of approximately $46 million, which represents about 6 percent of the Department's total; its 561 person-years account for 9 percent of the Department's personnel. The Region carries out DFO's mandate in three program areas: Science, Inspection Services, and Fisheries and Habitat Management.

13.9 Fisheries and habitat management are intended to be closely integrated, interdependent activities. Fisheries management involves assessing fish stocks, allocating fishery resources to fishermen, licensing fishermen and monitoring their catches - enforcing the provisions of the Fisheries Act that govern the conservation and protection of fish stocks. Habitat management covers the conservation, protection and development of the marine and freshwater habitats, where fish live and reproduce - enforcing the habitat provisions of the Fisheries Act and applying the Department's Policy on the Management of Fish Habitat (the Habitat Policy). The significant science component of the program - the assessment of fish stocks and habitat - is done by the science sector of the Department.

13.10 This Region is responsible for the fisheries and habitat management and development functions in the Arctic Ocean, the Northwest Territories, Alberta, Saskatchewan, Manitoba and Ontario. In the Northwest Territories, the federal government retains direct authority over the fisheries; in the Prairie provinces and Ontario the provincial governments have assumed much of the responsibility for day-to-day management.

13.11 The commercial fishery in the Region is predominantly devoted to whitefish, walleye and perch. About 50 percent of the commercial catch is marketed through a Crown corporation - the Freshwater Fish Marketing Corporation. Private processors market the balance, primarily the catch from the Great Lakes fishery. The Region's recreational fishery - an important part of the tourist industry - is estimated to be larger and more valuable than the commercial fishery. In the northern parts of the Region, Arctic char, narwhal, beluga, and seal are important to the natives for subsistence, social and cultural reasons.

Scope

13.12 We examined the programs and management practices of the Central and Arctic Region. We also examined how its managers cope with the demands placed on their diverse and expansive region, in a department dominated by problems on the east and west coasts. We looked at the following areas:

  • delegation to provinces;
  • fish habitat management;
  • Arctic fisheries management;
  • science priority setting; and
  • selected small craft harbours.

Delegation to Provinces

13.13 The division of powers in Canada's constitution produces a corresponding division of responsibility for the fisheries. The federal government has exclusive power to make laws with respect to the seacoast and inland fisheries. The provinces, by virtue of their powers over property, may also make laws that affect fisheries. The provinces regulate access to fishing in fresh water (with their recreational and commercial licences) and oversee processing plants. Freshwater fisheries administration is delegated to the province in Quebec, Ontario, Manitoba, Saskatchewan, Alberta, and British Columbia.

13.14 As a result of these arrangements, Ontario and the Prairie provinces perform virtually all their own stock assessment and stock management, and are responsible for their own licensing and enforcement activities. All provinces have some form of habitat review system, some more highly developed than others. The federal government maintains programs only in the fields of scientific support, habitat protection, and fish inspection.

An unclear division of administrative responsibilities
13.15 In our 1986 Report, we observed that delegating administrative responsibility for freshwater fisheries to the Central provinces had caused considerable confusion between the Department and the provincial governments, over their respective roles in habitat and fish management. At that time, the Department recognized the need to clarify the way it would exercise its responsibility for freshwater fish and intended to negotiate and sign General Fisheries Agreements (GFAs) with the provinces.

13.16 After five years, GFAs have been signed with Alberta and Ontario. They have been negotiated - but not finalized - with Manitoba and Saskatchewan. The negotiations have been delayed by recent court decisions forcing DFO to clarify its role and responsibilities with respect to environmental assessment.

13.17 The GFAs are meant to be supported by sub-agreements to deliver programs in areas of mutual interest, such as habitat management, science and aquaculture. To a varying extent, discussions and negotiations have been held with all of the Central provinces, but no sub-agreements have been finalized. In Ontario, a Memorandum of Intent for a habitat sub-agreement has been signed.

13.18 Resolving federal-provincial jurisdictional problems - which are not exclusive to the Region - is complex and highly sensitive in the current environment. Recent court decisions on environmental assessment have highlighted the problems associated with the unclear division of habitat management responsibilities between the federal and provincial governments. The risk here is that the unclear division of responsibilities will result in uncertainty about whether important activities are actually taking place.

