Notice
This website will change as a result of the dissolution of Indigenous and Northern Affairs Canada. Consult the new Crown-Indigenous Relations and Northern Affairs Canada home page or the new Indigenous Services Canada home page.
This website will change as a result of the dissolution of Indigenous and Northern Affairs Canada. Consult the new Crown-Indigenous Relations and Northern Affairs Canada home page or the new Indigenous Services Canada home page.
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This Directive takes effect on June 2011.
The transition strategy from the Funding Arrangements: Intervention Policy (2008) to the Default Prevention and Management Policy (effective June 2011) provides that from JUNE 2011.
Subject to the Third Party Funding Agreement Manager remaining eligible for call-up by the Department, the Third Party Funding Agreement Manager may continue to provide services under an existing Third Party Funding Agreement Management. At the time of implementing the transitional provisions in Section 1.1.1, the Department will terminate or amend any existing Third Party Funding Agreement Management in order to implement the requirements of this Directive, including securing a Third Party Funding Agreement Management Action Plan from the Third Party Funding Agreement Manager.
Terminology in existing Third Party Manager Framework Agreements may not align to the terminology in this Directive. This Directive does not void or alter existing agreements. As new agreements come into place or existing agreements are amended, the language between this Directive and the agreements will be brought into alignment.
Application of this Directive will be extended from First Nations and Tribal Councils to other Aboriginal Recipients providing essential services to the First Nation service population.
This directive applies to Aboriginal Affairs and Northern Development Canada (AANDC) (hereinafter referred to as the Department) officials managing transfer payments with the exception of funding provided under legislated self-government agreements and funding agreements resulting from federal-provincial accords.
This objective of this directive is to aid in the implementation of the Default Prevention and Management Policy (2011) through Departmental processes which identify defaults. Recipients will be required to remedy their default(s) in an appropriate, timely and cost effective manner, Programs, services, activities and projects are to be delivered with funds being expended as required in the funding agreement
To provide for the timely and effective remedy of high risk Defaults, where the Recipient is assessed by the Department as being unwilling and/or unable to rectify its default situation and only when deemed by the Department to be necessary, by engaging a Third Party Funding Agreement Manager to administer the terms and conditions of the funding agreement signed by the Department — for a period of time during which the Recipient works to remedy the underlying causes of the Defaults and reassume administration of funding.
The expected results of this Directive are:
The Directive sets out Third Party Funding Agreement Management as an administrative response appropriate in the event of high risk Defaults involving a First Nation, Tribal Council and Other Aboriginal Recipient providing essential services; or the funding agreement that would normally exist with these Recipients is not in place.
This Directive should be read in conjunction with the "Default" and the "Remedies on Default" sections of the funding agreement.
Third Party Funding Agreement Managers are pre-qualified through the federal MERX process, managed through the Transfer Payment Centre of Expertise. They are "called up" by regions/sectors based upon the most competitive bid for the specific services required.
Third Party Funding Agreement Managers operate at arms-length from the Department, in that they are not directly supervised by the Department, and are expected to conduct themselves according to their own judgement and expertise. They possess general management skills to provide for local service delivery — using the Recipient's service channels to the extent possible. Their responsibilities and accountabilities are defined in a TPFAM Agreement which itself is a composite of: the Department's national TPFAM Framework Agreement; and the region/sector call-up and TPFAM Action Plan specific to each assignment.
As part of the Third Party Funding Agreement Management regime, Recipients are required to develop a Management Action Plan (MAP) by which they may correct the Defaults and strengthen their capacity, in order that the departmental requirement for a Third Party Funding Agreement Manager may be removed and the Recipient may resume administration of the funding agreement. The Recipient may request the assistance of the Third Party Funding Agreement Manager in doing so.
The Chief Financial Officer (CFO) has authority to issue this Directive in support of the TBS Policy on Transfer Payments, to amend or rescind the Directive and to approve any exceptions to the Directive that may be sought.
