Archived - Value for Money Audit of the Giant Mine Remediation Project

Background

The Minister of Aboriginal Affairs and Northern Development Canada (AANDC) requested that the Audit and Evaluation Sector (AES) conduct a Value for Money Audit of the Giant Mine Remediation Project (GMRP). Value for money auditing is intended to examine the ability of a government organization to discharge its responsibilities and control their costs by ensuring that resources are managed economically and that activities are organized efficiently.

Giant Mine is a defunct gold mine located in the city of Yellowknife, Northwest Territories. The mine site was first put into production by Giant Yellowknife Gold Mines Limited in 1948 and ran continuously under various owners until 1999. In 1999, the mine owner (Royal Oak Mines) was assigned into receivership and the Government of Canada, under the Department of Indian Affairs and Northern Development Act and the Northwest Territories Water Act, assumed administration and control of the mine with the responsibility for the protection of the environment and human health safety. It was immediately sold to Miramar Giant Mine Limited, after providing Miramar with indemnification for the underground contamination. Under the agreement, the mine site continued to operate until 2004, with gold ore being shipped off-site for processing and AANDC assuming the role of caretaker for pre-existing environmental liabilities on the property, including the arsenic trioxide (As2O3) dust stored underground.

Mining operations at the site, which grew over the years to encompass more than 870 hectares, including a number of ponds and small lakes, were halted in July 2004. Since 2005, AANDC and the Government of Northwest Territories (GNWT) have co-managed the site, with the Deton'Cho Nuna Joint Venture providing on-site care and maintenance at Giant Mine.

Currently, there are 237,000 tonnes of arsenic trioxide stored underground at Giant Mine in five chambers and 10 mine stopes. The mine site area has other sources of arsenic located in the abandoned roaster, tailings, waste rock, underground mine workings, and contaminated soils.

In 1997, AANDC and the mine operator, along with Environment Canada, the GNWT and the City of Yellowknife, began holding technical workshops to discuss the management of arsenic trioxide at Giant Mine. Over the next six years, AANDC, together with various stakeholders, worked to finalize an action plan to address mine contamination.

The broad objectives for the GMRP are to clean up the surface; stabilize and secure the underground; and maintain and monitor the site for health and safety. Surface and underground remediation activities, which have been identified following several years of extensive technical and scientific research and public consultation, are designed to minimize the release of contaminants from the mine site to the surrounding environment and to protect the health and safety of local residents. AANDC has ultimate accountability and responsibility for the GMRP.

Audit Objective and Scope

The objective of this audit was to assess the efficiency and effectiveness of the management practices, financial controls and accountability structures in place to support governance, risk management, project management, budget management and cost estimation and procurement management of the GMRP. The ultimate outcome for the GMRP is the remediation of the site within certain quality, time, and budget constraints. As a result, the attributes of management practice for which value for money were assessed included those considered fundamental to help ensure the planned outcome for the GMRP could be achieved.

The scope of this audit covered the timeframe from 2006-07 to July 2012. The audit included an assessment of the efficiency and effectiveness of the process to action key decisions related to governance, risk management, project management, budget management and cost estimation and procurement management, for the GMRP. The audit did not seek to examine the approaches selected to remediate the site (e.g., frozen block method). There were 56 options considered and rejected in favour of the Frozen Block Method, outlined in an Options Analysis of Remediation Method document.

Statement of Assurance

In my professional judgment as Chief Audit and Evaluation Executive, sufficient and appropriate audit procedures have been performed and evidence gathered to support the accuracy of the conclusions reached and contained in this report. The conclusions were based on observations and analyses of the situations as they existed at the time against the audit criteria. The conclusions are only applicable to the Value for Money Audit of the Giant Mine Remediation Project. The evidence was gathered in accordance with the Internal Auditing Standards for the Government of Canada and the International Standards for the Professional Practice of Internal Auditing.

Conclusion

Overall, we found that AANDC has made progress in building and improving on its project management practices to help ensure the achievement of its planned outcomes on the GMRP. AANDC has introduced and/or drafted a number of sound practices to strengthen its activities in the areas of governance, risk management, project management, cost estimation and budget management, and procurement management. Processes and tools that have been implemented or drafted by AANDC to improve practices include: project governing bodies; operational risk assessment practices; a Major Project Office; improved cost estimation practices and budget reporting; and Service Level Agreements to Public Works and Government Services Canada (PWGSC) procurement requirements.