Fish Habitat Management

13.19 The Fisheries Act contains a number of sections that represent what is probably the most powerful federal legislation to protect fish habitats and the fisheries that depend on them. The implications of these habitat provisions extend well beyond fisheries to broader environmental issues, as demonstrated by recent court decisions emphasizing the responsibility the federal government must assume in assessing environmental impacts. ( See photograph )

13.20 To date, much of the effort in fish habitat management in the Region has been carried out by the Central provinces along with their management responsibilities in the fisheries themselves. This administrative complexity - and the distinctly different interests of the responsible parties, each of which has its own mandate - has made the management of fish habitats a difficult task.

13.21 DFO addressed concerns about fish habitat in its 1986 Habitat Policy. This policy sets as an overall objective a net gain in fish habitat through conservation, restoration and development. To conserve habitats, the policy established no net loss as its guiding principle. The Habitat Policy also proposes integrating the planning of fisheries management with habitat management ( see Exhibit 13.1 ).

13.22 It would therefore be reasonable to expect the Department to have a plan in place for fully implementing the principles and strategies of the Habitat Policy. We would also expect to see reporting to Parliament on progress.

Informal agreements the basis for dividing responsibility
13.23 By virtue of the Fisheries Act, it is DFO that has the ultimate authority to ensure the protection of fish habitats. However, while management of the fisheries has been formally delegated to (or assumed by) the Central provinces, final habitat sub-agreements to clarify jurisdictions and responsibilities have not been reached. In one case - Ontario - a Memorandum of Intent has been signed pursuant to the July, 1988 Canada-Ontario Fisheries Agreement. This memorandum was intended to lead to a subsidiary agreement that would specify respective roles and responsibilities.

13.24 Although the Region has developed informal working arrangements with each of the provinces, the lack of formal arrangements to monitor and assess habitat management activities leaves DFO managers unable to assess the impact of decisions on the fishery and on fish habitats. Consequently, although it has the ultimate authority and responsibility to protect fish and fish habitats, DFO cannot be sure to what extent those responsibilities are being carried out.

Slow implementation of the Habitat Policy
13.25 Since its introduction in 1986, the Department's Habitat Policy has received wide acceptance as a well-written, logical document and a good example of a framework that recognizes a sustainable development approach in the management of fish habitats. Over five years, however, progress in developing a co-ordinated approach to implementing the Habitat Policy's principles and strategies has been slow.

13.26 A number of department-wide initiatives to implement the policy were started, but not completed:

  • A "Strategic Implementation Planning Framework" was established in 1987, and annual reporting on habitat achievements and progress subsequently commenced. However, since 1989 these planning and reporting instruments have been overtaken by new requirements. The Department has recently initiated revised reporting under amendments to the Fisheries Act and has requested updates to the planning framework.
  • A framework for evaluating the implementation of the Habitat Policy was developed, and several workshops were held to examine a proposal for a two-tiered evaluation. (This evaluation has been postponed one year, to 1991-92.)
  • Several drafts of a procedural guide for implementing the "no net loss" principle have been developed; however, DFO habitat managers are having difficulty agreeing on an acceptable approach, in part due to the complexity of the subject and an absence of definitive scientific information.
13.27 In the Central and Arctic Region, the Central provinces have endorsed the principles of the Habitat Policy. Its implementation has been hindered, however, by the failure to finalize habitat sub-agreements, and by crises like the recent court decisions resulting in expanded responsibilities for environmental assessment, which continue to interrupt habitat work and override plans, adding to the strain on available resources.

13.28 We believe the Department needs to make a concerted effort to get the implementation of the policy back on track. Failure to do so risks inconsistent application of the policy, and possible unknown damage to fish habitats.

Limited habitat data and information
13.29 Properly implementing the Habitat Policy requires specific data and information on habitats, and the development of indicators to measure complex concepts like their productive capacity, which are very hard to define. Despite ongoing attempts, DFO habitat managers and scientists have not yet refined methods to define and measure the productive capacity of different habitats.

