Audit of the Vehicle Fleet Management

December 2019

Acronyms and Symbols

AAC

Domestic Procurement, Contracting and Asset Management

AAD

Platform Corporate Services

AAO

Mission Procurement Operations

ACM

International Platform

AFD

Client Relations and Mission Operations

AFS

Mission operations, Policies and Innovation

AMR

Asset Master Record

ARI

Automotive Resources International

AWC

Physical Security Abroad

AWD

Delivery, Professional and Technical Services

CFM

Consular, Security and Emergency Management

CSD

Security and Emergency Management

CSS

Readiness and Security Operations

FAS

Finance and Administration System

FY

Fiscal Year

GAC

Global Affairs Canada

HOM

Head of Mission

HQ

Headquarters

LES

Locally Engaged Staff

MCO

Management and Consular Officer

MRO

Mission Request Online

SCM

Corporate Planning, Finance and Information Technology

SMD

Financial Operations

SMSC

Logistics and Grants and Contributions Portfolio

SOP

Standard Operating Procedures

SPD

Procurement, Asset Management

SPP

Contracting and Material management Policy

TB

Treasury Board

VBD

Office of the Chief Audit Executive

Executive summary

In accordance with Global Affairs Canada’s (the Department) approved 2019-2020 Risk-based Audit Plan, the Office of the Chief Audit Executive conducted an audit of the Department’s vehicle fleet management.

Why it is important

Global Affairs Canada manages Canada’s International Platform, a global network of 178 Missions in 110 countries that supports the international work of the Department and 37 partner departments, agencies and co-locators. The use of vehicles is essential to support this network and help fulfill the Department’s mandate. Global Affairs Canada owns and operates a fleet of approximately 907 vehicles, both armoured and unarmoured (light-duty) in 142 locations across the world and at headquarters in Ottawa, with an acquisition value of $66 million.

What was examined

The objective of the audit was to determine whether the Department effectively manages and operates the departmental vehicle fleet throughout its life cycle.

The audit focussed on Department-owned vehicles, both light-duty and armoured, with a cost over $10,000 CAD, which excludes smaller vehicles such as scooters and motorcycles. The audit assessed the departmental fleet operations for fiscal years 2018-2019 and 2019-2020 up to August 31, 2019. The scope of this audit did not include the acquisition and contracting processes, as it was not assessed as high risk, and vehicles purchased for the 2018 G7 Summit held in Canada.

More details about the audit objective, scope and criteria are presented in Appendix A.

What was found

The audit concludes that the Department has some effective processes in place to manage and operate its vehicle fleet. The audit noted areas for improvement to better support overall governance and improve life cycle management of the departmental vehicle fleet. The Department is aware of the challenges it is facing and has launched an initiative intended to resolve some of the fundamental issues.

Recommendations

Based on the audit findings, the following recommendations were made:

1. The Assistant Deputy Minister of International Platform (ACM) should:
   • Clarify roles and responsibilities for departmental fleet management; and
   • Update departmental guidelines and manuals related to fleet management.
2. The Assistant Deputy Minister of International Platform (ACM), in collaboration with the Assistant Deputy Minister of Consular, Security and Emergency Management (CFM), should:
   • Put in place a process to assess the full transportation needs of missions and ensure that missions have an appropriate vehicle fleet size and composition to fulfill their mandate; and
   • Ensure that departmental fleet life cycle planning is an informed process based on existing fleet size and condition and a forecast of future requirements for acquisition, maintenance/repair and disposal.
3. The Assistant Deputy Minister of International Platform (ACM) should:
   • [REDACTED]
   • Clarify the life expectancy standard of armoured vehicles currently employed by Canadian missions;
   • Develop and formalize destruction guidelines for armoured vehicles; and
   • Implement a formal communication process to inform the missions in a timely manner on the disposal schedule for their armoured vehicles.
4. The Assistant Deputy Minister of International Platform (ACM) should include armoured vehicles in the initiative to improve fleet management at Missions and regularly monitor the initiative to ensure its full implementation within the prescribed timelines.

Statement of Conformance

This audit was conducted in conformance with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing and with the Treasury Board Policy and Directive on Internal Audit, as supported by the results of the quality assurance and improvement program. Sufficient and appropriate audit procedures were conducted, and evidence gathered, to support the accuracy of the findings and conclusion in this report, and to provide an audit level of assurance. The findings and conclusion are based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed upon with management and are only applicable to the entity examined and for the scope and time period covered by the audit.

