Non-Public Property (NPP) 101
Advanced Logistics Officer Course
12 November 2015
Commodore Mark B. Watson
Director General Morale and Welfare Services
www.cfmws.com
Why NPP For ALOC
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)
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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
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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.
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Outline
• 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
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Non-Public Property (NPP) Defined
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);
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Strategic Effect
• 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’.
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Morale & Welfare Employee
Demographics
• 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
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NPP / Public Financial Components
NPP Financial Component
Public Financial Component
FY 2014/15
NPP Net Worth $705M
FY 2014/15
Public Funding $128M
$25M
$17M
$54M
$121M
$9M
$92M
Base / Wing Fund
/ Reserve
Messes
$22M
$27M
$70M
CANEX
$396M
SISIP Financial
CFCF & CFMWS
DCSM
MFRC Core Funding C108
Public Responsibility to NPP/ASD Programs C109
CEM
CFPAF
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Organizational View
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Staff of NPF, CF
• 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.
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Staff of NPF, CF – Deployment Ready
• 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
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Respectful Workplace
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
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NPP Vision and Mission
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
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NPP 101
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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
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NPP 101 (cont’d)
• 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
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NPP Governance
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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
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NPP
CDS
VCDS
Comd RCN
Comd CA
Comd RCAF
DG Fin Mgmt
CMP
C Res & Cdts
CF CWO
Former CF Mbr
Gen J.H. Vance
LGen G.R. Thibault
VAdm M.A.G. Norman
LGen J.M.M. Hainse
LGen M.J. Hood
BGen W. Liedtke
LGen C. Whitecross
BGen P.J. Bury
CWO K.C. West
Mr D. Langton
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NPP Committees
Audit Committee
Pension Committee
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Chair
– Mike Jeffery
• Chair
– Mike Ward, Assoc DGMWS/COO
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Members
– Ken Pennie
– Robin Sellar
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• Members
– Ginette Champagne, VPHR
– Larry Mohr, Sr VP Commercial Svcs
Ex-Offico
– Bruce Pickard, CIO
– Cmdre Watson
– Shirley Tang-Jassemi, CFO
– CWO Martel (DGMWS)
– G. Winchester
– Amipal Manchanda (ADM(RS))
– D. Latulippe
NOTE: CRS is responsible for the audit of NPP within the CAF
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NPP Committees (cont’d)
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
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NPP Governance - Local
• 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
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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
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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”
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Public Accountability Framework
& NPP
• 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
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NPP Accountability Framework
•
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
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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
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NPP Financial Authorities
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
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NPP Financial Authorities (cont’d)
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
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The “Bank”
• 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)
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CFCF
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
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Consolidated Insurance Program (CIP)
• 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
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CFCF Contributions to Local
Bases/Wings
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
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CFCF Contributions to Local
Bases/Wings (cont’d)
• PSP Training Grant FY 15-16 $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
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Representational Expenses
• 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;
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Representational Expenses
• 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.
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Representational Expenses
• 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.
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Use of NPP Funds
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
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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
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Misuse of NPP
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.
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NPP Compliance and Assurance
Common Observations
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)
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Fixed assets verifications not being conducted
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Independent stocktaking not being conducted
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NPP Contracting - Application
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 resale 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
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NPP Contracting – Sole Sourcing
• 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.
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NPP Contracting – Sole Sourcing (cont’d)
• 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 noncompetitive 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
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NPP Contracting – CANEX
• 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
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NPP IM/IT Procurement
• 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)
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NPP IM/IT Procurement
B/W Comd Support
• 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
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CO’s Duty: Provision, Serving and
Consumption of Alcoholic Beverages
• 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:
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a prohibition on the operation of bars except on a profit-making or break-even basis
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a prohibition on "Happy Hour" or "two for one" specials etc.
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NPP Artifacts and Memorabilia
• 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.
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Use of Federal Real Property
• 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)
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NPP 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
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Support Our Troops Fund
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“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
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Corporate Outreach
• 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
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Sponsorship
• One Sponsorship Specialist Position at HQ which
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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
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Key References
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Personnel and Support Programs Policy Manual
A-AD-262-000/AG-000 Mess Administration
A-FN-105-001/AG-001 Policy and Procedures for NPF Accounting​
A-PS-110-001​ 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
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Sr Logistics Officer Role
• 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 www.cfmws.com
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About CFMWS Video
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Questions?
More information at www.cfmws.com
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