Increased workload arising from more environmental assessments
13.30 The Fish Habitat Management Branch and the regional habitat managers and scientists have been overwhelmed by the additional work resulting from the greater environmental assessment responsibilities placed on the Department by virtue of recent court decisions. The courts have held that the Department must assume these responsibilities, even when a provincial government is the proponent or the principal authority issuing permits, and even when the provincial government has already performed an environmental assessment. In short, whenever a proposal might have an environmental impact on an area of federal responsibility, an assessment in accordance with the Guidelines Order must be carried out.

13.31 The Region has administrative procedures for handling proposals referred or reported to it. There is, however, no systematic collection of information on the number and types of habitat referrals handled by DFO. It is, therefore, difficult to compile statistics on referrals received and completed for planning and evaluation purposes.

13.32 The Region should systematically measure and report on habitat referrals.

Department's response: An initiative is underway to develop a system for reporting on habitat referrals on a national basis. This system is expected to respond to the issues set out in paragraph 13.30.

13.33 Parliament is not being properly informed about the problems in implementing the Department's Policy for the Management of Fish Habitat. Both the 1990-91 and 1991-92 Part IIIs of DFO's Estimates briefly describe some of the progress made in this area but do not mention any of the delays encountered or the limited data. Nor do the Part IIIs mention the related risks to the fisheries and fish habitats that can result. For instance, the 1990-91 "achievements" reported "significant progress" in furthering policy directions for habitat, including the development of an interim version of the No Net Loss Procedural Guide. Several drafts of this document have been developed since 1988, but it has not been finalized. The Department reports that the draft procedures are currently being tested.

13.34 The Department should report fully to Parliament on its progress in implementing the Policy for the Management of Fish Habitat.

Department's response: DFO concurs with the recommendation. The Department undertook, when the Fisheries Act was amended in January 1991, to provide an annual report to Parliament on the administration of the habitat protection and pollution prevention provisions of the Act, commencing with the results of the 1991-92 fiscal year.

Arctic Fisheries Management

13.35 Compared to the other fisheries in Canada, the fisheries in the Arctic are very small, both in their value and in the volume of the catches. However, the fish and marine mammals have social, cultural, and economic significance to the predominantly native residents of the Northwest Territories.

13.36 The native population relies heavily on the fisheries for its livelihood. Because economic opportunities in the Arctic are limited, fishery development is a priority for governments, native organizations and communities. More and more, northern residents look to the development of new commercial and recreational fisheries to increase their income. This increases the demand placed on DFO for services, and the burden is compounded by the huge area of land and water that the Region must monitor and manage with its limited resources. ( See photograph )

13.37 A period of change. DFO's responsibilities in the Arctic are heavily influenced by events that are mostly outside the Department's control: the negotiation and settlement of native land claims, the federal government's delegation of certain responsibilities to the territorial governments, economic growth and the demand for renewable and non-renewable resources. In turn these events are shaped by government fiscal considerations, intergovernmental relations, and public attitudes and expectations. This has resulted in a period of considerable change in the Northwest Territories, making it extremely difficult to develop and implement a practicable Arctic program. Nevertheless, we would expect the Department to ensure that it can meet its obligations to provide data on the most significant Arctic fish stocks required by native land claim settlements.

13.38 Negotiations were opened with the Government of the Northwest Territories to transfer the day-to-day administrative responsibilities for inland fisheries management from DFO to the Government. DFO was to retain responsibility for managing anadromous and marine fisheries, fish habitat, science and fish inspection. Negotiations eventually broke down when the two parties were unable to agree on the resources (dollars and person-years) to be transferred.

Difficulties in implementing Arctic initiatives
13.39 Despite the priority the Department has placed on Arctic issues, departmental personnel in the North are having difficulty keeping pace with the demand for services resulting from native land claims settlements, pressures for resource development, public pressure to regulate marine mammal harvesting, and the expanded demand for environmental assessment.

