Audit of Management of Laboratories (AU1414)

TABLE OF CONTENTS

EXECUTIVE SUMMARY

INTRODUCTION

Natural Resources Canada owns and/or occupies 18 major laboratories or science centres across Canada, which are essential to delivering on the Department’s science activities. These facilities contribute significantly to the delivery of the Department’s programs and achievement of its strategic objectives and priorities by allowing it to conduct leading-edge science and technology (S&T) research.

The Department’s expenditures related to laboratory activities and science centres in fiscal year 2012-2013 were approximately $270 million.Footnote 1 Furthermore, with a broad inventory of scientific equipment within these facilities that account for a total original acquisition cost of over $152 millionFootnote 2, they form a material and significant amount of the Department’s asset portfolio.

The Audit of Management of Laboratories was approved by the Deputy Minister as part of the Risk-Based Audit Plan for 2013-14. The audit was selected due to the importance of laboratories role within the Department and the materiality of these facilities and their equipment. In addition, no audits on laboratory facilities management across sectors had previously been conducted.

The objective of the audit is to provide reasonable assurance that sound management practices are in place to manage NRCan laboratories. Specifically, the audit assessed whether:

  • Departmental sectors have in place effective governance processes with respect to the management of laboratories;
  • Departmental sectors have established effective operational planning and management processes; and
  • Departmental sectors are exercising effective oversight and monitoring activities.

The scope of the audit included NRCan’s Laboratory Management activities from April 2012 to June 2013. In some instances where projects extend over multiple years, the audit covered more than one fiscal year. The scope of the audit did not include an examination of Net Vote Revenue Activities, Health and Safety, Intellectual Property, Physical Security, or the center located in Resolute operated under NRCan’s Polar Continental Shelf Program. Furthermore, the scope did not include an assessment of the quality or relevance of the scientific research conducted within the laboratories or its use.

STRENGTHS

Overall sectors have governance processes in place to ensure that laboratory activities are aligned with the Department’s objectives and priorities. Engagement of stakeholders through partnerships and collaborative engagements is conducted, creating efficiencies and generating revenues to supplement internal funding. Investment planning processes related to identifying and prioritizing major capital equipment needs for laboratory activities and the delivery of large-scale initiatives are well managed.

AREAS FOR IMPROVEMENT

Opportunities for improvement were identified in the following areas:

  1. Enhancing the clarity of alignment of laboratory activities with NRCan’s S&T signature projects;
  2. Enhancing corporate oversight to ensure the sharing of best practices;
  3. Strengthening conflict of interest awareness and management processes with respect to S&T to further ensure consistency and minimize related inherent risks;
  4. Consistently including the planned acquisition of capital equipment and assets valued between $10,000 and $250,000 in the Sectors’ strategic planning process; and
  5. Enhancing corporate oversight for laboratory activities, including the development of a comprehensive performance management framework.

AUDIT CONCLUSION AND OPINION

Overall, the Audit Branch can provide reasonable assurance that sound management practices are in place to manage NRCan laboratories.

In my professional judgement as Chief Audit Executive, the audit conforms with the Internal Auditing Standards for the Government of Canada, as supported by the results of the internal Quality Assurance and Improvement Program.

STATEMENT OF CONFORMANCE

In my professional judgement as Chief Audit Executive, the audit conforms with the Internal Auditing Standards for the Government of Canada, as supported by the results of the internal Quality Assurance and Improvement Program.

Christian Asselin, CPA, CA, CMA, CFE
Chief Audit Executive

ACKNOWLEDGEMENTS

The audit team would like to thank those individuals who contributed to this project and, particularly employees who provided insights and comments as part of this audit.

INTRODUCTION

NRCan is comprised of five Program Sectors, two Policy Sectors, and two Corporate Sectors, each overseen by a Sector Assistant Deputy Minister.

NRCan’s Policy Sectors provide policy leadership, strategic advice, consultative services and horizontal leadership. The Policy Sectors are: the Science and Policy Integration Branch (SPI), the Major Projects Management Office (MPMO).

NRCan’s Program Sectors are predominantly science based. These include: the Canadian Forest Service (CFS), the Earth Sciences Sector (ESS), the Energy Sector (ES), the Innovation and Energy Sector (IETS), and the Minerals and Metals Sector (MMS). Working in partnership with all levels of government, universities, research institutes, the private sector and international organizations and governments, these Sectors conduct science and technology (S&T) research to provide Canadians with ideas, innovations, knowledge, and technologies. NRCan laboratories contribute significantly to the delivery of the Department’s programs and achievement of its strategic objectives and priorities.

The Department’s Science and Technology strategy focuses on creating a more competitive and sustainable Canadian economy. The strategy recognizes that the government plays an important role in ensuring a competitive marketplace and in creating an investment climate that encourages the development of world class innovative products, services and technologies.
 
NRCan owns and/or occupies 18 major laboratories or science centres across Canada which are essential for the delivery of the Department’s science and technology activities. A laboratory is a facility that provides controlled conditions in which scientific research, experiments, and measurement may be performed. NRCan’s laboratories provide a national presence and support regional and local systems of innovation, contributing to Canadian competitiveness and economic development.

Each laboratory science centre is independently managed by its respective Sector within NRCan, and are not all managed in the same way. For example, NRCan’s Earth Science Sector (ESS) manages its laboratories using a Science Laboratory Network (SLN). The SLN is the ESS network of laboratories across the Geological Survey of Canada (GSC) comprised of five lab groups spread out across the six divisions, each with a unique capacity to provide specialized laboratory results in support of programs. In contrast, although NRCan’s other Sectors manage their laboratories based on specialization; they do not necessarily employ a formalized network model such as ESS.