1. Background

The audit of the Vehicle Fleet Management was selected as part of Global Affairs Canada’s (the Department) 2019-2020 Risk-based Audit Plan and approved by the Deputy Minister. The objective of this audit was to determine whether the Department effectively manages and operates the departmental vehicle fleet throughout its life cycle.

Departmental Context

Global Affairs Canada owns and operates a fleet of approximately 907 vehicles, both armoured and unarmoured (light-duty) in 142 locations across its global network of missions abroad and at headquarters (HQ) in Ottawa. The acquisition value of these vehicles is $66 million while the net book value is $27 million. The departmental fleet at missions is composed of light-duty vehicles dedicated to the Head of Mission (HOM), fleet vehicles for mission staff, maintenance vehicles, and other dedicated government department vehicles. It also includes armoured vehicles to travel to high-risk areas requiring heightened security measures. The domestic fleet is comprised of executive and operational light-duty vehicles.

The number of vehicles varies constantly as the Department acquires new vehicles and disposes of others during the fiscal year. Based on 2016 market value, the acquisition value of a single light-duty vehicle is estimated at $30,000 CAD while the acquisition of a single armoured vehicle is estimated at $250,000 CAD. Consequently, armoured vehicles have the highest overall value despite a lower number of vehicles.

In fiscal year (FY) 2018-2019, the Department spent $9.6 million on its vehicle fleet, including $4.9 million in operating and maintenance costs and $4.7 million in capital vehicle acquisitions. This number excludes the vehicle costs associated with the G7 Summit of $4.3 million. For FY 2019-20, the Department plans to acquire [REDACTED] new vehicles, of which about 81% are due to replace existing vehicles.

Over the past three years, the Office of the Chief Audit Executive (VBD) conducted a series of 18 mission audits. The objective of these audits was to determine whether sound management practices and effective controls were in place to ensure sound stewardship of resources at missions and to support the achievement of the Department’s objectives. One of the audits’ areas of focus was the missions’ asset management practices and controls, including vehicle fleet management, to assess whether they were adequate and appropriate. Overall, the mission audits have made improvement recommendations to address identified weaknesses, including:

• Planning and budgeting of the vehicle fleet were not standard across missions;
• Not all missions had a detailed maintenance plan;
• Vehicle usage did not always meet the minimum set by Treasury Board guidelines;
• Monitoring of fuel, completeness of driving logs, and mileage tracking was uneven across the missions; and
• [REDACTED] of vehicles was not always done in accordance with departmental policies and procedures.

Policy and Guidelines

Federal departments are accountable for the sustainable and financially responsible management of materiel that supports the cost-effective and efficient delivery of government programs. Treasury Board’s Policy on Management of Materiel provides direction to federal entities for the management of departmental material assets throughout their life cycle. At Global Affairs Canada, Contracting and Material Management Policy (SPP) developed a policy suite on materiel management to provide direction on the execution of materiel management activities and define associated responsibilities, including for fleet management, in compliance with Treasury Board’s policy.

International Platform (ACM) is responsible for the implementation of departmental policies. It developed guidelines and manuals to support fleet management, such as:

1. The Materiel Management Manual (2015) outlining the Department’s responsibilities for managing all materiel, including fleet, of the Canadian government abroad, except on military bases.
2. The Mission Fleet Management Guidelines (2012) detailing the mandatory procedures related to the asset management life cycle of motor vehicles. The phases of life cycle management include: assessing requirements; analyzing options; planning acquisition; acquiring; operating, using and maintaining; and disposing and replacing.
3. The Mission Transportation Operating Guidelines (2019), which are currently being developed, will provide guidance on transportation services at missions, including the authorized use of vehicles, official vehicle assignment, vehicle logs, and safety and emergency considerations.

When justified by the level of threat, some missions abroad develop a Mission Movement and Travel Protocol establishing procedures for the use of, but not limited to, mission vehicles.