13.40 The two years of delegation negotiations with the Government of the Northwest Territories added further pressure. DFO delayed several initiatives, including boat and vehicle replacements and upgrades, and the staffing of several vacant fishery officer positions. The uncertainty as to whether delegation would proceed affected staff morale, DFO's ability to deliver programs, and its ability to plan for the future. Through all this, staff have attempted to manage in a period of reduced resources.

Limited knowledge base in the Arctic
13.41 Lack of information on fisheries and fish habitat outside major fisheries. Fisheries data are limited to information available for Great Bear Lake and Great Slave Lake and for the commercial fisheries that sell to the Freshwater Fish Marketing Corporation.

13.42 A consultant's report recently prepared for the Government of the Northwest Territories concluded that there are serious deficiencies in knowledge about inland fish and fisheries. In addition, the 1987-88 report of the Arctic Fisheries Scientific Advisory Committee indicated that, in 75 percent of cases where scientific advice was required for the various fisheries, the knowledge base was inadequate. In several instances, the rational planning of fishery resources exploitation cannot proceed because the information on the distribution and abundance of fish and marine mammal resources and on how these resources are used is inadequate. ( See photograph )

13.43 It is unreasonable to expect that DFO would have fishery management plans in place for all of the hundreds of Arctic fish stocks. Priority must be given to those with the greatest economic and/or cultural significance and to those that may be endangered or overharvested. Accordingly, DFO has developed criteria for determining the importance of a stock and is developing management plans for those with priority status.

13.44 As a basis for the sound scientific and economic management of stocks, there is a need for data on stock assessment, research (including habitat research) and harvest, particularly for domestic fisheries. DFO needs this information to respond to pressures from fishermen and the Government of the Northwest Territories, as well as to answer national and international concerns about endangered species. Collecting this kind of data is an obligation under both current and proposed native land claim settlements.

13.45 The Department should ensure that it can meet its obligations to provide data on fish stocks for current and proposed native land claim settlements.

Department's response: The Department is increasing its information base for priority stocks within its fiscal constraints.

Developing co-operative management approaches
13.46 Experience has shown that co-operative management can contribute to the successful implementation of programs, particularly in expansive geographic areas such as the Arctic, where the Department's program resources are limited. Co-operative management involves clients in setting priorities and making decisions on resource management, research, enforcement and development, generally through their participation on boards and committees. In fact, co-operative management boards are a legal requirement under settled land claims in the Arctic, and will be required under future settlements.

13.47 Both formal, co-operative management agreements and less formal arrangements have been established through various committees and boards in the Arctic. Consultations are also held with Hunters' and Trappers' Committees and other resource users. The ability to communicate with resource users has proven critical to these co- operative management processes. In general, DFO has not experienced problems in its communication with Arctic resource users.

Science Priority Setting

13.48 The mandate of DFO Science. DFO's science program has a mandate to ensure that the highest standard of scientific information is available to the Government of Canada for use in developing policies, regulations and legislation governing the oceans and aquatic life, and to other government departments, private industry and the public for use in planning and carrying out aquatic activities.

13.49 The Central and Arctic Region's reputation is based primarily on its scientific expertise, its history of research projects and the quality of its research scientists. Over 50 percent of the Region's resources are devoted to the science program.

13.50 In some ways, science sector activities are more diverse in the Central and Arctic Region than they are in other DFO regions. Since the Department's responsibilities include the Great Lakes, transboundary waters across the Western provinces, involvement in aboriginal claims, and new circumpolar perspectives, DFO plays an important role with other government agencies in a growing number of issues of regional, national and international importance, such as toxic contaminants, acid rain and changes in climate. The Region also faces budgetary constraints and is searching for alternatives. It is important in this environment that the Region's management evaluate the effectiveness of its changing funding arrangements.

13.51 Given that the Region is the Centre of Disciplinary Expertise for Freshwater Fisheries Contaminants and Toxicology, and is a key contributor to Great Lakes Water Quality initiatives, science continues to be its primary operational focus.

Scientific issues in the Region are accorded lower priority
13.52 To assess continuity of priorities, we reviewed science sector and departmental priorities for the Region's Biological and Physical/Chemical Sciences programs, covering the five fiscal years 1987-88 through 1991-92. We also reviewed the 1990-91 priority-setting process for Biological Sciences.

