Non-Public Property (NPP) 101 Advanced Logistics Officer Course 12 November 2015 Commodore Mark B. Watson Director General Morale and Welfare Services

Your Comds are equipped and will look to CAF Officers and PSP staff to assist with their MW mandate CFMWS has undertaken many initiatives: – Annual B/W Comd Forum (2 days of NPP, Sep 15) – CDS Guidance to COs – Two NPP Financial Certifications (DLN) – Briefings to CAF courses, seminars, workshops – Briefings to ECS Councils and Boards – Reserve Force Information Sessions You need to catch up to where your Comd is 2 Why NPP For ALOC

Aim To provide you as professional Logisticians an awareness of Non-Public Property and its importance to Morale and Welfare of the CAF, serving and former, and your families. 3

CFMWS Organizations Overview Intro to Non-Public Property (NPP) NPP Governance & Legal Framework Public Accountability Framework and NPP Accountability CFCF NPP Contracting Use of NPP Funds NPP Use of Federal Real Property Sponsorship, Outreach and Initiatives Leadership Challenges and Key References 4 Outline

As defined in the National Defence Act, “non-public property” means (a) all money and property, other than issues of materiel, received for or administered by or through messes, institutes or canteens of the Canadian Forces, (b) all money and property contributed to or by officers, non-commissioned members, units or other elements of the Canadian Forces for the collective benefit and welfare of those officers, non-commissioned members, units or other elements, (c) by-products and refuse and the proceeds of the sale thereof to the extent prescribed under subsection 39(2), and (d) all money and property derived from, purchased out of the proceeds of the sale of, or received in exchange for, money and property described in paragraphs (a) to (c); 5 Non-Public Property (NPP) Defined

To have the right, relevant Public morale and welfare programs and support services in place that both contribute to the operational effectiveness of the CAF and to the quality of life of CAF personnel and their families. To have Non-Public Property programs and activities at all CAF locations that provide a value proposition unique to the military community that enhances the morale and welfare benefit to CAF personnel, former members and their families and reflects their ‘ownership’. 6 Strategic Effect

Approximately 4,000 “Staff of the Non-Public Funds, Canadian Forces” – Number increases due to casual employment, esp. in summer – 1,781 full time, 777 part time, 1,004 casual, 436 temporary staff – 42% CAF affiliation (Retired and/or Family) 206 Canadian Armed Forces members 153 National Defence public servants 1,000 at Military Family Resource Centres (locally employed) Plus many, many volunteers 7 Morale & Welfare Employee Demographics

NPP / Public Financial Components 8

9 Organizational View

The MND has been authorized by the GiC to manage all HR functions and powers for NPF employees (IAW Financial Administration Act (FAA)). The MND delegated this authority to the CDS and the Chief Executive Officer (CEO) of the Staff of the NPF, CF (DGMWS). The Staff of the NPF, CF is a separate agency within the federal public administration of Canada and is the employer for NPF employees. Listed in Schedule V: Separate Agencies of the FAA. NPF employees are public servants, but not part of the core PS administration for which TB is the employer. Staff of NPF, CF 10

Staff members support deployed personnel by delivering publicly-funded: – rest and recreation programs, – Home Leave Travel Assistance, – fitness, sports and recreation programs. PSP established group of NPF employees/contractors, fully trained, ready to deploy to provide deployment support 11 Staff of NPF, CF – Deployment Ready

CDS intent – Op HONOUR: Op HONOUR is focused at Canadian Armed Forces (CAF) Restore CAF to its highest ethical integrity and ensure a safe, harassment-free work environment Eliminate harmful and inappropriate sexual behaviour within entire CAF community CFMWS Will support and facilitate this mission Must do its part in providing healthy environments for staff, CAF members and their families Respectful Workplace 12

Vision Vibrant community, recreational and leisure programs and activities, financial and retail goods and services that are tailored to the military community (One Community – One Million Strong) Mission Through the special provisions of Non-Public Property (NPP), and as directed by the CDS, enable and support Morale and Welfare services and activities that benefit serving and former CAF personnel, and their families 13 NPP Vision and Mission

