Public Accounts Committee — pac ga 50 mvveteran mvlegionnaire report apr 2023 (GA50)

GA50

Newfoundland and Labrador — Committees

House of Assembly Newfoundland & Labrador Standing Committee on Public Accounts 50th General Assembly – Report 2 Review of the Auditor General’s Report on the MV Veteran & MV Legionnaire April 2023 This report is privileged until tabled in the House of Assembly.

Public Accounts Committee Report to the House of Assembly April 2023 1 Contents Committee Members ............................................................................................................ 2 Transmittal ............................................................................................................................ 3 Mandate & Order of Reference ............................................................................................. 4 Statement of Values ............................................................................................................. 5 Background .......................................................................................................................... 6

Summary of Work ................................................................................................................. 8 Findings ................................................................................................................................ 9 Recommendations .............................................................................................................. 12 Acknowledgments .............................................................................................................. 13 Appendix A ......................................................................................................................... 14

Public Accounts Committee Report to the House of Assembly April 2023 2 Committee Members Members of the Public Accounts Committee during the period of the Committee’s work on this matter were: Helen Conway Ottenheimer, Harbour Main, Chair (appointed to Committee as of October 19, 2022; acclaimed Chair on April 19, 2023) Sherry Gambin-Walsh, Placentia - St. Mary’s, Vice-Chair Brian Warr, Baie Verte - Green Bay Pleaman Forsey, Exploits (as of April 3, 2023) Jordan Brown, Labrador West Lucy Stoyles, Mount Pearl North Tony Wakeham, Stephenville - Port au Port (up to January 24, 2023) Scott Reid, St.

George’s - Humber Lloyd Parrott, Terra Nova (up to October 18, 2022) Unless otherwise noted, Committee members were appointed by motion on June 1, 2021.

PublicAccountsCommittee ReporttotheHouseofAssembly April2023 Transmittal Speaker, IampleasedtopresentReport2ofthePublicAccountsCommitteeforthe5QthGeneral Assembly.ThisreportreflectstheCommittee’sreviewoftheAuditorGeneral’sreport respectingtheMVVeteranandMVLegionnaire.IthankmembersoftheCommitteefortheir diligenceandhardworkonthismatterandIrecommendthisreporttotheHouseof Assembly. Respectfullysubmitted, HelenConwayOttimer,MHA HarbourMain Chair

Public Accounts Committee Report to the House of Assembly April 2023 4 Mandate & Order of Reference The Standing Committee on Public Accounts traditionall y reviews the annual reports of the Auditor General, selecting matters from the report on which to hold hearings. The Committee reviews the audited accounts of the House and the Clerk’s role as accounting officer. It also inquires into other matters it may determine relating to the Public Accounts of the Province and may request special reports from the Auditor General on issues it deems to be of concern.

The Committee is dedicated to improving public administration, including how government delivers servic es to its citizens, by overseeing the implementation and effectiveness of government programs and operations in accordance with intentions of the Legislature. It uses powers vested in it by the Legislature to ensure recommendations of the Auditor General are implemented.

Public Accounts Committee Report to the House of Assembly April 2023 5 Statement of Values The Standing Committee on Public Accounts is dedicated to improving public administration in partne rship with the Auditor General. The Committee examines the administration of government policy, not the merits of it. The Committee strives to achieve consensus in its decisions, whenever possible, and Members take a non -partisan approach to their work on this Committee.

Public Accounts Committee Report to the House of Assembly April 2023 6 Background In March 2018, the Public Accounts Committee request ed the Office of the Auditor General (OAG) undertake a review of the process used to purchase two vessels, the MV Veteran and the MV Legionnaire , including the mechanical issues experience d since the two entered service. Further to the request of the Committee, pursuant to

Section 16 of the Auditor General Act,1 the OAG undertook a performance audit of the Department of Tr ansportation and Infrastructure focused on the issues outlined above, with the following objective: “To determine whether the Department of Transportation and Infrastructure effectively managed the construction, operationalization and initial operations of the MV Veteran and MV Legionnaire.” The audit period covered April 2009 to March 31, 2019.