13.53 Scientific research and the related priority setting in a government agency such as DFO could be described as a matter of trying to arrive at a balance among the functional needs defined by a mandate, the evolving frontiers of knowledge, and the availability of resources.

13.54 DFO has a formal process in place to establish science sector priorities, designed to guide regional science programs. Recognizing that spin-off ideas and non-priority research have an important role and that some regional flexibility is needed, the process is not intended to impose absolute national control over programs.

13.55 The priorities of DFO place a strong emphasis on Atlantic and Pacific marine issues. The Central and Arctic Region does not receive as much prominence in the Department's priority-setting process. Despite this, the Region has been successful in maintaining its scientific excellence. Reviews by the Royal Society and others, over the years covered by this examination, have shown that the calibre of science has been high. And peers also consider that the productivity of the Central and Arctic Region science community is high.

13.56 There appears to be growing recognition that much of the Region's science is, in fact, nationally and internationally significant - and of particular importance to "sustainable fisheries" issues. In addition, activities in freshwater and marine science have moved away from narrowly defined, discipline-specific work toward more broadly conceived, transdisciplinary ecosystem activities. Moreover, greater environmental awareness also places more emphasis on DFO's freshwater science responsibilities.

Impact of outside funding on research programs
13.57 Based on our review of science budgets over five years, we observed that substantial reductions have occurred in the purchasing power of base support funding for Biological Sciences and Physical/Chemical Sciences in the Central and Arctic Region. Science programs and projects depend, to varying degrees, on outside or contingent funding made available by other departments or agencies. Since 1987-88, the Biological Sciences and Physical/Chemical Sciences programs have depended on external funding for more than half of their non-salary operating budgets.

13.58 These funds are obtained on an annual basis from sources largely outside DFO. The use of outside funds does address industry priorities and encourages a transfer of technology. However, the annual funding drive and the sunset nature of many of these funding arrangements add to the uncertainty about the longer-term prospects of these programs.

13.59 This is a particular problem for the Region's Arctic programs. There are cases where an entire field season would have been lost if funds had not been borrowed from DFO base funding until the outside funds for the project arrived. In a case involving Arctic marine mammal research, funding came through too late to be used efficiently, and partial funding fragmented the program.

13.60 Furthermore, the premature termination of external funding for a multi-year program can result in the uneconomical and inefficient use of the resources already invested. As an example, at the time of our audit, the outside funding necessary to keep the Experimental Lakes Area program operating in 1991-92 was still in question, placing a host of research activities in doubt. Yet the program is described as "the flagship of DFO's freshwater research", and was pivotal in Canada's negotiations with the United States on acid rain ( see Exhibit 13.2 ).

13.61 The Department should evaluate the effectiveness of increasing its reliance on outside funding in the Region's science program.

Department's response: The Department is examining ways to involve other partners more directly in the Experimental Lakes Area programs and in sharing costs on a long-term basis. Funding has been approved for the Green Plan acid rain program. The Department plans to consider ways to reduce the undesirable effects of external funding on program delivery.

Implications for Central and Arctic Region scientists
13.62 The significance of the Region's science. Given the Department's apparent focus on coastal fisheries and oceans problems, the Region's scientists have the impression that their contribution is not really valued in DFO. We found a widespread perception that the significance of the Region's science is not accorded appropriate attention or is not fully understood at headquarters, despite the recognition it has merited elsewhere. However, headquarters staff have a different view and point to the role played nationally by the Region's scientists, but they acknowledge that this issue could be addressed with better communication.

Review of science priorities
13.63 Headquarters science sector managers, with input from regional managers, are currently going through a major review of programs. This exercise will define science sub-work activities as "business units" (chemical oceanography and contaminants, aquaculture, and stock assessment, for example).

13.64 For each business unit, the Department will determine and document the background, environmental and internal information that will enable it to better define what it is doing now - and what it will have to do in the future - to ensure that its business is appropriately delivered. DFO hopes that this program review will help the science sector to better define and rank its priorities, deciding which programs and projects will be supported and to what extent.