Although a number of sound practices have been implemented, or are in the process of being implemented, inconsistencies were identified in the extent to which new practices and processes have been fully operationalized. In this regard, five key recommendations were identified through the audit.

Recommendations

1. The Assistant Deputy Minister, Northern Affairs Organization, should ensure that the proposed governance framework for the Giant Mine Remediation Project is finalized and implemented, with minutes and records of decision documented for the key governing bodies, such as the Oversight Committee and the Senior Project Advisory Committee.
2. The Assistant Deputy Minister, Northern Affairs Organization, should ensure that a comprehensive risk management framework (including strategic and project level risks) and a risk management plan are established for the Giant Mine Remediation Project to monitor risks on a regular basis.
3. The Assistant Deputy Minister, Northern Affairs Organization, should ensure, as part of the Major Project Office implementation, that:
   
   
   • Clear roles and responsibilities between PWGSC and AANDC for the Giant Mine Remediation Project are defined, documented, communicated, agreed upon, and finalized such that the project management can focus on optimizing, resourcing, and delivering the project in accordance with its objectives. The resulting final organizational structure should be as streamlined as possible to support a strong and clear focus on the project.
   • A proper baseline schedule (prepared according to industry standards), an integrated project schedule, a management plan and a reporting regime are established to link all parties together into a standardized Critical Path Methodology. The establishment of these documents will help to ensure that a clear window to the overall position and progress for the Giant Mine Remediation Project is provided to the project management team(s).
   • A rigorous and effective change management program be finalized to support the consideration and reporting of changes to the scope and total estimated cost of the Giant Mine Remediation Project.
4. The Assistant Deputy Minister, Northern Affairs Organization, should ensure, through consultation with the Chief Financial Officer, that budget management and cost estimation practices for the Giant Mine Remediation Project are strengthened by:
   
   
   • Developing a Master Project Total Estimated Cost to Complete document that includes a cost variance simulator, such as a 'Monte Carlo Simulation', to highlight the potential and probable deviation ranges in total cost estimates. The establishment of such a document would help to communicate key assumptions in the cost estimate and variance vulnerabilities to all project stakeholders.
   • Incorporating multi-year requirements of future work and costs in a Master Project Total Estimated Cost to Complete document based on industry best practices and the Association for the Advancement of Cost Engineering International Cost Estimate Classification system. Roles and responsibilities for maintaining, reviewing, and monitoring this document should be defined and communicated.
5. The Assistant Deputy Minister, Northern Affairs Organization, should ensure, through consultation with the Chief Financial Officer, that the current approach to procurement management for the Giant Mine Remediation Project is strengthened by:
   
   
   • Improving the tools and guidance to support contract monitoring and reporting of expenditure variances and performance measures and targets.

Introduction

The Minister of Aboriginal Affairs and Northern Development Canada (AANDC) requested that the Audit and Evaluation Sector (AES) conduct a Value for Money Audit of the Giant Mine Remediation Project (GMRP). Value for money auditing is intended to examine the ability of a government organization to discharge its responsibilities and control their costs by ensuring that resources are managed economically and that activities are organized efficiently.

Mine History

Giant Mine is a defunct gold mine located in the city of Yellowknife, Northwest Territories. The mine site was first put into production by Giant Yellowknife Gold Mines Limited in 1948 and ran continuously under various owners until 1999. In 1999, the mine owner (Royal Oak Mines) was assigned into receivership and the Government of Canada, under the Department of Indian Affairs and Northern Development Act and the Northwest Territories Water Act, assumed administration and control of the mine with the responsibility for the protection of the environment and human health safety. It was immediately sold to Miramar Giant Mine Limited, after providing Miramar with indemnification for the underground contamination. Under the agreement, the mine site continued to operate until 2004, with gold ore being shipped off-site for processing and with AANDC assuming the role of caretaker for pre-existing environmental liabilities on the property, including arsenic trioxide (As²O³) dust stored underground.

Mining operations at the site, which grew over the years to encompass more than 870 hectares, including a number of ponds and small lakes, were halted in July 2004. Since 2005, AANDC and the GNWT have co-managed the site, with the Deton'Cho Nuna Joint Venture providing on-site care and maintenance at Giant Mine.

Site Contamination

Gold ore deposits at Giant Mine were found in arsenopyrite (FeAsS), the most abundant and widespread arsenic mineral. To extract gold from the arsenopyrite ore, a roasting process was employed, which created, as a by-product, arsenic trioxide dust. Most of the dust created through extraction was collected and pumped underground into purpose-built chambers and mined-out stopes. This approach to storage relied on the area's natural permafrost, which worked as a frozen barrier to prevent the dust from migrating to other areas. However, due to on-going mining in the area, the permafrost thawed, which allowed water to seep into and out of the underground storage areas.