In order to enhance reporting and accountability with respect to its S&T activities, which include laboratory activities, NRCan has organized its programs and research under broad subjects, using a thematic approach, such as “Green Mining Innovation, Clean Energy S&T, Explosives and Materials Safety and Security, and Forest Disturbances Science and Application” for example. These are known as NRCan Signature S&T projects. They represent an aggregation of activities managed through the Department’s Program Alignment Architecture (PAA). Specifically, NRCan’s “Signature S&T projects” were developed to answer the question: “What is the S&T that the department performs?” Grouping NRCan’s S&T into 23 Signature projects is intended to help with understanding the vast S&T conducted by the Department as well as communication, accountability and managing of S&T. The grouping of projects into Signature S&T allows for detailed financial reporting of S&T expenditures.

The Department’s expenditures related to laboratory activities and science centres in fiscal year 2012-2013 were approximately $270 millionFootnote 3. The Department has a broad inventory of scientific equipment used in these facilities including over 8200 pieces of equipment with a total acquisition cost of over $152 millionFootnote 4. As a result, laboratories and their related equipment form a material and significant amount of the Department’s asset portfolio.

NRCan’s Assistant Deputy Ministers who are responsible for delivering S&T, are ultimately accountable for each of their Sector’s science centres activities. NRCan’s Chief Scientist, as a functional lead, works with the Department’s Assistant Deputy Ministers to ensure that NRCan’s policy advice is backed by sound evidence, based in part on the results of NRCan’s laboratory activities. This is a critical point of the integration of science and policy.

Centrally, NRCan’s Science and Technology Board (STB) provides senior corporate leadership to allow for an integrated and coordinated approach to the ongoing management of NRCan’s S&T capacity and responsiveness. The STB is chaired by the Department’s Deputy Minister and its members include Assistant Deputy Ministers (ADMs) from NRCan’s Scientific Sectors and from NRCan’s Science and Policy Integration Branch, as well as other ADMs depending on the agenda. The S&T Board also includes three external members.

The Directors General Science and Technology Committee (DGSTC) is chaired by the Chief Scientist and is comprised of a representative DG from each sector with an interest in the S&T activities of the department. It supports the S&T Board’s objective of overseeing S&T governance and accountability at NRCan, especially with respect to planning and priority-setting, resource allocation, risk management and performance measurement. The DGSTC also supports the Board’s broader efforts related to implementation of the NRCan S&T Strategy including renewing S&T capacity, developing the S&T knowledge base, exploring partnerships and collaboration and other delivery mechanisms, and maintaining effective public and stakeholder engagement. Their role is integral to the management of the Department’s S&T activities, including laboratories and science centres.

AUDIT PURPOSE AND OBJECTIVES

The objective of the audit was to provide reasonable assurance that sound management practices are in place to manage NRCan laboratories.

Specifically, the audit assessed whether:

  • Departmental sectors have in place effective governance processes with respect to the management of laboratories;
  • Departmental sectors have established effective operational planning and management processes; and
  • Departmental sectors are exercising effective oversight and monitoring activities.

DEPARTMENTAL RISK

An internal audit of management of laboratories is included in NRCan’s 2013-2014 Risk-Based Audit Plan and was approved by the Deputy Minister. There have been no previous Department-wide audits on laboratory management.

A risk-based approach was used in establishing the objectives, scope and approach to this audit engagement. A summary of the key underlying risks that were taken into consideration are:

  • NRCan laboratory activities may not adequately address the key natural resources issues;
  • Inability to maintain a sufficient and representative workforce with the appropriate experience and skill-mix and support effective talent management including recruitment, retention and learning may affect the performance of the laboratory activities;
  • Potential conflict of interest issues may exist due to collaborations and partnerships with stakeholders; and
  • Notwithstanding recent Accelerated Infrastructure Program (AIP) investments to modernize 12 labs, the challenge of maintaining laboratory equipment and infrastructure that may be too costly to replace but required to meet the priorities of the Department.

SCOPE

The scope of the audit included NRCan’s Laboratory Management activities from April 2012 to June 2013.

The scope of the audit did not include an examination of Net Vote Revenue Activities, Health and Safety, Intellectual Property, Physical Security, or the center located in Resolute operated under NRCan’s Polar Continental Shelf Program. These topics have either been examined during the conduct of previous or current audit work or, will be addressed during the course of future audit work identified in NRCan’s 2013-2016 Risk-Based Audit.

Furthermore, the scope did not include an assessment of the quality or relevance of the scientific research conducted within the laboratories or its use.

Of the 18 laboratories and science centersFootnote 5, the following were selected for detailed examination and were included as part of the audit:

  • Canadian Forestry Sector: Pacific Forestry Centre and Northern Forestry Centre;
  • Earth Sciences Sector: Science Laboratory Network(SLN);
  • Minerals and Metals Sector: Canmet MATERIALS Research Centre Hamilton, CanmetMINING Ottawa and CanmetCERL (Canadian Explosives Research Laboratory) Ottawa; and
  • Innovation and Energy Technology Sector: CanmetENERGY-Ottawa and CanmetENERGY-Devon.

APPROACH AND METHODOLOGY

The approach and methodology followed the Internal Auditing Standards for the Government of Canada, which incorporates the Institute of Internal Auditors’ International Standards for the Professional Practice of Internal Auditing. These standards require that the audit be planned and performed in such a way as to obtain reasonable assurance that audit objectives are achieved.

The audit included various tests, as considered necessary, to provide such assurance. Internal auditors performed the audit with independence and objectivity as defined by the Internal Auditing Standards for the Government of Canada.

The audit methodology was based on internal auditing guidelines and included:

  • Interviews with the key personnel responsible for the forecasting process and its monitoring;
  • Reviewing key documents and relevant background documents;
  • Reviewing the process and practices related to controls in place; and
  • Reporting the results and findings.