Established in NDA (ss. 2 & 38-41) A unique type of Crown property Governance assigned to CDS Purpose is to provide benefit to serving and former members of the CAF, and their families, or for any other purpose designated by the CDS Money component known as Non-Public Funds (NPF) Revenues from NPP operations retained as NPF FAA does not apply 14 NPP 101

Trust-like relationship between the CDS and serving and former CAF personnel and their families, with the CDS having fiduciary responsibility Overall functioning is much like a cooperative: income of revenue-producing activities (CANEX, SISIP, CF Central Fund) retained within NPP and used to finance other programs and activities 15 NPP 101 (cont’d)

NPP is not part of DND Full governance assigned to CDS Authorities delegated to DGMWS as Managing Director of NPP FAA does not apply to NPP NPP Board serves as an advisory board: – Provides stakeholder input to CDS – Strategic plans, policies and direction – NPP investments – Approval of audited financial statements NPP Board and AFC engagement is key – NPP is a “Chain of Command” responsibility 16 NPP Governance

17 NPP CDS Gen J.H. Vance VCDS LGen G.R. Thibault Comd RCN VAdm M.A.G. Norman Comd CA LGen J.M.M. Hainse Comd RCAF LGen M.J. Hood DG Fin Mgmt BGen W. Liedtke CMP LGen C. Whitecross C Res & Cdts BGen P.J. Bury CF CWO CWO K.C. West Former CF Mbr Mr D. Langton

Audit Committee Chair – Mike Jeffery Members – Ken Pennie – Robin Sellar Ex-Offico – Cmdre Watson – CWO Martel (DGMWS) – Amipal Manchanda (ADM(RS)) NOTE: CRS is responsible for the audit of NPP within the CAF 18 Pension Committee Chair – Mike Ward, Assoc DGMWS/COO Members – Ginette Champagne, VPHR – Larry Mohr, Sr VP Commercial Svcs – Bruce Pickard, CIO – Shirley Tang-Jassemi, CFO – G. Winchester – D. Latulippe NPP Committees

Investment Committee Chair – Mike Ward, Assoc DG/COO Members – Larry Mohr, Sr VP Commercial Services – Shirley Tang-Jassemi, CFO – Bob VandenBygaart – Marc St-Jean Secretary – Pierre Goulet, Assoc VP CSD, SISIP Financial 19 NPP Committees (cont’d)

Base/Wing/Station/Ship COs responsible and accountable for governance and administration of their respective funds B/W Comd must establish a B/W Fund Cmte with a Chair (B/W Comd or rep), Secretary and additional members as req’d. Senior Mgr PSP and B/W NPP Accounting Mgr/Regional Accounting Mgr are ex-officio mbrs. Must issue detailed Terms of Reference Meet quarterly, require annual budget B/W Compt should be providing a robust and informed challenge and advisory function 20 NPP Governance - Local

Legal Framework – How is NPP Administered NPP is vested in the CDS and Unit Cos MND has authority to make regulations with respect to liability and restitution of loss of / damage to NPP MND has authority to direct how NPP is to be audited No gift, sale or transfer of NPP is legally effective without CDS approval As FAA does not apply to NPP, CDS has authority to establish NPP financial accountability framework 21

Legal Framework / Status – NPP Organizations They are “administrative constructs” created by either the CDS or by Base, Wing, or Unit Commanders at the local level CDS/CO-created NPP orgs are legally, “Her Majesty in right of Canada, as represented by the CDS/CO in his/her NPP capacity through (name of organization) Implications: – deal with the private sector as Her Majesty; – deal with the Crown through MoUs or SLAs; – cannot enter into a contract with the Crown “public” 22

A-PS-110 Public support for M&W Programs and NPP (DM and VCDS authority) NPP is not to be used for Public responsibility purposes 23 Public Accountability Framework & NPP

CDS Delegation of Authorities for the Financial Administration of NPP supported by a requirement to pass a NPP Financial Certification – To establish the NPP accountability framework and delegate financial authorities National and local governance NPP Letters of Financial Management Attestation NPP Hospitality Policy NPP Contracting Policy NPP Travel and Relocation Policy HR Policy, Accounting Policy, Sponsorship and Donation Policy, etc. National entities are externally audited ADM (RS) is responsible for the audit of NPP within the CAF Compliance and Assurance Team Consolidated Insurance Program NPP Fraud Prevention Handbook and Questionnaire 24 NPP Accountability Framework