In addition to the responsibilities assigned to departmental officials within the Default Prevention and Management Policy, the following duties are to be fulfilled by:
Program Sectors in engaging Recipients through program design are responsible to:
Regional Operations Sector and Northern Affairs Organization in supporting the consistent and cost-effective implementation of this Directive across regions are responsible to:
The CFO and Transfer Payment Centre of Expertise (TPCOE) in its leadership role for transfer payments are responsible to:
Regional Directors General and HQ Director Generals with program funding responsibilities in exercising their overall co-ordination role for the geographic or program area are responsible to:
Regional Funding Services Officers (FSO) or HQ Equivalent are the primary point of contact between the Department and the Recipients assigned to them and are responsible to:
Regional Directors, Corporate Services in their arms-length oversight role with respect to regional operations are responsible to:
A roster of pre-qualified Third Party Funding Agreement Managers is set in place by the Transfer Payments Centre of Expertise (TPCOE) based upon a forecast of the nature and extent of service required by Regions/Sectors. Potential Third Party Funding Agreement Managers are pre-qualified through the federal MERX process. Regions/Sectors use this roster to appoint a Third Party Funding Agreement Manager, by applying the call-up procedures set out in the Grants and Contributions Desk Book.
Regions/Sectors determine, for each appointment, the specific Third Party Funding Agreement Management services needed based upon the results of the Default Assessment process and with Recipient input to the extent practicable.
The call-up is sent to all pre-qualified Third Party Funding Agreement Managers on the roster who work from the geographic point of departure. The most competitive bid is selected, based on evaluation processes developed and maintained by the TPCOE.
The Third Party Funding Agreement Management may be terminated for convenience with 30 days notice, or for other reasons as described in the Third Party Management Framework agreement.
Notice to Other Federal Departments:
The Responsible Official will notify other federal departments, known to be funding the same Recipient, of the steps being taken to implement Third Party Funding Agreement Management — to help protect all federal interests and support a coordinated response.
Notice to Recipient:
The Responsible Official will give notice to the Recipient, as required by the Funding Agreement, as to:
The notice will also advise that the Recipient may call upon the Third Party Funding Agreement Manager to facilitate its preparation and implementation of a MAP in order to reassume administration of funds.
Where the requirement for Third Party Funding Agreement Management is not an escalation of an existing Default Management process (e.g. the result of an unsuccessful MAP), the Responsible Official may give the Recipient up to ten days from receipt of the notice to provide information which would indicate that a Default has not occurred or has already been remedied — except where the delegated authority determines that urgent health and safety issues demand immediate action.
Notice to Community:
The Responsible Official, within seven (7) calendar days of notifying the Recipient of the appointment of a Third Party Funding Agreement Manager, will offer to meet with the community to explain the course of action to be taken and to encourage community engagement. This offer shall be made through the leadership of the community and through other such means as deemed appropriate by the Responsible Official.
Notice to Other Stakeholders:
The Third Party Funding Agreement Management Agreement requires the Third Party Funding Agreement Manager on appointment to:
Appendix C — Exhibit 1.0 sets out the Third Party Funding Agreement Management Performance Management Framework.
The requirement for Third Party Funding Agreement Management is determined through the Default Assessment processes as set out in the Directive on Default Prevention and Management. Third Party Funding Agreement Management may be determined to be the most appropriate Default Management Strategy in the following circumstances:
Existing Funding Agreements between the Department and the Recipient will be kept in place, to the extent possible, as Third Party Funding Agreement Management is implemented given that:
The Third Party Funding Agreement Management Agreement shall consist of:
The duration of the Third Party Funding Agreement Management Agreement shall be the remainder of the current fiscal year (ending the next March 31) plus two optional one year extensions, which may be exercised at the option of the Department.
The Department will consider amending the Third Party Funding Agreement Management Agreement, subject to approval by the Third Party Funding Agreement Manager as improved information is generated as to the default situation and operational requirements; and as the recipient may request services from the Third Party Funding Agreement Manager within the scope of its mandate.