In August 2021, t he PAC received the MV Veteran and MV Legionnaire report, which concluded that the department did not effectively manage the construction, operationalization and initial operations of the MV Veteran and MV Legionnaire. The Auditor General found a number of concerns related to the department’s management of the project that may have contributed to the significant operational delays, service disruptions and unplanned costs. In its report, the Auditor General issued the following recommendations: 1.

The department should establish and follow a project management process for t he procurement of vessels that follows leading practice, with particular attention paid to risk management, onsite supervision, document management and training. 2. The department should ensure root causes for significant mechanical issues and recurring mecha nical issues of vessels are identified and addressed in a timely manner. 3. The department, with co -operation from other departments, should ensure that all opportunities for potential industrial benefits are identified, pursued and documented. 1 This authority is found in

section 22 of the Auditor General Act, 2021.

Public Accounts Committee Report to the House of Assembly April 2023 7 The complete r eport is available on the Public Accounts Committee webpage at: www.assembly.nl.ca/Committees/StandingCommittees/PublicAccounts/ga50session1/.

Public Accounts Committee Report to the House of Assembly April 2023 8

Summary of Work Following receipt of the MV Veteran and MV Legionnaire report, the Public Accounts Committee issued correspondence to the current Deputy Minister of the Department of Transportation and Infrastructure, requesting information pertaining to the department’s response to the Auditor General’s recommendations. Further to the response, t he Committee desired more detailed information and notifie d the department that a publi c hearing would be scheduled in the near future.

The Committee conducted public hearings to follow up on matters contained in the report on March 21 and 22, 2022 and November 9, 2022. The witnesses appearing at those hearings included current and former officials of the Department of Transportation and Infrastructure, a list of which is provided in Appendix A. Hansard transcripts and audio recordings of the public hearings are available on the Committee’s webpage at: www.assembly.nl.ca/Committees/StandingCommittees/PublicAccounts/ga50session1/

Public Accounts Committee Report to the House of Assembly April 2023 9 Findings Key themes emerged t hroughout the Committee’s public hearing deliberations , which were used to summarize findings into four categories, as follows. 1. Project management  The Committee heard from witnesses about the lack of capacity and resources for project management during the time of procurement and construction of the vessels, and that project management r esources were not incorporated into the cost estimates for the project.

Further, it was articulated that r esponsibilities for project management were not clearly defined , and there was a lack of interdepartmental coordination/communication in this regard.  The Committee also heard from witnesses that capacity and resource deficiencies in project management were a contributing factor to risk management issue s experienced during the project.  The Committee heard from s ome w itnesses that there have been changes and improvements to project management processes since this project, including: o Cost estimates for major infrastructure projects now include a project management component. o A p roject management manual was developed and is currently in use.

Witnesses referenced a 2014 version, but indicated that updates were in progress at the time of the hearing testimony (March 2022). o Project agreements established for major infrastructure projects now cover aspects from construction to operations, including risk management. 2. Human resources Key themes in this category were further sub-categorized as follows: a. Training: o The Committee heard from w itnesses there was a belief that the training strategy for the vessels was good and robust, but that perhaps it could have

Public Accounts Committee Report to the House of Assembly April 2023 10 been executed earlier.

Overall, witnesses did not believe training was the root cause of the issues experienced. o The Committee heard that personnel constraints (i.e., the ability to continue to operate vessels on the ferry routes impacted, while employees were away from regular duties to undergo training) resulted in execution of the training strategy in a shorter-than-anticipated time frame. o The Committee also heard from witnesses that there appeared to be a culture issue at that time, which impacted how the training strategy was received by employees. b.

Recruitment and retention: o The Committee heard that r etention issues were being experienced at the time vessels came into service, as employees were leaving to work in other industries offering more competitive wages and benefits (e.g., offshore oil and gas). o The Committee also heard that r ecruitment and retention issues continue to be experienced in the marine industry, as well as across government with many skilled trades and technical jobs. c.

Succession planning: o The Committee heard from witnesses about the lack of transition planning , particularly when there were changes in executive and senior management positions during the time of procurement and construction of the vessels. o It was noted that this loss of corporate memory likely contributed to, or further exacerbated, some of the issues experienced during the life of the project. 3.