Stakeholders

Vehicle fleet management at Global Affairs Canada is complex and involves numerous stakeholders within the Department, including the global network of missions and three (3) branches, as described below:

• Missions assess their transportation needs and submit requests to acquire new or replace an existing light-duty vehicle through the annual Strategia business planning exercise. Armoured vehicles are replaced according to a life cycle schedule managed by Physical Security Abroad (AWC). When missions receive vehicles, they are responsible for daily operations in compliance with policies, guidelines, and directives. Missions maintain usage log books, perform repairs and maintenance on all vehicles, and record related expenses. Missions are also responsible for the disposal of all their vehicles, both light-duty and armoured, through transfer sale, disposal (including destruction for armoured vehicles) or donations via Mission Exchange, as required. The HOM approves the Mission Movement and Travel Protocols, when applicable, based on the recommendation of the mission’s security committee composed of security specialists from different federal entities.
• International Platform (ACM) is responsible for service delivery related to materiel management, including fleet management, and provides support to missions:
  • Mission Operations, Policies, and Innovation (AFS) assesses mission and HQ requests for light-duty vehicles and makes capital budget recommendations to Client Relations and Mission Operations (AFD) for approval.
  • Mission Procurement Operations (AAO) is responsible to provide guidance on acquiring light-duty vehicles for missions once Client Relations and Mission Operations (AFD) approves the budget.
  • Domestic Procurement, Contracting and Asset Management (AAC) is responsible for reviewing strategies and the governance model on light-duty vehicles for missions in addition to developing tools and systems.
  • Physical Security Abroad (AWC) coordinates the department’s Armoured Vehicle program, which includes fleet management, life cycle procurement requirements, driver training, coordination of maintenance, relocation, and eventual destruction of vehicles.
• Corporate Planning, Finance and Information Technology – Chief Financial Officer (SCM) has overall responsibility for materiel management in the Department. Specific responsibilities regarding vehicle fleet management include the following:
  • Contracting and Materiel Management Policy (SPP) is responsible for the development of the departmental Policy on Materiel Management, including fleet management, in compliance with Treasury Board’s policy.
  • Corporate SAP – Logistics and Grants & Contributions Portfolio (SMSC) is responsible for providing a system tool/procedure to Domestic Procurement, Contracting and Asset Management (AAC) for capturing fleet information.
• Consular, Security and Emergency Management (CFM):
  • Readiness and Security Operations (CSS) identifies and prioritizes missions requiring armoured vehicles based on Mission Movement and Travel Protocols and provides security requirements to Physical Security Abroad (AWC) for the acquisition of these vehicles.

2. Observations and Recommendations

This section sets out key findings and observations based on documentation review, interviews with stakeholders, file review, and data analysis. Audit observations cover organizational structures, life cycle management, and information for decision making.

See Appendix A for a detailed description of the audit criteria.

2.1 Organizational Structures

Global Affairs Canada’s Policy on Materiel Management sets out the Department’s expectations to manage materiel in compliance with applicable legislation and policies and identify clear roles and responsibilities. It was expected that accountabilities, roles and responsibilities would be clearly defined, documented, communicated and understood by all relevant stakeholders. It was also expected that the management of the vehicle fleet would be supported by clear and current departmental policies, guidelines, procedures and manuals.

Roles and Responsibilities

The audit team reviewed the departmental organizational structure related to fleet management, met with all key stakeholders, and sent questionnaires to a sample of 22 missions to determine whether HQ stakeholders and missions’ respective roles and responsibilities were clearly defined, communicated and understood.

Based on the information collected through the questionnaire, the audit noted that missions’ roles and responsibilities are clearly defined and understood. This is particularly important as missions exercise a central role in all aspects of life cycle management (planning, acquisition, operation, and disposition).

At HQ level, accountabilities, roles and responsibilities are documented but they are not clearly communicated and understood. While individual stakeholders understand their own accountabilities, they are generally unclear about the roles and responsibilities of other stakeholders, especially the aspects with which they are not involved. This is partially explained by the dispersion of key stakeholders involved in departmental fleet management. See Appendix C and D for details on the dispersion of light-duty and armoured vehicles life cycle processes and ownership.

Interviews indicated that the Department would greatly benefit from a streamlined management structure that would consolidate the efforts of various stakeholders, within or across branches. Such a consolidation would be an opportunity to clarify roles and responsibilities and contribute to increased effectiveness and efficiency in the life cycle management of fleet vehicles.