Amendments to the Third Party Funding Agreement Management Agreement shall be made in accordance with the TPM Framework Agreement User Guide.
The mandate of the Third Party Funding Agreement Manager may include:
Within 60 days of appointment the Third Party Funding Agreement Manager shall provide to the Department a Third Party Funding Agreement Management Action Plan, as described in the Third Party Management Framework Agreement.
The Third Party Funding Agreement Management Action Plan may be informed by any prior assessments or plans related to the default situation (e.g. General Assessment or Management Action Plan); or that may be undertaken to understand the relationship between Recipient capacity and performance in administering the Funding Agreement (e.g., Readiness Assessment).
Appendix C — Exhibit 2.0 provides a notional Third Party Funding Agreement Management Action Planning Process.
The Directive on Default Prevention and Management sets out the manner in which a Management Action Plan (MAP) is to be prepared in response to a default situation. It should be prepared as early as practicable in the Third Party Funding Agreement Management process. It is the Recipient's plan for exiting from Third Party Funding Agreement Management and managing any outstanding (e.g. lower risk) issues after Third Party Funding Agreement Management. More details on this Plan are available in the Management Action Plan Workbook.
Funds payable under the funding agreement are redirected, in whole or in part, to the Third Party Funding Agreement Manager. The Third Party Funding Agreement Management Agreement sets out the requirements on the Third Party Funding Agreement Manager as to its use.
Funding levels may be adjusted after Third Party Funding Agreement Management as follows:
The Call Up shall specify the manner in which the performance of the Third Party Funding Agreement Manager will be assessed; in accordance with the approved mandate.
Performance will be evaluated quarterly, or more frequently based upon risk, and include the concurrent review of the performance of the Third Party Funding Agreement Manager and the Recipient MAP. The evaluation of the Third Party Funding Agreement Manager may consider:
The evaluation of the Recipient, including the MAP may consider:
Subject to the results of the quarterly reviews described above, the Responsible Officer may seek an update to the Default Assessment in order to recommend:
Records are maintained in accordance with Departmental Record Management policies, standards and practices, to demonstrate that due diligence has been exercised throughout the Third Party Funding Agreement Management process.
To best achieve the objectives of this Directive, it may be desirable for certain parties (the Department, Third Party Funding Agreement Manager, Recipient, members of the Recipient) to share information it obtained in confidence from another party. In such circumstances, adherence to existing process and procedures, such as described in the funding agreement or Third Party Management Framework Agreement, or other agreements or policies, should be maintained at all times.
The following internal controls support due diligence in implementing this Directive:
Use of national business processes, guidelines and working tools to support a coherent and consistent approach across regions/sectors and Recipient type:
Primary Default Management Strategy | Recommended by | Approved by |
---|---|---|
Management Action Plan | FSO Manager | TPMC* |
Third Party Funding Agreement Manager | TPMC* | Region/Sector Head |
* Transfer Payment Management Committee (TPMC) |
Developing staff skills to meet organizational requirements including:
Oversight of the operation of the transfer payment management control framework and transaction processing by the Chief Financial Officer and Audit and Evaluation Services
The Responsible Official shall preserve the onus on the Recipient to remedy its Default during the Third Party Funding Agreement Management regime by:
The reliability of assessment tools (e.g. Default Assessment (DA), General Assessment (GA), Readiness Assessment (RA)) may be evaluated by reviewing the problem statements within Third Party Funding Agreement Management Action Plans and Recipient MAP to determine if the assessment tools could be adjusted to better foresee and remedy the performance issues that have arisen.
The consequences of non-compliance with this Directive are set out in section 6 of the Policy on Default Prevention and Management (2011).
For enquiries and interpretations please contact: the Department's Transfer Payments Centre of Expertise.
Default: an event defined, within a Funding Agreements between the Department and a Recipient, as being a Default.
Default Assessment: is a structured business process used to determine, for a Recipient in a default situation:
Default Management: the process for identifying and managing defaults of a funding agreement.
