ARCHIVED - 4  Fleet Financial Framework

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The Fleet Financial Framework serves as the basis of the Integrated Fleet Operations Plan by providing the direction, tools, themes and inputs for its creation. It provides:

  • clear roles and responsibilities to those involved;
  • the foundational policies, guidelines and directives needed for the creation of the plan;
  • financial planning and review procedures as well as reporting requirements to ensure compliance with government financial policy; and
  • a record of Fleet executive board decisions related to the plan.

The goal of the Fleet Financial Framework is to ensure the Integrated Fleet Operations Plan is nationally relevant, accountable, transparent and affordable within Fleet's current financial position.

Notional Budget

Table 6 contains notional budget numbers for Fleet operations at sea for 2010–2011.

Table 6: Notional Budget, Ship Operations, 2010–2011 (Dollars)

SalaryOperations and ManagementFuelTotal
149,367,088 30,056,271 40,100,001 219,523,360

CCGS Samuel Risley, Medium Endurance Multitasked Vessel, in ice
CCGS Samuel Risley, Medium Endurance Multitasked Vessel, in ice

Fleet Affordability Plan

The Fleet Affordability Plan includes financial and operational risks as well as targeted risk management strategies. It also includes notional funding levels for the program, a listing of client requirements, current Fleet affordability measures and Fleet Executive Board-approved non-standard items and recommendations to the Coast Guard Management Board.

The Fleet Affordability Plan provides a national view of the services that the Fleet Operational Readiness program can provide in a given fiscal year, while maintaining overall affordability and accountability to the governance model and transparency to Fleet clients.

Integrated Fleet Operations Plan

The Integrated Fleet Operations Plan is an annually published document that represents an important milestone in Fleet's operational and financial planning process. It involves consultations with Fleet clients, both internal and external to DFO, in order to determine their need for Coast Guard vessel and helicopter support in the execution of their programs at sea. It also requires many inputs such as business plans, financial budget allo­cations, service level agreements or memoranda of understanding, client level-of-service expectations, priority-setting exercises and integrated investment plans.

Fuel

Managing fuel expenditures is a challenging task for the Fleet Operational Readiness program. Planned fuel consumption by Coast Guard vessels is approximately 60–65 million litres of fuel each year. Considerable volatility in fuel expenditures exists due to both price volatility and vessel programming (i.e., icebreaking activity is dependent on weather conditions). To improve the management of fuel expenditures, a controlled financial allotment for fuel expenditures has been created under the Fleet Operational Readiness program financial management system.

CCG Helicopter (MBB BO-105)
CCG Helicopter (MBB BO-105)
Photo: National Photo Library

The creation of a controlled financial allotment for fuel expenditures provides Coast Guard with the support and corroborating evidence needed when discussing actual fuel usage and essential funding requirements with the department and central agencies. This controlled allotment is supported by a process that provides for regular monitoring and reporting of consumption and expenditures by the regions to national headquarters on a monthly basis.

This allotment, controlled at headquarters by the Director General, Fleet, is used to provide each region with a prorated portion of the Fleet Operational Readiness fuel budget, based on regional requirements to support the Fleet Operational Readiness program. The expenditure controls placed on the allotment specify that the funding can be used only for the purchase of ships' fuel. In the rare case where a regional account is forecasted to end the year in a surplus position, the funding will either be redistributed by the Director General, Fleet to regions requiring additional fuel funding in the current fiscal year, or be returned to the Commissioner, Coast Guard's control account. It cannot be used by regions, at the regional level, to fund financial pressures.

The controlled nature of the allotment has provided the Fleet Operational Readiness program with direct benefits. For example, when there are severe pressures on the Coast Guard's fuel budget, the stringent validation and consistent monitoring of the fuel allotment can be used to demonstrate the need for additional in-year funding for fuel from the Commissioner, Coast Guard, the Deputy Minister, DFO, or Treasury Board.

Federal Excise Tax Relief Rebate

On March 17, 2010, a retroactive regulatory amendment to the Ships' Stores Regulations was published in the Canada Gazette, Part II allowing Coast Guard to request a federal excise tax rebate for fuel consumed outside Canadian waters as of April 1, 2008. In response to this regulatory change, Coast Guard requested and received a federal excise tax rebate of approximately $405,000 for 2009–2010.

In an effort to ensure national consistency in the reporting of fuel consumed outside Canadian territorial waters (i.e., beyond the twelve nautical mile limit), Fleet Circular 07-2010 Federal Excise Tax Relief, published July 16, 2010, was provided to ships' officers and ships' crews explaining the regulatory requirements, directives and procedures of the amendment of Ships' Stores Regulations (SOR/96-40).

Currently, Coast Guard expects to receive approximately $400,000 a year of re-spendable funds that will become part of Fleet's official fuel forecast and will form part of the approach to drive the fuel budget to a zero balance in each successive fiscal year.