CRITERIA

Audit criteria used in the audit were developed based on the Office of the Comptroller General’s Audit Criteria related to the Management Accountability Framework: A Tool for Internal Auditors, as well as other relevant TBS policies. The criteria were approved by management prior to the commencement of the audit. These are included in Appendix A.

FINDINGS AND RECOMMENDATIONS

GOVERNANCE

Summary Finding

Overall NRCan’s sectors have governance processes in place to ensure that laboratory activities are aligned with the department’s objectives and priorities. However, opportunities were identified to further enhance corporate oversight by ensuring the sharing of best practices and the development of tools to ensure the alignment of laboratory activities with NRCan’s S&T signature projects going forward.

Supporting Observations

Governance

NRCan's has established three Strategic Outcomes (i.e. Canada’s Natural Resources are Globally Competitive, Natural Resource Sectors and consumers are Environmentally Responsible, and Canadian have information to Manage their Lands and natural Resource and are Protected from Related Risks) along with four key Strategic Priorities which include: 1) Expand Markets and Global Partnerships; 2) Innovate for Competitiveness and Environmental Performance; 3) Unlock Resource Potential through Responsible Development; 4) Leverage S&T Knowledge for Safety and Security Risk Management.

As noted above, in order to enhance reporting and accountability with respect to its S&T activities, which include laboratory activities, NRCan has organized its programs and research under broad subjects, using a thematic approach, such as “Green Mining Innovation, Clean Energy S&T, Explosives and Materials Safety and Security, and Forest Disturbances Science and Application” for example. These are known as NRCan Signature S&T projects. They represent an aggregation of activities managed through the Department’s Program Alignment Architecture (PAA). Specifically, NRCan’s “Signature S&T projects” were developed to answer the question: “What is the S&T that the Department performs?” Grouping NRCan’s S&T into 23 Signature projects is intended to help with understanding the vast S&T conducted by the Department as well as communication, accountability and managing of S&T. The grouping of projects into Signature S&T allows for detailed financial reporting of S&T expenditures.

The audit examined whether effective governance processes were in place with respect to the management of laboratories, including alignment with NRCan’s priorities and clearly defined and documented roles and responsibilities. The audit noted that at the Sector level, strategic priorities and objectives, which are aligned with the Department’s objectives and priorities, have clearly been established. These have been set out within each of the Sector’s respective Integrated Business Plans, which describe the context in which each of the Sectors operates. Within this context, the audit found that management has set clear priorities and criteria for the selection of laboratory activities to ensure alignment to Departments strategic direction and priorities. While the projects examined were clearly aligned with the Department’s objectives and priorities, linkages to NRCan’s signature S&T projects were not always evident.

The audit also found that planning, approval processes and tools/templates used, as well as the detail in terms of documentation for proposed activities varied within and across Sectors. For example, the audit noted that MMS’ CanmetMINING along with IETS’ CanmetENERGY– Ottawa use a project screening process that includes a documented assessment to ensure that projects undertaken do not conflict with its mandate to avoid competing with the Canadian private sector. This practice was not found within the other Sectors examined.

It was also noted that laboratory activity approvals in some Sectors occurred at the Director General level, while in one case a Director General Committee is charged with the role of selecting and approving project proposals including laboratory activities. The audit found that the Canadian Forest Service Sector was exercising a best practice, as it further ensured consensus, coordination, collaboration and the creation of possible synergies with respect to the activities carried out in its laboratories.

Another example of varying practices included approaches and systems being used across Sectors for managing and monitoring laboratory activities. These varied from simple excel spreadsheets to sophisticated integrated systems. As such, the audit found an opportunity to further develop common management practices and tools, as well as ensure that best practices are identified and shared across to create efficiencies, wherever possible.

The audit also examined the clarity of roles and responsibilities with respect to the management of laboratories, and found that for the projects examined, roles and responsibilities were appropriately defined. Overall responsibility and performance expectations to which project managers were held accountable for were formally defined along with related authorities within project proposals and resulting service agreements.

At the Corporate level, Sector Assistant Deputy Ministers are responsible for delivering S&T and are ultimately accountable for each of their Sector’s science centres activities. In addition, NRCan’s Science and Technology Board (STB), established in February 2011, is mandated to provide strategic oversight on S&T, including laboratory activities, across the Department. As part of their objective, the STB oversees S&T governance and accountability at NRCan, especially with respect to planning and priority-setting, resource allocation, risk management and performance measurement.

NRCan’s Chief Scientist, as a functional lead, works with the Department’s Assistant Deputy Ministers responsible for delivering S&T to ensure that NRCan’s policy advice is backed by sound evidence based in part, on the results of NRCan’s laboratory activities. This is a critical juncture of the integration of science and policy.

The audit found that the roles of the STB and DGSTC continue to evolve. For example, the Terms of Reference for the DGSTC’s was recently updated to reflect changes to their role towards supporting the STB. As their respective roles are evolving and a comprehensive performance measurement framework for the S&T portfolio, including laboratories, is still being developed, the audit found opportunities to improve the tools and reports provided to these committees to further support informed decision making.

MANAGEMENT INITIATIVE

The audit noted positive initiatives with regards to the DGSTC providing further support to the STB to fulfill their role. This is exemplified by a report recently provided to the STB earlier this year summarizing NRCan’s science and technology activities, including laboratory activities, within 23 signature S&T projects. The audit team was advised that this was the first time such a comprehensive report was prepared. It included costing information, an overview of the 23 signature projects, detailed activities, as well as other information. Such information could be useful in developing further oversight tools, such as aggregate ‘roll-ups’ of projects and performance targets/indicators for example.