Duty to document  The Committee heard from witnesses that duty -to-document processes were not well established.  Further, it was noted that resources for information management were lacking across government at that time , and there was an inconsistent approach between departments.

Public Accounts Committee Report to the House of Assembly April 2023 11 4. Industrial benefits:  While there was indication that an industrial benefits agreement had been formally established, the Committee heard that it was not a legally binding agreement, but rather informal commitments from the contractor at the time of contract negotiations for the second vessel.

Testimony indicated that there was not a clear understanding of the nature and context of this agreement across departments.  While it was an informal arrangement, the Committee also heard that processes should have been implemented to document actions that were undertaken, timelines and other pertinent information toward execution of the commitments. It was noted that the lack of interdepartmental coordination, as well as lack of clarity overall in terms of the responsibility for and accountability to monitor and execute the arrangement, likely contributed to this shortcoming.

Public Accounts Committee Report to the House of Assembly April 2023 12 Recommendations The Committee re commends that the House of Assembly urge the provincial government to: 1. Finalize and implement revisions to the 2014 version of the project management manual referenced in testimony by the Department of Transportation and Infrastructure by January 1, 2024, if not already completed; 2. Implement duty-to-document requirements; 3. Develop and implement formal protocols for transition in executive -level positions across government; 4.

Review and update practices with respect to recruitment and retention in skilled trades and technical positions across government; 5.

Ensure the Marine Services Division of the Department of Transportation and Infrastructure: a. is provided with sufficient resources to meet the training requirements for employees in vessel operations within the pr ovincial fleet while maintaini ng safe, continuous operations; b. establishes and communicates clearly defined timelines for existing draft training manuals and/or guides to be finalized and implemented; and c. develops and implements strategies aimed at improvin g the organizational culture respecting the value of ongoing training; 6.

Consider the following with respect to industrial benefits agreements: a. whether there should be an industrial -benefits-agreements lens applied to Cabinet submissions respecting major projects; and b. clearly defining and communicating the responsibilities for, and management of, such agreements, should they be pursued.

Public Accounts Committee Report to the House of Assembly April 2023 13 Acknowledgments The Public Accounts Committee wishes to acknowledge Auditor General, Denise Hanrahan, and employees of th e Office of the Auditor General for their work on this audit and their support to the Committee in completing its review and follow-up. The Public Accounts Committee also wishes to thank the current and former public servants who participated in the public hearings for their cooperation and thorough testimony. Additionally, the Committee would like to acknowledge its support team in the House of Assembly Service.

Finally, the Committee acknowledges the service of Tony Wakeham, Member for Stephenville - Port au Port, who served as Chair during much of the Committee’s work on this matter.

Public Accounts Committee Report to the House of Assembly April 2023 14 Appendix A The following witnesses appeared at public hearings on the dates noted: March 21, 2022 Department of Transportation and Infrastructure Robert Smart, Deputy Minister (2009-2011) Brent Meade, Deputy Minister (2014-2015) Tracy King, Deputy Minister (2017-2020) Paul Alexander, Assistant Deputy Minister (2007-2011) Weldon Moores, Assistant Deputy Minister (2011-2013) Max Harvey, Assistant Deputy Minister (2013-2016) – by videoconference March 22, 2022 Department of Transportation and Infrastructure: Lori Anne Companion, Deputy Minister (2015-2017) Cory Grandy, Deputy Minister (current) John Baker, Assistant Deputy Minister, Air and Marine Services (current) November 9, 2022 Department of Transportation and Infrastructure: Jamie Chippett, Deputy Minister (2011-2013) Industry Energy and Technology: Alastair O’Rielly, Deputy Minister (2013-2016)

Document details

Collection	Newfoundland and Labrador — Committees
Citation	GA50
Type	committee
Volume / chapter	business_electronicdocuments_pac-ga50-mvveteran-mvlegionnaire-report-apr2023.pdf
Language	en
Format	json
Source	PROVINCIAL
Identifier	9363843a55d81383cc2fcdc7c08300c6ffc1d693

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