Currently, there are 237,000 tonnes of arsenic trioxide stored underground at Giant Mine in five chambers and 10 mine stopes. The mine site area has other sources of arsenic located in the abandoned roaster, tailings, waste rock, underground mine workings, and contaminated soils.

The Remediation Project

2.1. Audit Objective

The overall objective of the audit was to assess the efficiency and effectiveness of the management practices, financial controls and accountability structures in place to support governance, risk management, project management, budget management and cost estimation and procurement management of the GMRP. The ultimate outcome for the GMRP is the remediation of the site within certain quality, time, and budget constraints. As a result, the attributes of management practice for which value for money were assessed included those considered fundamental to help ensure the planned outcome for the GMRP could be achieved.

2.2. Audit Scope

The scope of this audit covered the timeframe from 2006-07 to July 2012. The audit included an assessment of the efficiency and effectiveness of the process to action key decisions related to governance, risk management, project management, budget management and cost estimation and procurement management for the GMRP. The audit did not seek to examine the approaches selected to remediate the site (e.g., frozen block method). There were 56 options considered and rejected in favour of the Frozen Block Method, outlined in an Options Analysis of Remediation Method document.

The audit criteria used during the audit were based on recognized models of control, Treasury Board of Canada Secretariat's draft Core Management Controls: A Guide for Internal Auditors, and performance audit and special examination criteria, used by the Office of the Auditor General and other leading practitioners.

5.1. Governance

To deliver on the ultimate objective of the GMRP, effective project governance is critical. The audit examined whether an effective oversight body with clear governance protocols has been established, and whether information to support efficient and effective project oversight exists and is implemented.

An oversight body has been defined with clear protocols to support project governance. However, delays have been experienced in the implementation of components of the oversight structure.

The audit confirmed that the GMRP has had two distinct governance frameworks in place from fiscal year 2006-07 to July 2012. A consistent element in both frameworks has been the Oversight Committee, which is comprised of representatives from the Government of Canada and the GNWT. Under the newly revised governance framework, the Oversight Committee is supported by additional committees at both the operational and strategic levels.

5.1.2. Project Governance (revised September 2010)

The following illustration presents the draft project governance structure, dated September 2010. While the project governance structure had not been approved as of the end of the audit fieldwork (July 2012), the Terms of Reference for the Management Board was recommended for approval in January 2011 and approved by AANDC's ADM, NAO on May 13, 2011.

Description of Governance

This chart depicts the project governance structure for the Giant Mine Remediation Project (GMRP). At the highest level, the project is overseen by the Project Leader (Assistant Deputy Minister, Northern Affairs Organization, AANDC), in collaboration with the Senior Project Advisory Committee. The Project Leader is supported by a Management Board that includes the Director General of the Natural Resources and Environment Branch (AANDC), the Regional Director General of AANDC's Northwest Territories Region, and a Regional Director General from Public Works and Government Services Canada (PWGSC). The Management Board works in collaboration with the Oversight Committee, comprised of the Regional Director General of AANDC's Northwest Territories Region and a representative from the Government of the Northwest Territories, and is supported by an Independent Review process that includes an independent engineer and a Peer Review Panel.

The Management Board governs the Project Leadership Committee, which includes the Project Director from AANDC (a representative from AANDC's Northwest Territories Region), the Project Sponsor (Director of Contaminated Sites Program, Northern Affairs Organization, AANDC) and the Project Director from PWGSC.

The Project Leadership Committee is responsible for overseeing Stakeholder Engagement, the Project Implementation Team and the AANDC Headquarters-based Major Projects Office. Stakeholder Engagement consists of the following four components: Community, Regulatory, Aboriginal and Environmental.

The Major Projects Office, which reports to the Project Leadership Committee through the AANDC Project Sponsor, is also linked to the Project Implementation Team.

The various committees and responsible parties listed above have been grouped into two broad categories: project governance and project management. The Project Leadership Committee contributes to both the project management and project governance of the GMRP. Those structures that support the Project Leadership Committee are considered as part of the project management of the GMRP, whereas the structures that lie above the Project Leadership Committee are considered as part of the project governance of the GMRP.

Through interviews and documentation review, it was noted that AANDC's ADM NAO has the ultimate accountability for the GMRP and that this has been the case over the entire audit scope period. However, as noted in Section 5.3.5 – Roles and Responsibilities, AANDC has not clarified roles and responsibilities which has led to uncertainty with respect to the leadership and execution of the GMRP.