Furthermore, the DGSTC is currently establishing a Performance Measurement Framework specifically related to S&T activities, including laboratories, across the Department. (See Recommendation #4.)

RISK AND IMPACT

The lack of clarity of alignment between laboratory activities and the S&T Signature projects may impede the receipt of proper strategic information received by the S&T Board and affect its ability to provide effective strategic oversight and direction.

Sharing best practices and tools may enable the Department to maximize synergies and increase efficiency.

RECOMMENDATIONS

1. It is recommended that the Chief Scientist and the accountable Sector Associate Deputy Ministers (ADMs) coordinate with the Directors General Science and Technology Committee (DGSTC) establish a process to ensure that best practices, such as project screening tools, are identified and shared across Sectors.

MANAGEMENT RESPONSE, ACTION PLAN AND TIME FRAME

1. Management agrees with the recommendation. The DGSTC is in place specifically to look at management practices and tools for the science and technology (S&T) activities in Natural Resources Canada (NRCan), drawing on best practices from within NRCan and across the science based department and agency community. Working under the auspices of the S&T Board, DGSTC will add a standing item to its agenda seeking out best management practices as it continues to work on Mobilizing S&T at NRCan.

Position responsible: Directors General Science and Technology Committee

Timing: Monthly at all meetings

COLLABORATIONS AND PARTNERSHIPS

Summary Finding

NRCan considers partnerships and collaborative arrangements with other organizations; however, opportunities exist to further mitigate against potential conflict of interest (CoI), by ensuring, for example, the consistent use and documentation of CoI assessment tools at the project level.

Supporting Observations

Collaborations and Partnerships

One of the principles underlying the Department’s 2011 Science and Technology Strategy is the development of effective collaborative arrangements, along with national and international partnerships with other research providers. In a time of limited resources and fiscal restraint, collaborative arrangements and partnership are seen as a way to ensure that NRCan maintains a competitive edge while expanding NRCan’s S&T capacity.

The audit noted that NRCan has undertaken successful partnerships and collaborative arrangements with organizations, including provincial partners, academia, industry groups, and others when planning laboratory activities. New ways of delivering programs are being considered that require less capital investment on behalf of NRCan. This is exemplified by the significant number of collaborative research arrangements currently in place with external partners that generated approximately $30 million last year of Net Vote Revenue. For example, forty-two percent (42%) of IETS’s CanmetENERGY-Devon operating funds are generated through collaborative arrangements.

While NRCan’s institutional collaborative efforts are generally driven by management (e.g. university and private sector collaborative arrangements and partnerships) and continue to evolve, the nature of scientific research will always require partnerships be driven by individual scientists as well. Moreover, scientists noted that efforts to seek partnerships were often time consuming and may take away time and resources that could be used for their scientific work. Depending on the project, scientists may be responsible for soliciting and recruiting partners and external funding.

There is an inherent risk that collaborative efforts, driven primarily by those individuals conducting the actual research, cause situations of potential Conflict of Interest (COI) or situations of perceived COI. For example, individual relationships between NRCan employees and industry that could give rise to perceptions of favourable treatment. While the audit did not identify any specific cases of COI or inappropriate activity, inconsistencies were noted in the processes applied to address potential situations of COI. For example, while one Sector laboratory had developed a roles and responsibilities manual making it mandatory for managers to ensure that their staff had read NRCan’s Values and Ethic’s Code, no other Sectors had developed such a requirement.

MANAGEMENT INITIATIVE

The NRCan Values and Ethics Code came into effect on April 2, 2012. The Code serves to mitigate potential ethical risks or possible conflict of interest situations that the Department or its employees may face in their daily activities. It was also noted that NRCan’s Values and Ethics Centre of Expertise has recently developed a self-assessment tool to assist staff in recognizing potential situation of conflict of interest.

With respect collaborative arrangements and partnerships, NRCan is currently establishing a policy on foreign workers, volunteers, visitors and visiting delegations in order to enhance the control and oversight of science and research and development activities.

RISK AND IMPACT

Collaborative efforts mainly driven by individuals and a lack of consistency in management processes increases the risk for a potential COI.

RECOMMENDATIONS

2. It is recommended that the Chief Scientist and the accountable Sector Assistant Deputy Ministers (ADMs) coordinate with the Directors General Science and Technology Committee (DGSTC), in consultation with NRCan’s Values and Ethics (V&E) Centre of Expertise, ensure a consistent approach to Conflict of Interest awareness and management processes with respect to science and technology (S&T).

MANAGEMENT RESPONSE, ACTION PLAN AND TIME FRAME

2. Management agrees with the recommendation. DGSTC working in collaboration with the V&E Centre of Expertise is developing a self-assessment questionnaire for all staff that will be released in 2013-2014. Release of the questionnaire, specifically Part 1 and accompanying communications also outline the appropriate actions required in cases of moderate or serious risk of conflict situations, supported by additional guidance on the V&E Wiki portal.

Position responsible: Values & Ethics Centre of Expertise & Directors General Science and Technology Committee

Timing: December-January 2013-2014 and ongoing

RESOURCES AND MANAGEMENT PRACTICES

Summary Finding

While Departmental Sectors have established operational planning and management processes, opportunities for improvement exist to ensure processes related to planned acquisitions of equipment and assets needed for scientific research are formally documented.

Supporting Observations

Human resources

The Departmental HR plan is part of the integrated business plan. An HR Renewal Committee exists, is active and working towards objectives. It supports the Deputy Minister (DM) and the Executive Committee in setting the Department’s strategic direction for talent management Corporate Succession planning exists for executive level positions. Corporate HR collects a variety of data on NRCan S&T professionals in order to prepare appropriate retention strategies and develop succession plans.