Three main components (authority) Commitments and contracting Payments Requisition Payment Base Commanders – Table 5 of the CDS Delegation of Authorities for Financial Administration of NPP applies 25 NPP Financial Authorities

B/W Comd Authority: PO&M for Single Event/Activity is limited to $250K if indebted to CFCF only $50K Capital – no authority if CFCF financed, $250K if self financed, $50K if indebted to CFCF Travel outside Canada and Continental USA limited to CFSU (E) only Representational Expenses up to authorized level Write-off - $250K, $50K if indebted to CFCF Sponsorship and Donations – ref: Policy No B/W Comd authority for IM/IT procurement Mandatory NPP Certification 26 NPP Financial Authorities (cont’d)

Canadian Forces Central Fund (CFCF) was established as a source of NPF which the CDS may use to provide financial assistance to units of the CAF. All other funds are related and subordinate to the CFCF. Base/Wing/Station/Ship Funds – Commanders are responsible and accountable – Oversight and structure for operating NPP programs and activities – NPP activities are managed and accounted by, through or as a subsidiary to the B/W/Station/Ship Fund (except messes, museums, CANEX) 27 The “Bank”

Sources of CFCF revenue include: Investments Loan interest Proceeds from disposition of NPP of closed out units Consolidated Insurance Program fees on NPP operations, programs and activities CFCF may provide: Recurring operating grants Subsidies to delivery of programs and services Grants/Loans for major capital projects Interest-free loans Write-offs of outstanding loans Any other purpose approved by the CDS 28 CFCF

provides adequate, cost effective, insurance coverage to all NPP activities combination of self insurance and purchased commercial insurance policies providing national coverage for property losses and liability claims Regular Force - all NPF property, business or economic undertakings of CANEX, Messes, Clubs, Base/Wing/Station activities, programs and funds, PMQ councils, the CFCF and all other NPP activities and programs accounted for in the NPP book of accounts Reserve Force - with prior approval of DGMWS/CFO, NPP property and activities of Reserve Force units and officially accredited museums are covered under the NPP CIP Insurance program Consolidated Insurance Program (CIP) 29

CANEX/SISIP Dividend Close to $3.6M per year, significant increase over old methodology Three components: -CANEX Royalties -Community Recreation -Equitability Adjustment Grant FY 15/16 CANEX/SISIP Dividend highlights: -no change to three components -inclusion of Reserve Class B and C and RCAF Class A -Distribution of funding to OUTCAN Units using same principles / components 30 CFCF Contributions to Local Bases/Wings

PSP Training Grant FY $172.5K CFCF Loan – 31 Mar 2015 o/s balance $1.4M CFCF Investment: Over $21M distributed to Bases and Wings within the last five years Other contributions: – Pension Solvency Contributions – IM/IT – provision on network infrastructure, application, website and support without user fees – Finance and HR – local support without user fees 31 CFCF Contributions to Local Bases/Wings (cont’d)

Subject to the maximum amount for a fiscal year determined by the NPP Board, a BComd may authorize the use of Base/Wing Funds to meet obligations to represent the department, the command or the base provided that: – The expenditure is such that it does not qualify for reimbursement from public funds; Representational Expenses 32

Allowable expense examples are: – Costs associated with infrequent/impromptu meetings/visits with/of Municipal, Provincial and Federal representatives in regard to Morale and Welfare programs; – Support/enhancement to change of Command ceremonies when public support is not provided; – Expenditure to respect tradition and protocol or change of command of individuals who do not meet the rank eligibility for public hospitality support; – Support for ceremonies associated with the appointment/end of tenure of Honorary Colonels (but not travel costs); – Costs associated with hosting foreign forces not covered by the public; – Hospitality including the provision of mementoes of a minor nature to respect traditions and protocol; – Costs associated with hosting visitors not covered by public hospitality; and – Attendance by Senior Base representatives at local community events. Representational Expenses 33

Non allowable expense examples are: – Costs associated with Branch heads meetings and luncheons; – Support normally covered by the Public hospitality; and – Provision of in Memoriam gifts, flowers to hospitalized members, or retirement or departure gift unless equitable criteria have been established for all members of the base. Representational Expenses 34