Default Prevention: a structured process to identify circumstances that are impacting or may impact the compliance with funding agreement in order to realize opportunities and mitigate negative impacts.
Emergency: a present or imminent event that requires prompt coordination of actions concerning persons or property to protect the health, safety or welfare of people, or to limit damage to property or the environment. (Quoted from the Emergency Management Framework for Canada)
Expert Resource: a person or organization engaged by a Recipient to assist and facilitate in the capacity development of the community and/or execution of any aspect of the Management Action Plan.
First Nations and Inuit Transfer Payment (FNITP) System: a web-enabled system that automates AANDC’s transfer payment business processes, manages funding agreement information, and provides on-line access for First Nations and other funding Recipients.
Funding Agreement: a written agreement or documentation constituting an agreement between the Government of Canada and an applicant or a Recipient setting out the obligations or understandings of both with respect to one or more transfer payments.
General Assessment (GA): a standardized process for assessing a Recipient for the purpose of identifying potential issues that may impact delivery of AANDC funded programs and services; and for adjusting administrative requirements in proportion to that risk, such that the funding agreement is managed within AANDC’s risk tolerance.
Management Action Plan (MAP): Is the primary plan, developed by the Recipient, to remedy and recover from the default, to address its causes and prevent its recurrence. The MAP is also used to identify capacity gaps and resources available for successful implementation.
Overall Default Management Risk Rating: Is the result of a standard process for combining the Risk to Remediation and Risk to Service Population to determine a risk rating for a Recipient that is in Default; and is used by the Department in deciding upon the principal default management action to be used to incite the Recipient to correct the Default.
Primary Default Management Strategy: a potential outcome to the Default Assessment process that is the requirement for: a Provisional Management Action Plan (MAP); a Management Action Plan (MAP); a Third Party Funding Agreement Management; or a Termination of Agreement. The Primary Default Management Strategy may be adjusted by the Department to the particular Recipient and default situation through further (secondary) requirements.
Program: a group of related activities that are designed and managed to meet a specific public need and are often treated as a budgetary unit. A program can be a project or a service.
Recipient: Is an individual or entity that either has been authorized to receive a transfer payment or that has received that transfer payment.
Responsible Official: the incumbent of a position to which tasks are assigned or responsibilities are delegated by this Directive; or are assigned or delegated by a procedure prepared pursuant to this Directive.
Risk: Is the future events or situations that may have a positive or negative impact on the achievement of the objectives of the funding agreement.
Risk Rating: Is a measure of the risk faced by a Recipient in managing a funding agreement, determined by aggregating the scores within the risk profile. Ranges of numeric risk scores are rated "low", "medium" and "high".
Risk to Service Population: the results of a structured process to assess the actual or potential impacts arriving from a default situation on the health, safety and well being of the service population or on community assets, and the urgency for action to mitigate those impacts.
Risk to Remediation: the results of a structured process to assess the likelihood that a Recipient is able to self-correct a default situation, in terms of its capacity and willingness to do so.
Third Party Funding Agreement Management: a Primary Default Management Strategy applied by the Department in high risk situations, whereby the Department appoints a Third Party Funding Agreement Management Manager to manage a Recipient’s funding agreement for a period during of time which the Recipient works to remedy the underlying causes of the Default and reassume responsibility for the funding agreement
Third Party Funding Agreement Management Manager: a third party, appointed by the Department, that administers funding otherwise payable to the Recipient and the Recipient's obligations under a funding agreement, in whole or in part, and that may assist the Recipient to remedy Defaults under a funding agreement.
Third Party Funding Agreement Management Action Plan: a plan prepared by the Third Party Funding Agreement Manager within 60 days of its appointment, setting out an assessment of the Recipient circumstances and a course of action for the Third Party Funding Agreement Manager and the Recipient during Third Party Funding Agreement Management. See the Third Party Management Framework Agreement for the contents required for a Third Party Funding Agreement Management Action Plan.