At the sector and branch level, succession planning is also being conducted to varying degrees. Sectors identify their future and current vacancies, reasons for departures and utilize the tools and support that is provided by Corporate HR. Some sectors have completed detailed analysis of the HR environment for S&T professional in the Sector and Branches in order to more strategically manage HR. Each sector has an HR committee mandated to adapt and apply a sector-wide approach to addressing key human resources issues, in the context of the sector’s business needs.

Capital assets

NRCan has a wide range of assets located across the country. The most significant asset types by dollar value are machinery and equipment, buildings/capital leases. NRCan Investment Plan 2013-14 to 2017-18, shows that the Capital Vote will decrease by $23 million.Footnote 6 NRCan’s planned resources for Capital investment is currently set at $7 million for 2014-15.

S&T equipment is used to conduct scientific research, map the Canadian land mass, develop new commercial technologies and conduct specialized tests such as those required for the regulation of explosives. This equipment is generally located in the 18 NRCan laboratories located across the country. NRCan, like the majority of science-based departments, faces the challenge of operating and maintaining scientific and technical equipment that is costly to replace. The government’s priorities and departmental business priorities have influenced the areas of department research, impacting both scientific research and the equipment required.

NRCan’s scientific and technology assets represent a significant portion of NRCan’s asset base. The Department has a broad inventory of scientific equipment used in its laboratories and science centers, with a total original acquisition cost of over $152 million and a net book value of $29 millionFootnote 7.

As of June 30, 2013, an analysis of 8,245 items recorded as scientific equipment, with values $10K or greater, showed an average age of 15 years. As such, an inherent risk exists due to the age of the equipment, the potential for escalating costs of repairs and maintenance, and decreasing capital investment.

The processes and life-cycle approach to managing assets are generally understood by staff. However, issues still remain with certain aspects of the life-cycle approach such as repurposing old equipment, disposal of obsolete assets, lengthy timelines for the procurement of scientific assets, along with limited funding. These issues can affect disposal costs and the ability of the laboratories to perform the S&T work, ultimately affecting the achievement of the Department’s strategic objectives, particularly those supported by lab based S&T activities.

The audit noted that investment planning processes related to identifying and prioritizing major capital equipment needs for laboratory activities and the delivery of large-scale initiatives are well managed. It was also noted that the investment planning processes established within ESS and CFS reflected integrated investment planning processes that took into account not only large capital equipment but items of smaller value as they related to laboratory activities.

However, the audit found that the acquisition of capital equipment and assets valued between $10,000 and $250,000 needed for scientific research is being conducted inconsistently across Sectors and is not always formally documented within Science Centers. It was also found that not all Sectors maintain a comprehensive list of assets provided by third-parties for Departmental use (i.e. academia, private sector).

Budgeting and monitoring

Certain of NRCan’s Science Centres operations are substantially based on cost recovery activities, collaborative arrangements, and partnerships that are in line with the Department’s priorities. It was noted that some have incurred annual funding shortfalls. In times of continued fiscal constraint and global economic instability, a significant economic downturn could affect these centres’ ability to sustain the delivery of their mandate.

Analysis of the entire project portfolio for each laboratory is important. Even though each activity or project has been allocated a budget based on targeted results, it was noted that there was not a consistent and comprehensive analysis of the financial resource capacity within all Sectors. It was also noted; however, that ongoing budget monitoring does occur at the Responsibility Centre level for the project and/or activity, and at the Laboratory centres.

RISK AND IMPACT

A lack of consistency regarding the management of equipment increases the department’s risk that assets are not managed in the most optimal manner.

RECOMMENDATIONS

3. It is recommended that the Chief Scientist and the accountable Sector Assistant Deputy Ministers (ADMs) coordinate with the Directors General Science and Technology Committee (DGSTC) to ensure that planned acquisitions of capital equipment and assets between $10K and $250K needed for scientific research are identified as part of the Sector strategic planning processes. This information could be reported to the DGSTC on a periodic basis, to enable efficiencies and improve the coordination of such acquisitions.

MANAGEMENT RESPONSE, ACTION PLAN AND TIME FRAME

3. Management agrees with the recommendation. Adjustments to annual lab activity in sector integrated business plans will account for acquisitions of science and technology (S&T) capital equipment and assets between $10K and $250K which are normally coordinated with Shared Services Office (SSO). An annual wrap-up will be provided to DGSTC working with S&T sectors, SSO and Science and Policy Integration (SPI).

Position responsible: Science & technology Sector Assistant Deputy Ministers working with the Chief Scientist, the Directors General Science and Technology Committee & Science and Policy Integration

Timing: Starting with the planning cycle of 2014-15 and annually thereafter

PERFORMANCE MEASUREMENT AND PRACTICES

Summary Finding

Performance measures and related reporting processes exist; however there is no comprehensive performance measurement framework for laboratory activities across Sectors. Quality systems also exist; however it was found that Sectors are using a variety of basic and complex measures to ensure quality control.

Supporting Observations

Measuring performance and quality control

Measuring performance is essential in understanding an organization’s strengths, weaknesses, and opportunities for improvement. It is an integral part of strategic planning. It enables an organization to determine whether the processes in place resulted in the achievement of expected results.

The audit examined whether Sectors assess laboratory activities against pre-established performance indicators. It was found that Sectors are using a variety of basic measures, such as the number of presentations at conferences, the number of peer-reviewed publications, the number of collaborative efforts and partnerships, and whether project are on time, and on budget.

While it was noted that Sectors have in place some performance metrics encompassing both qualitative (customer survey) and quantitative (in-kind contributions), these are being applied inconsistently within, and, across Sectors. The audit found no evidence of a consistent approach or evidence of a comprehensive performance measurement framework for laboratory activities.