Examples of APPROVED Fund use: compensatory time off for accommodation, transportation, meals and other eligible expenses such as entrance fees to cultural, sport or entertainment activities or to pay for entrance fees to recreation areas organized tours for transportation, entrance fees, meals and other eligible expenses rental of recreation facilities for access to swimming pools, exercise facilities, golf courses, beaches or similar recreational facilities purchase of equipment for sport, fitness and recreation programs 35 Use of NPP Funds

Funds will NOT be used to: provide cash prizes or direct cash payment, etc. purchase alcoholic beverages purchase personal items such as CDs, ipads, gifts, clothing, souvenirs or end of tour gifts subsidize FRT, LTA, HLTA, third location HLTA, or any other travel program that is not authorized as in theatre CTO R&R 36 Use of NPP Funds

37 The NPP of the Base Fund or any of its components, including CANEX, shall not be alienated: By gifts or donations to private or Public institutions To relieve an officer or non-commissioned member of his personal responsibility for loss or damage to NPP For testimonials or gifts For national appeals for financial assistance For the provision of anything connected with religious services A grant or transfer of Base/Wing Funds to a charitable or other organization that is not specifically part of base NPP is prohibited. Misuse of NPP

Note that NPP is not immune to theft and fraud so management must ensure internal controls are in place and are functioning. Common observations/weaknesses: Poor cash controls (accountable documents, segregation of duties, cash register tapes, numbered tickets, timely deposit of revenues) Fixed assets verifications not being conducted Independent stocktaking not being conducted 38 NPP Compliance and Assurance Common Observations

Reminder: NDA exempts NPP from the FAA, NPP is also exempt from public contracting and procurement Applies to CAF, DND employees and NPF employees Applies to all expenditures of NPF for the acquisition of goods and/or services for NPP organizations, including goods for re- sale by CANEX, Messes and other NPP Organizations Must be read in conjunction with the CDS Delegation of Authorities for Financial Administration of NPP C109 - Public programs delivered by NPP → contract arrangements for goods/services follow the NPP Contracting Policy, notwithstanding that NPP will subsequently be reimbursed by Public funds NPP Contracting - Application 39

NPP contracts are to be competitively tendered. However, competitive tendering may not be required when one or more of the following circumstances apply: – Pressing emergency / urgency and delay would prevent the contracting authority from meeting operational requirements of NPP programs and activities; – The nature of the work is such that the solicitation of bids would not reflect best business practice; – There is only one supplier capable of providing the required goods and services or capable of performing the work; and – The competitive tendering process would not result in obtaining the best value for money. NPP Contracting – Sole Sourcing 40

Prior written approval of DGMWS is required to enter into any contract that does not meet one or more of the previous noted criteria or exceeds the limitations imposed by the CDS Delegation of Authorities for Financial Administration of NPP for directed or non- competitive contracts which have been set as follows: – DGMWS: $5M; Associate DG: $500K – B / W Comd and CFMWS Div Heads: $50K – Others: Up to delegated authorities not to exceed $10K NPP Contracting – Sole Sourcing (cont’d) 41

CANEX has the first right of refusal for any new NPP re-sale and consumer service activities contemplated at any CAF Base/Station location NPP programs and activities shall, whenever practicable, obtain their goods for re-sale by messes and other NPP organizations, from/through CANEX NPP Contracting – CANEX 42

IAW CDS Delegation of Authority, IS Division’s approval is required for all NPP IM/IT acquisitions ( all HW, SW, IM/IT Services & Personnel) Integrity of network Efficiency and economy of support Best value No local authority to establish ‘separate’ networks or applications Every equipment, application, network site at B/W must be either Public or Non-Public (NPP) 43 NPP IM/IT Procurement

Need to expand NPPNet on B/Ws to better support Messes, Community & Recreation and other MW programs Using GPNet as the ‘pipe’; but, need to ensure there are adequate NPP network drops within buildings Will work with your local TIS/ASGs, etc. who must coordinate/do the work 44 NPP IM/IT Procurement B/W Comd Support