Transfer Payment Management Committee (TPMC): A Committee established within a Region or Sector, with governance responsibilities, to oversee the Default Management Process, and to approve draft Default Assessment Reports and Management Action Plans within their area of responsibility.
Treasury Board Secretariat (TBS) Policy on Transfer Payments (2008)
TBS Directive on Transfer Payments (2008)
AANDC: Management Control Framework for Grants and Contributions
AANDC: Default Prevention and Management Policy
AANDC: Directive on Default Prevention and Management
AANDC: Directive on General Assessment
AANDC: Directive on Financial Reporting
AANDC: Directive on Reporting Management
AANDC: Grants and Contributions Desk Book and training material including the:
AANDC: Third Party Management Framework Agreement
AANDC: Third Party Management Framework Agreement User Guide
Table of Contents:
Exhibit 1.0: Overview Third Party Funding Agreement Management Performance Management Framework
Exhibit 2.0: Notional Third Party Funding Agreement Management Action Planning
Exhibit 3.0: Quarterly Performance Report Format
This image is an Overview of the Third Party Funding Agreement Management Performance Management Framework.
It has dialogue boxes that list the key parts of the framework and are connected on a sequential basis:
1.1 Default Assessment (DA) used by AANDC to determine need for (or to continue) Third Party Funding Agreement Management
1.2 TPFAM Agreement and Action Plan: sets mandate for TPFAM Manager (TPFAM Manager may seek an amendment to the "call-up" as an improved understanding of the default situation is gained)
1.3 Primary cause of default is external?
Yes:
1.4 Other Government Agency may have lead role in remedying situation (e.g. emergency response by Health Canada; Public Safety Canada, Provincial EMO or police)
1.5 Third Party Funding Agreement Management process determines lead & support roles to arrive at:
No:
1.5 TPFAM Manager determines lead and support roles to arrive at:
1.6 Recipient Performance: measured in terms of the extent to which Recipient:
1.6 TPFAM Manager Performance Evaluation: measured in terms of extent to which TPFAM:
1.7 Replace TPFAM Manager?
Yes: Return to 1.2 TPFAM Agreement and Action Plan
No: Return to 1.1 Default Assessment (DA)
This image is a Notional Third Party Funding Agreement Management Action Planning.
It has dialogue boxes that list the key parts of Management Action Planning and are connected on a sequential basis:
3.1 Notice to Recipient and Call-up
Third Party Funding Agreement Management Notice to Recipient and Region/Sector Call-up are based upon the information in the Default Assessment Report
3.2 TPFAM Manager Implements TPFAM Agreement
Third Party Funding Agreement Management (with Recipient input if possible) prepares an action plan; building from the notice; such additional assessment information AANDC may provide; any Recipient MAP; and other information made available by the Recipient.
The TPFAM Manager may seek an amendment to the call-up as the default situation is better understood.
3.3 Lead and Support Roles Defined
The onus is on the TPFAM Manager to ensure continuity of service delivery; and on the Recipient to remedy the default situation and move towards sustainability
The TPFAM Manager may seek an amendment to the call-up as the Recipient seeks support services from the TPFAM Manager.
3.4 TPFAM and Recipient Finalize Individual Plans
"Call-up" to include format for performance reporting to AANDC.
"MAP Workbook" provided to Recipient.
(Concurrent review of Third Party Funding Agreement Management Agreement and Regional Management Action Plan)
This image is a Performance Evaluation (Concurrent review of Third Party Funding Agreement Management Agreement and Regional Management Action Plan).
It has dialogue boxes that list the key parts of the review of the Third Party Funding Agreement Management Agreement and Regional Management Action Plan and are connected on a sequential basis:
Review of Third Party Funding Agreement Management Agreement
AANDC approved TPFAM Agreement and accepted TPFAM Action Plan
AANDC reviews
Concurrent Review of Regional Management Action Plan
AANDC accepted Recipient MAP
AANDC reapplies Default Assessment (DA) when it is deemed time to review the Recipient’s readiness to reassume responsibility and accountability for funding agreement
AANDC Management Decisions