The audit examined whether Sectors assessed the quality of laboratory activities. It was found that Sectors are using a variety of basic and complex measures to ensure quality control. For example, it was noted that complete quality control systems and quality controls manuals had been developed for certain Sector Laboratories, while quality control in other laboratories were not as comprehensive.

MANAGEMENT INITIATIVE

The Office of the Chief Scientist is pursuing the establishment of an overarching performance measurement framework and a common matrix approach across the Department focusing on Relevance, Impact and Quality of NRCan’s S&T activities.

RISK AND IMPACT

The absence of a consistent approach to measure performance and lack of strategic performance measurement framework for S&T activities may reduce the Department’s ability to provide strategic direction and oversight.

RECOMMENDATIONS

4. It is recommended that the Chief Scientist and the accountable Sector Assistant Deputy Ministers (ADMs) coordinate with the Directors General Science and Technology Committee (DGSTC) to develop and put in place a performance measurement framework, including performance measures specific to the management of laboratories, building on the existing performance measurements.

MANAGEMENT RESPONSE, ACTION PLAN AND TIME FRAME

4. Management agrees with the intent of the recommendation. At its October 2013 meeting the science and technology (S&T) Board mandated the DGSTC, working in conjunction with sectors, to develop a performance measurement framework for the S&T activities of the department as identified in the Signature Projects – including work done in labs, but not necessarily always specific to lab activity. A draft of the framework will be presented to the Board in the Spring of 2014.

Position responsible: Directors General Science and Technology Committee working with the Chief Scientist and the science & technology Assistant Deputy Ministers

Timing: For an S&T Board Meeting in the Spring of 2014

APPENDIX A – AUDIT CRITERIA

The audit criteria were derived from widely recognized control models (e.g. Management Accountability Framework, CICA Criteria of Control - CoCo) and relevant policies, acts and legislation. Actual performance was assessed against the audit criteria resulting in either a positive finding or the identification of an area of improvement.

The objective of the audit is to provide reasonable assurance that sound management practices is in place to manage NRCan laboratories.

Audit Criteria Used to Conduct the Audit
Audit Sub-Objectives Audit Criteria
Sub-Objective 1: To determine whether the Departmental Sectors have in place effective governance processes with respect to the management of laboratories. 1.1 NRCan has a Governance process in place to ensure that laboratory activities are aligned with the Department’s objectives and priorities.
1.2 Authority, accountabilities, roles and responsibilities are clearly & formally defined, documented, and understood by staff in laboratories.
Sub-Objective 2: To determine whether the Departmental Sectors have established effective operational planning and management processes.
 
2.1 Investment planning with respect to Laboratories and related scientific equipment/assets are managed with due diligence.
2.2 Human resources planning and management are exercised with due regard to required capacity in order to meet objectives and priorities.
2.3 Budgeting and funding processes are in place and these take into account partnerships and collaboration arrangements.
2.4 Processes are in place to effectively address potential situations of conflict of interest.
Sub-Objective 3: To determine whether the Departmental Sectors are exercising effective oversight and monitoring activities.
 
3.1 Laboratory activities are formally monitored and reported on.
3.2 Performance measures and performance reporting processes have been established with regard to Laboratory activities.
3.3 Laboratories have appropriate laboratory and quality management systems and practices to ensure quality and timeliness of deliverables (including client satisfaction).

APPENDIX B – SCIENTIFIC EQUIPMENT ASSETS*

As of October 24, 2013

Age (Year) Count Acquisition Value Percentage Acquisition Value Net Book Value Percentage Net Book Value
0 - 0 194 3,088,319.44 2.0% 2,356,614.00 8.1%
1 to 4 1,162 28,189,995.43 18.5% 9,973,005.00 34.2%
5 to 10 2,016 37,561,281.31 24.6% 8,439,093.00 28.9%
11 to 15 1,283 25,908,408.36 17.0% 2,590,744.00 8.9%
16 to 20 949 19,179,830.49 12.6% 2,533,732.00 8.7%
21 to 26 1,253 19,512,632.50 12.8% 1,848,339.00 6.3%
>26 1,388 18,987,182.91 12.5% 1,422,062.00 4.9%
Totals 8,245 152,427,650.44 100.0% 29,163,589.00 100.0%

*This information is current and was derived from NRCan’s Financial Management System, SAP and represents scientific equipment with a value over $1000.00.

APPENDIX C – SCIENCE CENTRE EXPENDITURES*

Fiscal Year 2012-13

* This information reflects the expenditures by Science Centre as a whole. It was provided by the Department’s Sectors examined as part of the audit and extracted from the SAP system.

