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Canadian ODA Briefing Note (#4)
CCIC / in common
Auditor General’s Report on CIDA

October 2000

The Auditor General released the final chapters in his 2000 report on government expenditures on October 18th, 2000. This report contains a chapter on "CIDA: Managing Contracts and Contribution Agreements" (Chapter 14). This Briefing Note summarizes the key issues and recommendations in the chapter. The full text of the chapter is available at www.oag-bvg.gc.ca.

The Auditor General’sOffice reviewed 33 bilateral contracts and contribution agreements in relation to Government Regulations and Treasury Board guidelines, fair and transparent processes and CIDA’s own operational requirements and development needs. A proportion of these contracts were issued prior to the Open Bidding Pilot Project that was initiated in 1997.

The Review also reviewed the control framework for 7 program-funding agreements in Partnership Branch (NGO Division). They focused on six countries – Peru, China, India, Cameroon, Egypt and Mali.

When the changes in the Contracting process since 1997 are taken into account, the Auditor General is positive overall with CIDA’s management and monitoring of the contracting procedures in accordance with Government regulations and CIDA’s own policies and development needs. But several areas were noted by the Auditor General:

A) Bilateral Contract and Contribution Agreements

  • CIDA has consistently used contribution agreements in approximately half of its relationships with Canadian executing agencies and companies. Under Government regulations, sole -sourced contribution agreements are reserved exclusively for unsolicited projects that are initiated solely by executing agencies outside of Government. The Auditor General pointed to a number of instances (6 out of 11 agreements examined) where contribution agreements were used with projects whose origins lay in CIDA dialogue with developing country governments and/or where CIDA approached an executing agent to develop the project. Terms and conditions for contracting with CIDA have been revised and laid out clearly in CIDA’s "Contracting Guide for Managers" issued officially in May 2000.
  • The Auditor General quoted the 1999 Performance Review of the Open Competition Pilot that stated that contribution agreements for unsolicited proposals were not well understood or applied by CIDA officials. CIDA and Minister Minna replied that contribution agreements are very effective mechanisms for development cooperation but that CIDA "will introduce a more structured framework to better guide the use of contribution agreements". CIDA’s terms and conditions for grants and contributions related to the Geographic bilateral programs are due for renewal and approval by Treasury Board in March 2001.
  • The Auditor General pointed to many instances (half of the projects reviewed) of unrealistic or unclear expectations for results that are built into projects. Reasons for this included 1) competition for funds that encourage overly optimistic outcomes when more modest expectation are more realistic; 2) bidders that must accept the listed expected results in making bids even though they may appear to them as overly optimistic, and 3) a selection process that accepts as realistic the stated expected results in the proposal. CIDA’s recent elaboration of a results-based management framework encourages more realistic identification of goals and expected results.
  • Only a very small number (5%) of bilateral projects require environmental assessments, but in these cases CIDA has often not complied with the Act by filing the required documentation in the public registry to permit the Canadian public to participate in the review process. CIDA recently approved new directives to assure compliance with the Act.
  • CIDA does not have a performance evaluation system for executing agencies because of fear that public disclosure would result in lawsuits and the workload required. Contractors are only evaluated in terms of the merits of their response to particular proposals.
  • The Auditor General urged that greater attention be paid to critical assumptions for the successful execution of projects. Independent monitors and project implementers need to address changes in the critical assumptions (e.g. the policy environment, host country participation). The project process must be more explicit in addressing these changes (including formal review points in projects and contemplation of termination for projects not likely to succeed in achieving core results).
  • The Auditor General commended CIDA for close monitoring through project progress reports, but pointed out that "both CIDA and Canadian executing agencies expressed their frustration …over expectations for those reports, and the time taken to produce them". In May 1999 CIDA’s Performance Review Branch issued a "Guide to Project Performance Reporting for Canadian Partners and Executing Agencies".

B. Canadian Partnership Branch Agreements

  • While recognizing that Partnership Branch (CPB) focuses on managing its relationship with program partners at the institutional level, rather than the project level, the Auditor General was concerned that the Branch was not able to provide much specific information on the development results achieved by its partners. The Branch has issued a "Guide to Performance Reporting for Canadian and Developing Country Partners" in February 2000 (available on CIDA’s web site). The Minister has assured the Branch that she will not require detailed reporting of results by project for program-funded NGOs.
  • The Auditor General noted that institutional assessments had little impact on revised allocations to partners, which were for the most part based on historical levels, less across the board cuts in the period 1996/97 to 1998/99.

    The Auditor General sought more meaningful and accurate information from the Branch in its annual Performance Report to Parliament. Achievements must be placed within context of expected results and the resources expended to achieve them. The report also took exception to calculations in the last report that a $1 contribution from CPB was matched by a contribution of $1.19 from partners. The Auditor General calculated that the later figure was closer to $0.57. Ratings by project officers of expectations to reach planned results by partners were seen to be overly optimistic -- they agreed with only one out of the seven cases reviewed.

C. Gaps in CIDA’s New Information System

The Report pointed out that the introduction of the new information management and a Results-Based Management Module has so far not achieved integration of financial, contract and performance data at the project and management level. Auditors were not able to identify specific plans in the further development of this system to provide such enhancements.

Brian Tomlinson
CCIC Policy Team
btomlinson@ccic.ca

 

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