Minutes from the Management Board meeting of October 19, 2010 noted the need for a SPAC. Interviews noted that AANDC and PWGSC had met once with the aim of forming the SPAC. Since the Committee has been formed, no formal meetings have been held and a Terms of Reference has not been approved.

5.2. Risk Management

To support the efficient and effective delivery of the GMRP, an effective risk management framework must be in place. The audit examined whether AANDC has a documented approach to risk management that includes risk identification, assessment, mitigation and monitoring.

Risk assessments are conducted through various mechanisms on a regular basis, but to date, have been largely operational in nature.

AANDC has identified a number of risks in a variety of documents over the scope of the audit from fiscal year 2006-07 to July 2012. The focus of risk management activities throughout this period has been on operational risks. The following is a summary of risk related information provided to the audit team:

• A detailed risk register was initially developed in fiscal year 2005-06 and has since been updated on an annual basis. The risks included in this registry are operational in nature and include such considerations as dams, diversions, tailings and sediments, open pits, underground, water treatment, and infrastructure. This document is referred to as the GMRP Risk Registry. An example risk is "Dam 1" which is copied below to illustrate the approach taken:

Through a comparison of the risk registers from 2009-10, 2010-11 and 2011-12, we noted the following observations:

• Although risks are identified and a number of consequences for each risk are assessed for severity, likelihood and risk level, there is no overall assessment of the likelihood of the overall risk occurring.
• There is no comparison of all of the risks identified to help identify interrelationships among risks and to help understand the relative priority of all risks in relation to one another.
• Controls are identified in the form of the activities to be conducted in order to mitigate the likelihood of the risk occurring. However, current risk management tools and templates do not allow for the identification of who is responsible to complete the controls, the frequency of the control, and any required monitoring.

NAO program documentation from 2006 and 2009 discusses the Northern Contaminated Sites Program (NCSP) approach to risk management, and notes that strategic, operational and technical risks are identified and assessed for impact and likelihood. However, we did not observe any evidence supporting the identification of strategic project risks or project technical risks for the period 2009-10 to 2011-12. While we did note evidence of operational risks that had been identified prior to 2009, these risks were not detailed.

Other documentation reviewed included Detailed Work Plans (DWPs), Developers Assessment Reports, and Information Requests provided to the Mackenzie Environmental Impact Review Board. These documents consistently focused on operational risks.

A strategic project risk assessment workshop was completed in April 2012. The risk assessment focused on the objectives of the "current" phase of the project, i.e. Preliminary Design – Phase 2b (April 2012 – March 2015). The objectives of Phase 2b included: completing of the preliminary engineering and design to support Effective Project Approval; obtaining regulatory approval of the EA; completing the urgent site stabilization work; and completing the Freeze Optimization Study.

The workshop concluded that procurement is the most significant strategic project risk as it impacts three of the four phase 2b objectives. Planning and controls was determined to be the next highest strategic project risk, and human resources, governance, and community engagement were also considered significant strategic project risks. One of the next steps noted in the workshop included the monthly review of the risk register at Project Leadership Committee meetings.

NAO program documentation from 2006 stated that the NCSP has adopted AANDC's Integrated Management of Risks Framework. This suggests that the GMRP, which falls within the NCSP, has conducted a risk assessment that included strategic, operational and technical risks. The documentation reviewed by the audit team did not demonstrate that the project identified strategic project risks or project technical risks until recently. The consideration of risks beyond operational risks was addressed for phase 2b of the project in April 2012, which resulted in the development of the Strategic Project Risk Assessment to identify and assess key risks to the achievement of the overall objectives of the GMRP.

Observation: AANDC has not implemented a comprehensive risk management framework nor has it implemented a risk management plan that is monitored on a regular basis. In addition, the approaches to risk identification and assessment over the audit scope period have focused almost exclusively on operational risks.

The GMRP is a complex, multi year project with numerous stakeholders and requires a robust risk management framework and process. A risk management process should be designed, implemented, communicated and monitored to identify risks (strategic, operational and project level) to help inform project planning and demonstrate that mitigating actions are in place to address risks over the life of the project.

Standard and leading risk management practices include ongoing environmental scans, timely risk mitigation plans with clear accountability, and defined risk mapping (high, medium, low) for both likelihood and impact. The risk management process should be clearly documented, monitored for compliance, and risk management training should be provided for all project personnel.

