NFPS Governance Terms of Reference

Purpose of Terms of Reference

1. The purpose of these Terms of Reference (TOR) is to define the governance structure for the oversight and coordination of the Government's Seven-Point Action Plan in response to the Auditor General's 2012 Spring report on Replacing Canada's Fighter Jets, herein referred to as the National Fighter Procurement Secretariat (NFPS) action plan. Following completion of the NFPS action plan, the Deputy Minister (DM)-level Governance Committee (DMGC) will present its conclusions to Ministers in support of the Government's decisions on how to move forward with the replacement of the CF-18 fleet.

Aim of NFPS

2. The objective of the NFPS action plan is to ensure that the Royal Canadian Air Force acquires the fighter aircraft it needs to complete the missions asked of them by the Government; and, that Parliament and the Canadian public have confidence in the open and transparent acquisition process that will be used to replace the CF-18 fleet.

Overview of the Governance Structure

3. The key decision-making body for oversight and coordination of the NFPS action plan is a Deputy Minister (DM)-level Governance Committee (DMGC). This Committee will be chaired by the DM of Public Works and Government Services Canada (PWGSC). The core membership includes DMs of PWGSC, National Defence (DND) and Industry Canada (IC). Decisions of the DMGC will be taken by the core members. Privy Council Office (PCO), Treasury Board Secretariat, the Department of Finance and the National Security Advisor to the Prime Minister are ex-officio members. The DMGC will also include two independent members from outside the public service. Ex-officio and independent members will observe and provide a challenge function to inform the decision-making of the DMGC. Senior military personnel will also be called upon to inform and assist the work of the DMGC.

4. The work of the DMGC will be supported by an Interdepartmental ADM-level Steering Committee (ISC) charged with the management and implementation of decisions arising from the DM-level committee and other items that may arise throughout the implementation of the NFPS action plan. A full-time Interdepartmental Secretariat will be established within PWGSC and project teams will be established, as required. Annex "A" of this document provides additional information, including the roles and responsibilities of each of these governance bodies.

Departmental Roles and Responsibilities

5. The Minister of Public Works and Government Services is responsible and accountable to Parliament, under the Defence Production Act (DPA), to administer the DPA and has the exclusive authority to buy or otherwise acquire defence supplies and construct defence projects required by DND. As such, the Minister of Public Works and Government Services is accountable and responsible for the acquisition of defence supplies, the resulting contracts and agreements, including the planning, solicitations, negotiations, award, management, and related decision-making in order to ensure that the acquisition activities are administered in accordance with the applicable laws, regulations, policies, procedures and directives. Public Works and Government Services is also the lead department responsible and accountable for the National Fighter Procurement Secretariat coordination activities.

6. The Minister of National Defence (DND) is responsible and accountable to Parliament for the conduct of the Canadian Defence Services Program, in accordance with the National Defence Act (NDA), and acts as project and technical authority for the acquisition of defence supplies. To fulfill this mandate, the Minister of National Defence is responsible for defining defence requirements, the planning and execution of all project management activities, as well as the provision of specialized advice, assistance and services to PWGSC during the implementation of the acquisition process. In fulfilling these duties, DND will support the governance structure detailed in this document and outlined in the Action Plan.

7. The Minister of Industry Canada (IC) is responsible to continue to identify opportunities for Canadian Industry to participate in the Joint Strike Fighter program global supply chain, and other potential benefits for Canada in sustainment, testing, and training. Industry Canada reports on the Industrial Participation opportunities offered and secured by Canadian companies. In fulfilling these duties, IC will support the governance structure detailed in this document and as outlined in the Action Plan.

Transparency and Impartiality

8. The use of non-governmental independent third parties will be called upon to enhance openness, impartiality and transparency of the Governance structure as follows:

• The DMGC will include two independent members from outside the public service;
• TBS will commission an independent review of DND's¹ acquisition and sustainment project assumptions and potential costs for the F-35, which will be made public; and
• Other third party independent advice and reviews will be sought as determined by the DMGC and/or ISC.

Public and Parliamentary Reporting

9. The work of the Secretariat and of the various Committees involved in the NFPS action plan shall be done with transparency and openness to ensure appropriate public disclosure. As such:

• The DMGC will approve reports to Parliament;
• PWGSC, through the Secretariat, will develop a protocol for approval by the ISC and the DMGC, to meet the objectives of open, informed and transparent communications of activities related to the NFPS action plan; and
• The Secretariat will ensure the creation and maintenance of a dedicated website, and ensure a coordinated approach to the posting of information relating to the NFPS on departmental web spaces.