COs establish and promulgate orders governing the times, locations and conditions for the introduction, serving and consumption of alcohol at facilities and functions of the unit. the standards of care for the serving and consumption of alcoholic beverages must conform with those established by provincial and municipal laws; promote responsible attitudes and practices to avoid or reduce domestic or social problems and the adverse effects on health and work performance associated with immoderate use of alcohol ensure that all reasonable steps are taken to avoid contributing to injury or death resulting from the consumption of alcohol served at CAF facilities or CAF sponsored functions the sale of alcoholic beverages is not subsidized or discounted. Provisions should therefore include: ̶a prohibition on the operation of bars except on a profit-making or break-even basis ̶a prohibition on "Happy Hour" or "two for one" specials etc. 45 CO’s Duty: Provision, Serving and Consumption of Alcoholic Beverages

Items of NPP that have a symbolic, historical, traditional or sentimental value Not to be confused with crown-owned artifacts, relics and trophies controlled through NDHQ Items shall be listed on a distribution account separate from other NPP Any disposal or alienation of artifacts and memorabilia requires specific approval by CDS through DGMWS Loan of artifacts may be approved Consolidated Insurance Program (CIP) covers Reg Force artifacts. 46 NPP Artifacts and Memorabilia

CDS and Commanding Officers have full legal authority to allocate the administration of DND FRP to NPP organizations for the purposes of providing morale and welfare programs and services, although the exercise of that authority remains subject to Ministerial Direction DND FRP remains FRP; however, it becomes subject to the NPP provisions of the NDA and the associated regulations, orders, opinions, and policies May be used either directly or by licensing the use of the property to third parties through NPP Concession Agreements (through CANEX). Such licensing is excluded from the operation of Sec. 4 of the Federal Real Property and Federal Immovables Act (“FRPFIA”) All revenues derived constitute NPP and do not accrue to the Consolidated Revenue Fund (CRF) 47 Use of Federal Real Property

5 Year Capital Infrastructure Plan – NCR, CANEX and Base/Wing Oversight provided by Capital Program Board – VCDS, ECs, ADM(IE) Investment opportunities reviewed by NPP Investment Committee 48 NPP Real Property

“SOT” Fund has been adopted as an umbrella for: — Military Families Fund— Soldier On Fund — Hospital Comforts Fund — Op Santa Claus MFF Terms of Reference revised to respect link to conditions of service — Other considerations include financial need and support from the Chain of Command — All cases are evaluated on their own merits – no case creates a precedent B/W Comds have authority to approve < $5K in immediate support — Facilitated by the provision of BMO cards at the local level 49 Support Our Troops Fund

HQ function stood-up from sheer necessity – Increasing level of donations to SOT Fund – Growing number of third party fundraising events – Rising demands for Public support by third party partners/organizations The Provision of Services Manual allows for support to charitable organizations – However, the policy provisions of this Manual are not always followed DGMWS was designated by the CDS as the office of primary liaison with third party partners/organizations CRS Audit on Sponsorship included a limited examination of this area 50 Corporate Outreach

One Sponsorship Specialist Position at HQ which – Provides policy advice/guidance – Oversees training of Authorized Agents – Facilitates endorsement of Sponsor solicitation lists – Obtains sponsors for seven national CFMWS programs NPP Sponsorship is growing in $$$ and complexity at Bases/Wings – Donor Exhaustion – Sponsor Saturation CRS Audit looked at NPP Sponsorship at national and local levels 51 Sponsorship

Personnel and Support Programs Policy Manual A-AD /AG-000 Mess Administration A-FN /AG-001 Policy and Procedures for NPF Accounting​ A-PS ​ Public Support to Morale and Welfare Programs and Non-Public Property Manual Two NPP Financial Certifications – Fundamentals of NPP – NPP Financial Delegated Authorities and Contracting CFMWS Website/Library Sponsorship and Donation Policy A-AD 266 Canadian Forces Museums – Operations & administration Key References 52

Become familiar with NPP and MWS operations Complete the NPP Fundamentals Certification and read the CDS’s Guidance on CFMWS Programs (26 Jan 04) Advocate for Public to fulfill its obligation to support MWS operations Promote NPP and MWS operations to your leadership, colleagues and stakeholders More info at 53 Sr Logistics Officer Role

About CFMWS Video 54

Questions? 55 More information at