The NCSP has drafted a Major Project Standards and Guidance Manual, comprised of 23 chapters. Chapter 6, Risk Management, includes project risk management tasks and requirements including: developing the risk management plan; conducting a strategic project risk assessment; establishing project risk management tools; and, developing the project risk tolerance matrix. Roles and responsibilities are identified for the project governing bodies and essential positions. This document was still in draft as of July 2012 and has yet to be implemented for the GMRP.

Recommendation #2: The Assistant Deputy Minister, Northern Affairs Organization, should ensure that a comprehensive risk management framework (including strategic and project level risks) and a risk management plan are established for the Giant Mine Remediation Project to monitor risks on a regular basis.

5.3. Project Management

AANDC and PWGSC are both currently accountable for certain project management responsibilities for the GMRP. The audit examined samples of project management documentation developed and/or in place to determine whether such documentation supports the effective and efficient achievement of the GMRP's objectives.

Project management processes, practices, frameworks and tools to support the effective and efficient achievement of the GMRP's objectives have been enhanced throughout the period of this project and are in varying stages of implementation. Despite the observed enhancements, areas for improvement were noted with respect to: roles and responsibilities; schedule development, integration, management and reporting; and change management.

Both AANDC and PWGSC have developed a number of documents to support and facilitate the project management process. Project timelines, frameworks, flow charts, and control documents existed for the majority of the project timeframe.

5.4. Budget Management and Cost Estimation

To support the efficient and effective delivery of the GMRP, an effective budget management and cost estimation process must be in place by AANDC. The audit examined the project's cost estimating practices and tools as well as the budget management and mechanisms to assess, monitor and report on the accuracy and completeness of project cost.

Budget management and cost estimation have been conducted to support project estimates, expenditures and monitoring on a periodic basis; however, improvements can be made to strengthen the communication of cost estimates and related vulnerabilities, and the maintenance of a Master Project Total Estimated Cost to Complete document.

A number of project complexities exist that have had a compounding effect on the estimated project cost and related variances since 2006 due to their impact on the project timeliness as well as inflationary and escalation impacts. The audit noted various project estimation practices and tools have been established to support consistent cost estimation. These tools and practices have been enhanced throughout the audit period and the clarity of communicated variances estimates has improved.

The GMRP's approach to cost estimation, cost reporting and monitoring is guided by the following documents:

• AANDC NAO's draft Corporate Procedures Manual, which details the procedures to follow in the planning, implementation, monitoring, reporting, and review of project phases.
• AANDC NAO's draft Cost Estimation Guide, which was developed with reference to the Treasury Board Guide to Costing, provides a framework intended to enable the generation of consistently reliable and dependable cost estimates. The Cost Estimation Guide uses the cost estimate classification of accuracy of the Association for Advancement of Cost Engineering International (AACE).

Contingency estimates for the GMRP are developed (i.e. 5%, 15%, 30%, etc.) based on set criteria and a 10% contingency for support services, and are reflected in the current (2012) revised total estimated project cost of $904M. The total cost estimate includes contingency amounts that have been prepared with consideration of the following cost estimate practices:

• Government of Canada Estimate Classes – PWGSC uses estimate classes to identify the level of certainty regarding project definition, which is expressed as a percentage potential variance (A [+-5%], B [+-10%], C [+-20], and
  D [+-40%]).
• Industry Standards for Cost Estimation – The draft March 2012 Cost Estimate Guide utilized the current AACE industry standard model for cost estimation and provides a transition grid to match the PWGSC Estimate Class Model.
• Independent Peer Review – The Cost Estimate Report, prepared for AANDC by an external contractor, was reviewed for reasonableness of labour rates, material prices, and equipment costs by an independent, third party organization with deep experience in mining.

The initial (2006) cost estimate of $348M for the GMRP was broken down but provided limited detail and no classification of cost certainty. Costs included general ongoing care and maintenance, consultation, regulatory approvals, site assessment, and design work to complete the preliminary design and the development of a Substantive Costs Estimate.

Cost estimates are re-assessed and adjusted on an annual basis by the Project Manager, with assistance from PWGSC, as new technological advances occur and as new information becomes available on inflation, escalation, the extent of contamination found, and the progress towards remediation. According to AANDC management, a rigorous change control system is being introduced to control scope, schedule and budget through an appropriate delegated management authority. This change management system was implemented in May 2012 as noted in Section 5.3.3 – Change Management.