Policies and Guidelines

The audit team reviewed all available departmental policies, guidelines, procedures and manuals and noted that most of them were outdated and/or included gaps and contradictions, making them less reliable for support or direction. Several of the divisions/units listed as having responsibilities for vehicle fleet management no longer exist or have a different mandate than what is outlined in these policy documents. For example, the Mission Fleet Management Guidelines (2012) state that Contracting and Asset Management (AAC), now known as Domestic Procurement, Contracting and Asset Management (AAC), is responsible for submitting consolidated plan for vehicle purchases for approval and determining procurement options and forwarding pre-approved specifications. At the time of the audit, these responsibilities were split between Mission Operations, Policies and Innovation (AFS) and Mission Procurement Operations (AAO) while Domestic Procurement, Contracting and Asset Management (AAC) now has a different mandate related to the review of the governance model for vehicle management. The Mission Fleet Management Guidelines (2012) did not reflect these changes in responsibility.

Furthermore, these policies, guidelines, and manuals included gaps and contradictions. For example:

• The Mission Fleet Management Guidelines (2012) provide life expectancy standards for light-duty vehicles, in line with the standards provided by Treasury Board. However, the Material Management Manual (2015) states that life expectancy standards have not been assigned to vehicles; and
• Business ownership of the Mission Fleet Management Guidelines (2012) was not clearly established. The guidelines state that Contracting and Materiel Management, the former title for Domestic Procurement, Contracting and Asset Management (AAC), is the business owner of the document. However, at the time of the audit, the MODUS page displaying the guidelines stated that Mission Operation, Policies and Innovation (AFS) has been the business owner since December 2016. MODUS acknowledged that this page needed to be revalidated. Shortly after a discussion with the audit team on this matter, the business owner of the document was confirmed to be Mission Operation, Policies and Innovation (AFS) on the Modus page.

Without up-to-date departmental policies and guidelines, it contributes to confusion regarding who is accountable for the different life cycle activities related to fleet management.

Recommendation 1:

The Assistant Deputy Minister of International Platform (ACM) should:

• Clarify roles and responsibilities for departmental fleet management; and
• Update departmental guidelines and manuals related to fleet management.

2.2 Life Cycle Management

Global Affairs Canada’s Policy on Materiel Management states that the departmental materiel management regime has to implement and sustain an effective approach to materiel and asset management in order to effectively manage these items throughout their life cycle. Life cycle management is the effective and efficient management of assets along the entire continuum from identification of a requirement to the disposal and replacement of the asset required to meet the requirement. The phases of life cycle management includes:

• assessment of requirements and options analysis;
• acquisition planning and acquisition;
• operation, use, and maintenance; and
• disposition and replacement.

It was expected that life cycle management principles would be applied to the departmental vehicle fleet. The audit focused on assessment of requirements, operations, and disposal as these areas were assessed as being high risk.

Assessment of Requirements

Planning covers all phases of life cycle management, from the assessment of requirements to disposal. Planning at the assessment stage requires the Department to regularly review operational and organizational needs; determine initial and on-going requirements based on realistic forecasts of funds; know quantities of existing assets and level of inventory to be maintained; forecast maintenance and spare parts requirements; prepare plans early enough to provide input to the budget planning process; and plan for disposal of surplus assets. It was expected that the Department would have implemented a process to ensure that they have the right type of vehicle, at the right time, and in the right quantity.

The Department has two separate processes to assess vehicle needs for missions: one for light-duty vehicles and one for armoured vehicles. These two processes are reactionary rather than anticipatory and neither assesses the full transportation needs of a mission.

Planning for the acquisition of a new light-duty vehicle starts with missions which are responsible for determining their transportation requirements. To assess their requirements, missions must determine the frequency, usage, and environment in which they operate. Missions make their requests to HQ to add or replace a vehicle through Strategia, the departmental planning portal. Mission requests are assessed by Mission Operations, Policies, and Innovation (AFS), who then make recommendations to Client Relations and Mission Operations (AFD) for approval.