Due Diligence

10. The DMGC, the ISC and the Secretariat, along with TBS, the Department of Finance and PCO, will collaboratively ensure that due diligence is performed throughout the implementation of the NFPS action plan as follows:

• The provision of independently verified annual costing updates regarding the Joint Strike Fighter program;
• The results of the TBS commissioned independent review will help set a consistent costing framework that will be used to report costing estimates for this project;
• Contracting policy due diligence will also be validated by the Treasury Board via joint DND/PWGSC submissions for Project and Contracting Authority; and
• A validation of all the steps taken to date in the acquisition process will be conducted and independently verified.
• This validation encompasses the acquisition process for the first two phases and six steps as outlined in the Auditor General's report:
  • Identification Phase: capability deficiency identified
  • Options Analysis: Operational requirements defined; Total project life-cycle costs estimated; Risks assessed; Options analyzed; Procurement Strategy proposed

Secretariat

11. The Secretariat is responsible for the coordination of the implementation of the Government Action Plan referred to in Annex “B” herein.

Membership

12. A PWGSC Executive Director (ED), who is accountable to the ISC for the overall coordination of the implementation of the NFPS action plan, will lead the Secretariat. The remaining Secretariat members are drawn from PWGSC, DND, IC and other departments. These members are responsible to the ED for implementation of the NFPS action plan and responsive to their respective departmental authorities for departmental requirements related to the NFPS action plan.

13. The working relationship between the members of the Secretariat is cooperative. The ED has tasking authority over seconded employees of all other departments. The ED will be kept informed of issues emanating from other departments that might affect the NFPS action plan.

Next Steps

14. Following completion of the NFPS action plan, the DMGC will present its conclusions to Ministers in support of the Government's decisions on how to move forward with the replacement of the CF-18 fleet.

Amendments

15. It is agreed that these TOR may be amended as necessary and with the consent of the core members of the DMGC: Michelle d'Auray, Deputy Minister, Public Works and Government Services Canada; Michael Martin, Associate Deputy Minister, Department of National Defence; John Knubley, Deputy Minister, Industry Canada.

Annex "A"

Deputy Minister Governance Committee (DMGC)

A1. The DMGC is responsible for:

1. Interdepartmental coordination of the implementation of the Government Action Plan outlined in Annex "B" of this document, including the presentation to Ministers of any resulting conclusions;
2. Oversight and due diligence, including but not limited to areas of costing, acquisition process and resulting industrial benefits from the project;

A2. The DMGC shall:

1. Ensure transparency and provide as and when required briefings and related information to Ministers; and
2. Oversee, review and approve the preparation of any documentation to be presented to Ministers for discussion and decision, and to Parliament.

A3. DMGC meetings will be held as required, but normally not less than once every two months. The core members will reach decisions by consensus and within the context of their departmental accountabilities, as detailed in paragraphs 5, 6 and 7 of these Terms of Reference. Core members or the Associate Deputy Minister for the same department shall be present for items requiring DMGC decision.

Adm-Level Interdepartmental Steering Committee (ISC)

A4. The ADM-level Interdepartmental Steering Committee (ISC) is accountable to the DMGC.

A5. The ISC will include a core membership of ADM-level (or equivalent) representatives from key stakeholder departments as determined by the Deputy Minister of their respective department. The following departments/agency will comprise the core membership of the ISC:

1. PWGSC (Chair);
2. DND; and
3. IC.

A6. The ISC may also include ex officio membership at an equivalent level from the Department of Finance, Treasury Board Secretariat and Privy Council Office and any other agency/entity that will provide advice and expertise to aid the core membership in its decision-making role.

A7. The ISC is responsible for:

1. Ensuring the efficient and effective management of the NFPS action plan in accordance with the scope approved by the Government;
2. Reviewing the risks and the associated mitigation strategy identified by the Secretariat; and
3. Providing updates and recommendations to the DMGC, as required.

A8. ISC meetings will be held as required during the implementation of the NFPS action plan, but normally not less than once a month.

Secretariat

A9. The organizational structure of the Secretariat will be reviewed periodically to assess the requirements to implement the NFPS action plan. Positions will be staffed in accordance with the requirements of the NFPS action plan as it progresses.