An AANDC Project Charter, PEP and project plans have been developed by the Northern Contaminated Sites Program to plan, execute, control, and manage processes, standards, as well as the project schedule, scope and budgets. These baseline documents are the critical planning documents for helping to ensure that the current detailed budget of $904M is monitored, controlled and tracked. The PEP describes the contract implementation plan in terms of scope, schedule, cost, risks, procurement, quality, safety, human resources, and communications.

Phase Work Plans (PWP) are compiled to group the activities and deliverables to be performed during a specific life cycle phase into a work plan. It extracts those sections from the PEP that apply to the upcoming phase and is not a source or control document on its own, like the Project Charter or PEP.

The purpose of the PWP is to define the funding and budgetary requirements for the current phase only. In the case of multi-year project phases, the PWP will be revised annually to coincide with the fiscal cycle. Based on our review of relevant documentation, we observed improvements in quarterly project reporting on annual project cost. The 2011-12 Quarterly Reports provide: significant detail on the original budget, adjusted budget, annual commitments to date, year-end forecast, variance numbers, variance explanations, Total Project Cost Estimate amounts for the fiscal year; and provide a breakdown by budget categories and financial accounts, Specific Service Agreement (SSA), and DWP.

Observation: There is no evidence that an overall Master Project Total Estimated Cost to Complete document, that incorporates key assumptions, changes in key assumptions, variances, and other critical information, is maintained and updated on an ongoing basis.

Examination of the cost estimates and related budgets indicate that from 2006 to 2012, overall project cost estimation occurred at three separate points in time: 2006, 2009 and 2012. As a result of the discrete process used to estimate the total project cost and the varying levels of detail in each period, the audit team encountered difficulties tracking changes in overall project cost estimates and the underlying support for these changes from 2006 to 2012. Documentation with respect to key assumptions and their potential vulnerabilities was extremely limited in 2006 and 2009.

An effective Master Project Total Estimated Cost to Complete document should enable: overall project cost monitoring; the detailing of changes and associated reasons for changes; actual overall cost variance reporting; and, forecasted cost variances. In the absence of such a document, the audit team found that the current reporting and cost tracking tools are not sufficient to readily enable an assessment of the overall project cost against the current cost estimate at any point in time, in a consistent manner.

Recommendation #4: The Assistant Deputy Minister, Northern Affairs Organization, should ensure, through consultation with the Chief Financial Officer, that budget management and cost estimation practices for the Giant Mine Remediation Project are strengthened by:

• Developing a Master Project Total Estimated Cost to Complete document that includes a cost variance simulator, such as a 'Monte Carlo Simulation', to highlight the potential and probable deviation ranges in total cost estimates. The establishment of such a document would help to communicate key assumptions in the cost estimate and variance vulnerabilities to all project stakeholders.
• Incorporating multi-year requirements of future work and costs in a Master Project Total Estimated Cost to Complete document based on industry best practices and the Association for the Advancement of Cost Engineering International Cost Estimate Classification system. Roles and responsibilities for maintaining, reviewing, and monitoring this document should be defined and communicated.

5.5. Procurement Management

To support the efficient and effective delivery of the GMRP, a strong procurement process must be in place by AANDC. The audit examined the procurement practices and processes in place at AANDC to support project approval and planning, the division of roles and responsibilities for the management of procurement contracts, and monitoring of supplier performance and targets. The audit also examined PWGSC procurement documents, such as contracts, strategy and risk plans, evaluation and results, and project monitoring tools and reports, relating to the Base Care and Maintenance and Freeze Optimization Study contracts.

Mechanisms are in place to identify, assess, evaluate, approve, and communicate projects for procurement; however, improvements can be made to reflect the multi-year nature of the GMRP and to strengthen the consistency of amendments and cost revision practices.

AANDC is responsible for managing the remediation efforts as part of the GMRP and is the overall Project Owner. PWGSC, the procurement agent for all large dollar value goods and services purchased by the Government of Canada, leads all AANDC procurement activities in excess of $2 million. In the fiscal year 2011-12, PWGSC-led procurement activities on the GMRP were approximately $19 million or 86% of the total project expenditures of $22 million. The remaining $3 million was managed and procured internally by AANDC.

From the listing of PWGSC's work plan for 2011-12, the audit selected and examined two ongoing contracts: i) Base Care and Maintenance (delivered through a contract with Deton'Cho Nuna), and ii) Freeze Optimization Study (delivered through a contract with Deton'Cho Nuna and sub-contracted to SENES/SRK). For each contract, the audit examined the efficiency and effectiveness of procurement planning and project approval, and performance monitoring and reporting.

Audit Criteria