Based on interviews and responses collected through the questionnaire sent to 22 missions, mission’s size and environment, vehicle usage, and historical costs of replaced vehicles are the main factors taken into account when requesting to add or replace a light-duty vehicle. From the 22 missions that received the questionnaire, 17 submitted a request to obtain or replace a light-duty vehicle through Strategia for fiscal year 2018-19. The audit team reviewed mission requests from these 17 missions and noted that, although the Strategia template is the same for all missions, the information provided is not standardized. The rationale to add or replace a light-duty vehicle was not indicated for seven (7) missions. Moreover, the audit team also noted that the assessment of Mission Operations, Policies and Innovation (AFS) is unclear and decisions are not supported by documented rationales. The assessment for each request only states whether it is approved or denied. Consequently, without documented rationales, the Department may not be able to demonstrate sound decision making in support of its vehicle acquisition.

The planning process is different for armoured vehicles since they are treated as a security countermeasure. The need for such vehicles is determined by the threat environment in a given region. Security specialists at the mission from Global Affairs Canada and other government departments develop and update the Mission Movement and Travel Protocol based on security intelligence and determine which areas need to be accessed with an armoured vehicle. Readiness and Security Operations (CSS) assesses and approves mission requests for new acquisitions or replacements based on Mission Movement and Travel Protocol. Readiness and Security Operations (CSS) provides Physical Security Abroad (AWC) with risk-based needs, who subsequently determines the technical specifications to mitigate those risks. Quick and drastic changes to the threat environment in a given region may also bring Readiness and Security Operations (CSS) to promptly react and allocate an armoured vehicle to a mission without a formal request. Planning for armoured vehicles is flexible in order to adapt quickly to evolving threat environments. Readiness and Security Operations (CSS) last reassessed the current number of armoured vehicles in February 2019, in consultation with missions.

The Department developed a five (5) year Investment Plan identifying key investments in assets, including vehicles. While the Investment Plan includes information about how much the Department intends to spend for vehicles during this five (5) year period, it does not provide any information on the number and type of vehicles or where these vehicles would be deployed, as acquisitions of vehicles and related costs are still decided on a mission by mission basis. It can be harder to plan for armoured vehicles as the situation in a given country may rapidly change and influence the number of armoured vehicles required. However, the number of light-duty vehicles required is more predictable as new acquisitions are far less common than replacements.

Overall, the planning processes for light-duty and armoured vehicles operate independently and are not aligned, resulting in HQ not assessing the full transportation needs of a mission. In some cases, transportation needs once assumed by light-duty vehicles may have been transferred to the newly acquired armoured vehicle(s). In other cases, when the number of armoured vehicles is reduced, the mission may need new light-duty vehicles to meet transportation needs once assumed by armoured vehicles because the threat level is now lower. Since the two planning processes operate independently, missions may not have the right number and composition (light-duty, armoured) of vehicles they need to fulfill the mission mandate.

Operating Vehicles at Missions

Missions are responsible for operating vehicles, both light-duty and armoured, that are allocated to them. Operating vehicles includes driving the vehicle but also maintenance, repairs, monitoring, and training. The Office of the Chief Audit Executive (VBD) audited maintenance and repairs of vehicles in the past 18 audits of management practices of missions in the last four (4) years and will continue to do so in the future ones. Section 2.3 of this report focuses specifically on monitoring. Drivers training was identified as being high risk and this is why the current section focuses on this aspect.

According to Global Affairs Canada’s Policy Framework on Materiel Management, managers must ensure that their employees receive proper training to drive vehicles. Driving a light-duty vehicle does not require any specific training however, proper training to operate armoured vehicles is important to ensure the security and safety of employees traveling in them. [REDACTED] the Manual of Security Instructions suggest that every effort should be made to ensure that at least one driver per mission receives special training to drive an armoured vehicle.

Missions are responsible to inform Physical Security Abroad that their drivers need training for armoured vehicles. The missions receive funding to train the drivers in designated driving schools with the proper training syllabus. Headquarters keeps track in a spreadsheet of drivers who received armoured vehicle training. [REDACTED]

Disposal

Treasury Board’s Policy on Management of Materiel states that the disposal of surplus materiel assets must be conducted as effectively as possible, as soon as possible after they become surplus to the requirements of program delivery, and in a manner that obtains highest net value for the Crown. This policy applies only to light-duty vehicles. For armoured vehicles, the Department must destroy them completely at the end of their life.

