Backgrounder - Third-Party Funding Agreement Management

In November 2013, Aboriginal Affairs and Northern Development Canada (AANDC) revised the implemented Default Prevention and Management Policy (DPMP), which was developed to maintain continuity in the delivery of departmentally funded programs and services to Aboriginal communities while a First Nation is in default.

The appointment of a Third-Party Funding Agreement Manager is one of the actions available to the department under the DPMP. Third-Party Funding Agreement Management is a temporary measure to ensure the continued delivery of programs and services to community members, and is applied by the department only as a last resort.

AANDC uses a competitive bidding process, which is advertised on Buyandsell.gc.ca, to establish a list of qualified Third-Party Funding Agreement Managers. This selection process follows the government contracting policy requirements and established Public Works and Government Services Canada (PWGSC) contracting practices. Third-Party Funding Agreement Managers are rated on mandatory criteria and qualifications. Once on the list, whenever AANDC needs the services of a Third-Party Funding Agreement Manager, the companies will be approached to bid on the work or may be approached directly if circumstances support a non-competitive engagement (e.g., delay would be injurious to health, safety and welfare of community members).

The decision to place a First Nation into Third-Party Funding Agreement Management means that the department appoints a Third-Party Funding Agreement Manager (TPFAM) to manage a recipient's funding agreement. The TPFAM works with the First Nation to remedy the underlying issues that caused the need for Third-Party Funding Agreement Management. Third-Party Funding Agreement managers operate at arm's-length from the department and are not directly supervised by AANDC but are expected to liaise closely with both the First Nation and the department.

Upon appointment, the administration of all funds allocated by the funding agreement between AANDC and the First Nation is transferred to the Third-Party Funding Agreement Manager. The mandate of the Third-Party Funding Agreement Manager may also include acting as a facilitator between the First Nation and its creditors to negotiate debt repayment plans at the request of the First Nation.

It is important to note that under Third-Party Funding Agreement Management, the First Nation's Chief and Council remain in place as does the Band's financial management staff. The Chief and Council continue to manage resources and funding that do not arise from their funding agreement with AANDC. The Chief and Council of a First Nation under Third-Party Funding Agreement Management continue to be responsible for setting the strategic direction of the First Nation, and for exercising their governance powers such as by-laws or governance resolutions.

Often First Nations remedy the situation which led to the default and emerge from Third-Party Funding Agreement Management. In order to emerge from Third-Party Funding Agreement Management, a First Nation will need to establish a Management Action Plan (MAP) that addresses the defaults and shows sustained results (e.g. deal with health and safety difficulties, continuity of service delivery to all members, and steps to develop capacity).

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