Lab Centre Expenditures ($ Salary) Expenditures ($ O&M) Expenditures ($ Capital) Expenditures (GC+OGD) Expenditures Total FTE Total
IETS – Devon $6,895.15 $6,939.30 $0.00 $260.98 $14,095.43 80
IETS – Varennes $8,095.30 $2,765.80 $0.00 $1,073.00 $11,934.10 71
IETS – Ottawa Bells Corner $18,455.00 $9,011.90 $0.00 $2,455.39 $29,922.29 254
CFS – Pacific Forest Centre $9,348.60 $3,395.70 $0.00 $689.70 $13,434.00 119
CFS – Northern Forest Centre $6,847.90 $1,988.80 $104.90 $834.90 $9,776.50 93
CFS – Great Lakes Forest Centre $9,580.80 $3,113.50 $104.00 $445.80 $13,244.10 121
CFS – Atlantic Forest Centre $6,293.50 $2,776.40 $41.00 $259.00 $9,369.90 85
CFS – Laurentian Forest Centre $8,099.40 $3,395.70 $78.00 $989.90 $12,563.00 99
MMS – Canmet Mining* $11,578.01 $4,822.03 $0.00 $1,612.03 $18,012.07 111
MMS – CERL $2,227.92 $1,628.43 $0.00 $0.00 $3,856.35 24
MMS – CMAT Hamilton $7,473.20 $600.60 $0.00 $7,854.10 $15,927.90 79
ESS – GSC Calgary $5,784.35 $1,936.53 $0.00 $0.00 $7,720.88 64
ESS – GSC Pacific (Vancouver +Sidney) $6,332.73 $2,241.71 $0.00 $0.00 $8,574.44 66
ESS – GSC Atlantic (Dartmouth) $5,559.87 $431.56 $0.00 $0.00 $5,991.43 60
ESS – GSC Central (Ottawa) 10,400.04 $4,102.09 $0.00 $445.55 14,947.68 113
ESS – GSC Quebec $3,877.83 $3,060.62 $0.00 $35.00 $6,973.45 40
ESS – Geomatic Activities ** $29,826.19 6,524.77 $10,713.47 $1,139.97 48,204.40 299
ESS – Canadian Hazards Information System CHIS** $4,195.77 $1,896.32 $69.96 $0.00 $6,162.05 45
ESS – Polar Continental Shelf NCR & Resolute $2,015.12 $7,419.67 $10,642.31 $0.00 20,077.10 26
Grand Total ($000's) $162,886.68 $68,051.43 $21,753.64 $18,095.32 $270,787.07 1849

* Including Val d'Or - Sudbury and Limebank
** PCSP Capital Investment funds from DND for the construction of the Canadian Armed Forces Arctic Training Centre

APPENDIX D – LABORATORIES’ MANDATES

IETS
DEVON, ALBERTA

Mandate:
CanmetENERGY serves as the Government of Canada's energy science and technology arm to provide solutions and knowledge for addressing critical oil sands environment issues while also ensuring it remains a valuable product for Canada. With this increase in oil sands growth there are several environmental challenges to land, air, water and energy conservation that will need to be addressed for Canada to pursue oil sands in a sustainable manner. We currently conduct research and technology development programs in the following areas: Extraction and Tailings; Water Management ; Multiphase Systems; Upgrading Oil Sands and Heavy Oil and Future Fuels and Emissions.

IETS
VARENNES, QUEBEC

Mandate:
CanmetENERGY is established nationally and internationally as a leader in providing energy solutions in built environments. Our clean energy project analysis, modeling and simulation software tools are key enablers of industry’s ability to optimize integrated energy efficient design, comply with code requirements, and qualify for funding and incentives programs. We work on net zero energy houses and buildings through design integration, advanced HVAC technologies development, rating and labelling support, and regulatory measures deployment.

IETS
OTTAWA, ONTARIO

Mandate:
Scientists at CanmetENERGY are leading the research and development of a diverse set of innovative technologies that will make fossil fuel combustion cleaner and contribute to the sustainable use of this resource. Working in a variety of research areas, we strive to make power generation more efficient and environmentally sustainable by reducing harmful emissions. Through the development of carbon capture and storage technologies, CO2 can be captured and permanently stored underground, thereby removing its harmful effects on our environment. By researching combustion processes such as clean coal technologies, gasification, oxy-fuel combustion, fuel and emission assessment, pollution control systems, and combustion system optimization,

CFS
VICTORIA, BRITISH COLUMBIA

Mandate:
The Pacific Forestry Centre (PFC), located in Victoria, British Columbia, works with forest sector stakeholders regionally, nationally and international to undertake the science behind challenging forest issues. The PFC is home to an internationally recognized collection of forest fungi and tree diseases, and the largest collection of forest insects in Western Canada. It is the headquarters of the Canada’s National Forest Carbon Monitoring, Accounting and Reporting System and the National Forest Inventory. PFC research activities include forest pests, forest resource survey methods, bio-energy, wildfire, forest sector competitiveness and the economics of international trade.

CFS
EDMONTON, ALBERTA

Mandate:
Building on its strengths in both the social and biophysical sciences, the Northern Forestry Centre (NoFC) leads and contributes to integrated, interdisciplinary research on nationally significant sustainable forest management issues. The NoFC is located in Edmonton, Alberta. Staff collaborates closely with other federal departments, provincial and territorial governments, industry and universities in the three prairie provinces and Northwest Territories to address key questions associated with climate change (both forest carbon and impacts and adaptation), wild land fire and ecosystem processes.

CFS
SAULT STE. MARIE, ONTARIO

Mandate:
The Great Lakes Forestry Centre (GLFC) has been a landmark in Sault Ste. Marie, Ontario, for more than 50 years. The centre is home to Canada’s Insect Production and Quarantine Laboratories, a one-of-a-kind research facility that employs clean-room technology and allows scientists to study alien invasive insects. The GLFC has a worldwide reputation for scientific excellence and is a world leader in forest research.

CFS
FREDERICTON, NEW-BRUNSWICK

Mandate:
The Atlantic Forestry Centre (AFC) is Atlantic Canada’s centre of excellence in forest research, with a 100-year history of forest science in the region. Co-located in Fredericton, New Brunswick, and Corner Brook, Newfoundland and Labrador, the AFC plays a vital role in national forestry research. The centre is home to a renowned insect chemical ecology lab that provides advanced detection and management tools for insects affecting Canada’s forests. The AFC is also responsible for the management of the Acadia and Petawawa Research Forests. The National Tree Seed Centre, a valuable genetic bank for scientific research and conservation, is also located here.

CFS
STE-FOY, QUEBEC

Mandate:
Located in Québec City, Quebec, the Laurentian Forestry Centre (LFC) is involved in the acquisition and dissemination of forest knowledge. Staff use state-of-the-art infrastructure, including molecular biology, remote sensing, geomatics and modeling labs, to conduct research in areas such as climate change, forest ecology, forest pest biology, ecogenomics and forest ecosystem dynamics and productivity. To support this research, the LFC also has a collection of insects and fungi, an experimental station in Valcartier, an arboretum, greenhouses, and several experimental plots across Quebec.