Of the 22 missions who received the audit questionnaire, 17 had disposed of a light-duty vehicle in the last two fiscal years. The audit team reviewed the disposal process for these 17 vehicles and noted that it was conducted in accordance with the expected life expectancy of the vehicles. The majority of the disposals (12 out of 17) were pre-approved by Headquarters and had disposal reports on file signed by the HOM. However, in one instance, there was no rationale for disposal and in another instance, the mission disposed of a vehicle even though Headquarters had not yet approved its replacement. Fifteen missions stated that before disposing of vehicles, they determine whether future repairs and maintenance costs will exceed the net value of the vehicle. In addition, 21 missions stated that they strive to obtain the highest value for the Crown. Missions have mentioned mileage, vehicle condition, and age as the main reasons to dispose of light-duty vehicles.

According to Physical Security Abroad (AWC), armoured vehicles are disposed of after eight (8) years in normal conditions and five years (5) in harsh conditions. However, the rationale or calculations to obtain these disposal standards is not documented and only reflects departmental usage. [REDACTED]

[REDACTED]

Of the 22 missions who received the questionnaire, six (6) missions had to destroy a total of [REDACTED] during fiscal year 2018-2019. The audit noted that [REDACTED] in two (2) missions had been destroyed. [REDACTED]

[REDACTED]

Recommendation 2:

The Assistant Deputy Minister of International Platform (ACM), in collaboration with the Assistant Deputy Minister of Consular, Security and Emergency Management (CFM), should:

• Put in place a process to assess the full transportation needs of missions and ensure that missions have an appropriate vehicle fleet size and composition to fulfill their mandate; and
• Ensure that departmental fleet life cycle planning is an informed process based on existing fleet size and condition and a forecast of future requirements for acquisition, maintenance/repair and disposal.

Recommendation 3:

The Assistant Deputy Minister of International Platform (ACM) should:

• [REDACTED]
• Clarify the life expectancy standard of armoured vehicles currently employed by Canadian missions;
• Develop and formalize destruction guidelines for armoured vehicles; and
• Implement a formal communication process to inform the missions in a timely manner on the disposal schedule for their armoured vehicles.

2.3 Information for Decision Making

Treasury Board’s Directive on Fleet Management: Light-Duty Vehicles requires departments to ensure that essential information about their fleet is tracked for management and reporting purposes by a fleet management information system to monitor the cost of maintaining, repairing and operating vehicles as part of a life cycle management approach to fleet management. The audit expected that systems and practices would be in place to manage, monitor and report on the departmental vehicle fleet. Specifically, it was expected that sufficient, complete and accurate vehicle information would be captured. It was also expected that regular monitoring and reporting of financial and operational information would take place to support decision-making and ensure optimal management of the vehicle fleet.

According to departmental policy documents, missions are responsible for managing their fleet by recording expenses in the financial system, and maintaining and analyzing vehicle log books. Missions use numerous systems to manage their vehicle fleet, such as Finance and Administration System (FAS), and Mission Request Online (MRO). A limited number of missions also use an off-the-shelf software. All these systems operate independently.

The audit team reviewed departmental policies and noted that they do not include any mandatory requirements for internal reporting. Based on the information collected from the 22 missions which received the questionnaire, 15 stated that they produce reports on fleet management (e.g., repairs and maintenance, fuel consumption, usage) but most of this information is not reported to HQ. Therefore, HQ does not have the information it needs for fleet management decision making.

The audit team reviewed all expenditures related to vehicles in FAS for the last two fiscal years and noted that missions are not consistently recording fleet management cost information into departmental systems. For example, entries were not systematically coded under the right category of expenses and the vehicle’s unique identification number was often not recorded, making it difficult to associate costs with a specific vehicle. A lack of standardized practices in recording fleet data resulted in inconsistent, inaccurate, and unreliable fleet management cost information. Without a single formal information management system and standard information recording practices, the Department cannot make informed decisions regarding fleet management.

Departmental Initiative to Improve Fleet Management at Missions

The Department is aware of management gaps related to its fleet at Missions and launched an initiative intended to correct them. According to a presentation made to the Missions Committee in April 2019, the initiative was launched following the identification of the key issues, as summarized below:

• Unavailability of reliable real-time basic information on GAC fleet including: number of vehicles, location, condition, etc., resulting in important challenges in responding to parliamentary questions, access to information, and other information requests;
• Increased risks of non-optimal, misuse or fraud related use of Government of Canada vehicles due to the absence of a single standardized and automated system to assist in effective, efficient, and compliant management of GAC fleet;
• Almost no automatic data analytics capability to detect anomalies such as mileage vs. fuel consumption and unusual use of vehicles;
• Limited capability to evaluate future needs required for multi-year investment plans; and
• Sub-optimal lifecycle management capability.