Small Craft Harbours

13.65 The Central and Arctic Region manages 496 small craft harbours with a value of approximately $400 million. The Region's 1990-91 capital budget for this activity is $7.4 million. ( See photograph )

13.66 The criteria for the small craft harbours audit were derived from our guide on auditing capital assets, and covered needs definition, options analysis, project definition, contracting and project delivery.

Inappropriate levels for funding approval
13.67 We audited records, contracts and reports for 11 harbours -10 commercial and 1 recreational - on which capital funds had been spent over the past three years. We also examined the expenditure planning process and concluded that it is sound. It is based on an assessment of facilities and their use every two years to verify that they meet national standards for harbour conditions. However, funding approval for necessary harbour repairs is often late, which adversely affects the completion of projects. Each project over $15,000 must be approved by headquarters, which causes significant delays in delivering funds to the Region. That, in turn, delays the start of construction and increases overall costs because construction must continue into the winter.

13.68 The Department should review the level of spending authority accorded regional directors, to determine what level represents the most reasonable compromise between the need for efficiency and the need for control in carrying out planned or emergency harbour repairs.

Department's response: The approval process is being revised to minimize delays in construction starts.

Lack of preventive maintenance
13.69 We found that the Small Craft Harbours (SCH) directorate lacks documented policies and procedures for preventive maintenance. We were informed that "the preventive maintenance philosophy is based on comprehensive inspections, rather than on a scheduled maintenance program". There is an inherent risk to this approach, in that a lack of scheduled maintenance can eventually lead to more costly emergency or major repairs.

13.70 We noted that the Harbour Maintenance Management System focusses on larger projects and provides no guidance on preventive maintenance. In our view, the funds available for operations and maintenance (less than 0.5 percent of the $400 million value of the assets) are not sufficient to safeguard these assets in the long term.

13.71 The Small Craft Harbours directorate should review its procedures and budget allocation for preventive maintenance.

Department's response: The Department will review the harbour maintenance system. New procedures will be proposed to improve the preventative maintenance aspects of the Program.

Weaknesses in contracting procedures
13.72 We examined 34 contracts and noted that all major construction and repair is carried out by the Department of Public Works (DPW) under Specific Service Agreements between DPW and the SCH directorate. After funding has been approved for a specific project, the Regional Director (SCH) initiates the project. DPW solicits bids and, once the successful bidder is chosen, recommends a contract award. The SCH directorate approves the award, then provides funding. The SCH directorate is not directly involved in the contracting process and does not receive a copy of the contract; consequently, it has no way to assess whether the contract meets project specifications.

13.73 The final acceptance inspection of a project is carried out by DPW. Except for the Manitoba office, the SCH directorate does not participate in the commissioning process. In our view, this does not afford the SCH directorate the owner's normal opportunity to determine that the work has been done correctly and that it meets the original specifications.

13.74 The Small Craft Harbours directorate should be involved in the final inspection and commissioning process for major projects.

Department's response: The Department will attempt to work out an agreement with DPW whereby it can rely for the most part on final inspections completed by DPW, but will participate on a selective basis in some final inspections.

Conclusion

13.75 The Central and Arctic Region has more demands placed on it than it can meet in a period of continuing restraint. Many of these demands relate to national and government-wide issues that it is asked to address. These are complex and difficult issues to deal with and it will require considerable time to reach solutions. At the same time, like all government organizations, the Region has to manage within existing resources.

13.76 We found that the Region is coping with these demands through practices such as establishing informal co-operative arrangements with the provinces, developing habitat referral procedures, participating in co-operative management boards in the Arctic, identifying priority Arctic fish stocks and using more outside funding to support science projects.

13.77 Our audit recognizes both the pressures placed on the Region and the initiatives it has undertaken to meet these pressures. In this context, we have raised a number of observations and recommendations, both to inform Parliament of the operational environment in this geographically large and diverse Region and to encourage management to concentrate its efforts in several areas, to help the Region meet and deal with the demands placed on it.