A10. In the overall implementation of the NFPS action plan, the primary tasks of the Secretariat are to:

1. Review, oversee, and coordinate the implementation of the NFPS action plan, as described in Annex "B" of this document;
2. Ensure that a validation of all the steps taken to date in the acquisition process is conducted and independently verified;
3. Development of short term, medium term and long term plans for the implementation of the NFPS action plan;
4. Inform the ISC regarding progress in the implementation of these plans, highlighting potential risks, issues and/or changes to plans that would impact the achievement of the NFPS objectives;
5. Provide regular updates to the ISC;
6. Each department remains responsible for their respective communication activities, and all communication activities will be coordinated through the Secretariat. PWGSC, through the Secretariat, will develop a protocol for approval by the ISC and the DMGC, to meet the objectives of open, informed and transparent communications of activities related to the NFPS action plan;
7. Monitor the international environment and developments, engage as appropriate, and inform ISC and DMGC as required;
8. Ensure effective coordination of the activities of all participating government departments in implementing government direction with respect to the NFPS action plan;
9. Refer interdepartmental issues that cannot be resolved within the Secretariat to the ISC for resolution;
10. Provide the following support to the DMGC and to the ISC:
    • Coordinate and produce the minutes of the DMGC and ISC meetings;
    • Monitor and manage key risks as identified by the DMGC and ISC;
    • Prepare or assist in the preparation of regular updates to Ministers and to Parliament, as appropriate, with respect to various elements and phases of the implementation of the NFPS action plan;
    • Prepare or assist in the preparation of various reports, including reports to Parliament, as required.

A11. Throughout the implementation of the NFPS action plan, it is envisaged that the relationship between the Secretariat and the various departments will include open and interactive communication and reporting on the status of implementation and the progress of its key milestones.

A12. The Secretariat may establish Working Groups for specific tasks.

Other

A13. All written correspondence involving the NFPS and all other NFPS - related reports initiated within PWGSC, DND, or IC, and which may have an impact on the NFPS action plan or on the coordination role of the Secretariat shall be provided to the Secretariat. The Secretariat will ensure that the other members of the Governance structure receive copies of reports containing subject matter that might affect them.

A14. A cost recovery agreement for the operation of the Secretariat will be negotiated between PWGSC and DND.

A15. To the maximum extent practicable, Secretariat staff shall be co-located. The accommodations shall be sufficiently secure to facilitate the handling of sensitive and classified documentation and activities.

A16. It is agreed that PWGSC will remain responsible and accountable for the operation of the interdepartmental Secretariat.

Annex "B"

Action Plan

B1. In response to the Auditor General's 2012 Spring report on Replacing Canada's Fighter Jets, the Government announced on April 3, 2012 the following action plan to address the Auditor General's findings and recommendation:

1. “The funding envelope allocated for the acquisition of the F-35 will be frozen;
2. The Government of Canada will immediately establish a new F-35 Secretariat within the Department of Public Works and Government Services Canada. The Secretariat will play the lead coordinating role as the Government moves to replace Canada's CF-18 fleet. A committee of Deputy Ministers will be established to provide oversight of the F-35 Secretariat;
3. The Department of National Defence, through the F-35 Secretariat, will provide annual updates to Parliament.  These updates will be tabled within a maximum of 60 days from receipt of annual costing forecasts from the Joint Strike Fighter program office, beginning in 2012. The Department of National Defence will also provide technical briefings as needed through the F-35 Secretariat on the performance schedule and costs;
4. The Department of National Defence will continue to evaluate options to sustain a Canadian Forces fighter capability well into the 21^st century;
5. Prior to project approval, Treasury Board Secretariat will first commission an independent review of DND's acquisition and sustainment project assumptions and potential costs for the F-35, which will be made public;
6. Treasury Board Secretariat will also review the acquisition and sustainment costs of the F-35 and ensure full compliance with procurement policies prior to approving the project;
7. Industry Canada, through the F-35 Secretariat, will continue identifying opportunities for Canadian Industry to participate in the F-35 Joint Strike Fighter global supply chain, as well as other potential benefits for Canada in sustainment, testing, and training, and will provide updates to Parliament explaining the benefits.”

¹Noting that acquisition and sustainment assumptions received from the US Joint Strike Fighter program office will not be included in this review. (Back to note 1)