The objective of this initiative is to standardize the management of the departmental fleet by expanding the current capability of FAS in creating a module dedicated to the management of light-duty vehicles deployed at missions. This initiative would reinforce the reliability of fleet management data, standardize recording practices, and allow stakeholders at HQ to get a complete picture of the departmental fleet of light-duty vehicles at all times. Domestic Procurement, Contracting and Asset Management (AAC) is currently collecting information on light-duty vehicles at missions to get a more accurate fleet database.

While the initiative is supported by the Assistant Deputy Minister of International Platform (ACM), the success of the initiative depends on the capacity of Domestic Procurement, Contracting and Asset Management (AAC) to lead and manage the project to completion. The audit noted that Domestic Procurement, Contracting and Asset Management (AAC) did not receive any additional resources to achieve the objective of the initiative, which may compete with their mandated priorities. The current initiative would also be an opportunity to include armoured vehicles information into the new FAS module to really get a full picture of departmental vehicles, and not just light-duty vehicles. Physical Security Abroad (AWC) told the audit team that they would be interested to include fleet management data for armoured vehicles into the new FAS module.

Recommendation 4:

The Assistant Deputy Minister of International Platform (ACM) should include armoured vehicles in the initiative to improve fleet management at Missions and regularly monitor the initiative to ensure its full implementation within the prescribed timelines.

3. Overall Conclusion

The audit concludes that the Department has some effective processes in place to manage and operate its vehicle fleet. The audit noted areas for improvement to better support overall governance and improve life cycle management of the departmental vehicle fleet. The Department is aware of the challenges it is facing and has launched an initiative intended to resolve some of the fundamental issues.

Appendix A: About the Audit

Objective

The objective of this audit was to determine whether the Department effectively manages and operates the departmental vehicle fleet throughout its life cycle.

Scope

This audit examined all Department-owned vehicles, both light-duty and armoured. However, the audit did not examine vehicles that have fewer than four wheels and/or with a cost less than $10,000, such as scooters and motorcycles. The audit assessed the Department’s fleet operations for fiscal years 2018-2019 and 2019-2020 up to August 31, 2019. However, to gain a more complete understanding of the subject matter of the audit, relevant material outside this period was also examined. The scope of this audit did not include the acquisition and contracting processes as it was not assessed as high risk and vehicles purchased for the 2018 G7 Summit held in Canada.

Criteria

The following criteria were developed based on the results of audit risk assessment and drawn from generally accepted controls expected to be in place:

Approach and Methodology

The audit was conducted in conformity with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing and with the Treasury Board Policy and Directive on Internal Audit. These standards require that the audit be planned and performed in such a way as to obtain reasonable assurance that the audit objective is achieved.

In order to conclude on the above criteria, the following methods were used to gather evidence:

• Identify and review relevant policies, directives, guidelines and operational standards relating to vehicle fleet management;
• Review and analyze financial and non-financial information related to fleet operations;
• Conduct walkthroughs of key processes to identify and assess the effectiveness of key controls;
• Test selected judgmental samples through file reviews as required;
• Conduct interviews with departmental officials in HQ and like-minded departments (RCMP);
• Collect relevant information from selected missions regarding their roles and responsibilities in some aspects of fleet management;
• Increase efficiency by leveraging mission visits to obtain information on certain aspects of fleet management;
• Perform data and trend analysis; and
• Conduct other tests and document review as deemed necessary.

To supplement the audit work conducted at HQ, the audit team sent a questionnaire to 22 missions in order to collect information on the life cycle management of their vehicle fleet. This sample of missions was selected based on various criteria such as:

• Geographic representation;
• Mission and fleet size;
• Number of light-duty vehicles versus armoured vehicles;
• Total fleet expenses for the last two fiscal years; and
• New acquisitions and disposals in the last two fiscal years.

Appendix B: Management Action Plan

Appendix C: Life Cycle Management Process – Light-duty Vehicles

Appendix D: Life Cycle Management Process – Armoured Vehicles