MMS - CanmetMINING (3 Laboratories)
(Ottawa, Val d’Or, Sudbury and Limebank)

Mandate:
CanmetMINING focuses on research and development in the following main areas of mining, processing, and related environmental issues. CanmetMINING's international reputation for technical excellence in conventional mineral processing is augmented by recognized leadership in developing technological solutions to reduce the environmental liabilities facing the minerals industry, as well as innovation in relation to mining extraction technologies. Wherever possible, CanmetMINING works in partnership with industry, provincial/territorial governments, universities and other research institutes. Current activities focus on three principal strategic directions.

MMS - Canadian Explosives Research Laboratory
OTTAWA, ONTARIO

Mandate:
The Explosives Safety and Security Branch (ESSB) is responsible for administering the Explosives Act and regulations and pursuing the advancement of explosives safety and security technology. ESSB's principal priority is the safety and security of the public and of all workers involved in the explosives industry in Canada. Through the Explosives Regulatory Division (ERD) (internet, wiki), the Branch provides services and support to the explosives industry, including manufacturers, importers, distributors, and users of explosives. Recently, an enrolment program for suppliers of explosives precursor chemicals (Restricted Components) was put in place.

MMS - CanmetMaterials
HAMILTON, ONTARIO

Mandate:
In collaboration with industry, CanmetMATERIALS conducts applied research, and develops and deploys technologies, to improve all aspects of producing and using value-added products from minerals and metals. Specifically, CanmetMATERIALS uses its specialists and one-of-a-kind laboratory facilities in metal processing and joining, corrosion prevention, ceramic technology, physical and mechanical testing, micro-characterization of materials, prototype fabrication, and advanced materials development.

ESS - Geological Survey Canada
CALGARY, ALBERTA

Mandate:
The GSC (Calgary) is a division of the (GSC) and was established in 1967 in response to an increasing demand by government and industry for geological information about the energy-rich regions of western and northern Canada. We have become an important source of information and expertise on the geology, geochemistry, geophysics and resource potential of the sedimentary basins in western and northern Canada, which contain most of Canada's known oil, natural gas and coal resources, as well as important deposits of minerals. We are also the Geological Survey of Canada's national centre for research in paleontology, coal and organic geochemistry.

ESS - Geological Survey Canada
VANCOUVER AND SIDNEY, BRITISH COLUMBIA

Mandate:
Scientists at GSC Sidney are engaged in geoscientific research aimed at increasing our understanding of the geological history, processes, and hazards affecting Western Canada. We hope that your visit to our web site provides you with useful information about our many research efforts, as well as with an understanding of the many aspects of geoscience that influence our everyday lives. And (GSC) Vancouver is proud of its scientific expertise and wants to share with you a century of valuable data collection. Explore this website and discover how the raw data from our rock, fossil and sediment analysis is transformed in a myriad of ways (from maps and reports to CD-ROMs) for use by other scientists, planners, farmers, engineers and the general public.

ESS - Geological Survey Canada
DARTMOUTH, NOVA SCOTIA

Mandate:
A team of specialists in marine and petroleum geology, geophysics, geochemistry and geotechnology providing a source of integrated knowledge and advice on marine geoscience, with specific concentration on Canada's coastal and offshore landmass.

ESS - Geological Survey Canada
OTTAWA, ONTARIO

Mandate:
The Central Canada Division is presently the largest GSC division as a result of the assimilation of parts of the former CGD, MRD and GSC-Pacific divisions. The division presently consists of 12 sections of 142 people managed by a division office comprising an executive secretary and Executive assistant. The objective is to reorganize the division down to eight sections, and to fill a critical People Support role by using our leadership succession plan and placing a potential Leader in a deputy director role.

ESS - Geological Survey Canada
QUEBEC, QUEBEC

Mandate:
The Quebec Geoscience Centre is a joint research centre founded in 1988 following an agreement signed between the Institut national de la recherche scientifique (INRS), a branch of the University du Quebec, and the GSC. The Centre brings together scientists from GSC Quebec and INRS Georessources to collaborate on projects, spanning the many disciplines of the earth sciences, together with researchers from universities, provincial governments and private corporations.

ESS – Geomatic Activities
OTTAWA, ONTARIO AND SHERBROOKE, QUEBEC

Ottawa - Canada Centre for Remote Sensing (CCRS) Mandate: The Canada Centre for Remote Sensing (CCRS), Natural Resources Canada is the Government of Canada's centre of excellence for remote sensing and geodesy. Remote Sensing is the science (and to some extent, art) of acquiring information about the Earth's surface without actually being in contact with it. This is done by sensing and recording reflected or emitted energy and processing, analyzing, and applying that information.

Ottawa and Sherbrooke – Mapping Information Branch - The Centre for Topographic Information – Ottawa (CTI–O) and Sherbrooke (CTI-S) are responsible for the acquisition, management and exploitation and dissemination of digital topographic information to promote Canada's sustainable use of natural resources, environmental protection, economic development opportunities, as well as political, security and sovereignty issues.

ESS - Polar Continental Shelf Program (PCSP)
OTTAWA, ONTARIO AND RESOLUTE BAY, NUNAVUT

Mandate:
The Polar Continental Shelf Program (PCSP) is an organization within NRCan that provides logistical support to over 1100 Canadian Arctic researchers annually. The overall mission of the PCSP is to provide safe, efficient and cost-effective logistical support to researchers from Canadian government agencies, northern communities, and independent and university groups conducting scientific activities in isolated areas throughout the Canadian Arctic.