Evaluation of the Capital Assistance Program
February 2025
1258-3-072 (ADM(RS))
Reviewed by ADM(RS) in accordance with the Access to Information Act. Information UNCLASSIFIED.
Table of Contents
Evaluation Scope
The Evaluation of the Capital Assistance Program (CAP) was conducted in compliance with the Treasury Board Policy on Results and meets the obligations of the Financial Administration Act. The evaluation examined the extent to which CAP is aligned with the priorities and needs of the Department of National Defence (DND) and the Canadian Armed Forces (CAF); accomplished its intermediate objectives; and delivered projects efficiently between fiscal years (FY) 2019/20 and 2023/24.
Alternate Formats
Assistant Deputy Minister (Review Services)
Program Overview
CAP is unique as the only infrastructure grants and contributions program in DND. Created in 1983, it is a Vote 10 contribution program that is used to fund off-base capital projects related to the operation of military bases, wings and installations located within Canada. DND uses CAP to fund capital projects undertaken with provinces, territories, municipalities and public utilities.
Baseline funding is $5.45 million a year, and supplementary funding is allocated for large capital projects, such as $230 million for the Inuvik runway extension. Seven projects were completed in FY 2019/20 to 2023/24.
CAP projects must meet one of the following principal objectives of the program:
- reduce DND non-core infrastructure and non-core services through consolidation and joint-use opportunities with eligible recipients;
- reduce DND operating, maintenance and recapitalization costs of municipal-type works and public facilities over the long term; or
- modernize or construct locally owned facilities for shared use by DND and local communities.
The final expected results of the program are:
- the optimization of DND infrastructure to support the evolving force structure; and
- enhanced quality of life in the CAF.
Figure 1 Summary
This figure consists of two horizontal bar charts that depict the type, number and total project value of funding for CAP from FY 2019/20 to 2023/24. There are three types of funding: CAP baseline budget; dedicated funding; and projects awaiting dedicated funding. The bar charts present the following information:
- Twenty projects worth $57 million funded with baseline funding
- Two projects worth $239.5 million funded with dedicated, supplementary funding
- Five projects worth $300 million pending funding
Overall Conclusion
CAP is a unique program within DND that continues to fulfill an important role, given its ability to divest/reduce non-core infrastructure and meet departmental requirements through investments in infrastructure owned by local authorities; however, the program’s lack of visibility at the strategic level challenges its ability to further advance departmental real property (RP) objectives.
The evaluation found that CAP is achieving its intermediate outcomes; however, its ability to do so is constrained by the program’s baseline and dedicated funding levels. CAP’s ability to measure impact and advance its objectives would be enhanced through the collection of performance measurement data that better reflects the program terms and conditions, including estimated cost savings data.
CAP has low administrative overhead costs. The overall project monitoring process, however, is not sufficient for the program’s larger and more complex projects, such as the Inuvik runway extension. CAP project funding is often a long and complex process. The program should review reporting requirements for larger, more complex future projects to promote accountability without assuming undue liability. The process timeline is mainly driven by the activities of other stakeholders that are beyond the program manager’s control. Improved communication and coordination amongst the various stakeholders would facilitate project delivery. CAP is in the process of enhancing program management, such as the clarification of stakeholder roles and responsibilities in the revised CAP Project Guide and Procedures Manual and updating communication products for internal and external audiences.
Recommendations
- Improve the integration of CAP with departmental RP planning and priorities.
- Ensure management actions underway are completed to enhance project guidance regarding:
- recipient reporting requirements;
- coordination between DND/CAF stakeholders; and
- cost-benefit analysis from DND/CAF applicants.
Figure 2 Summary
This figure is a horizontal bar chart that depicts the total project values per regional operations group for CAP from FY 2019/20 to 2023/24. It highlights how DND/CAF has prioritized infrastructure in the North through the Inuvik runway extension project, valued at $230 million.
- Northern Region: $293,862,132
- Atlantic Region: $152,283,000
- Western Region: $58,083,500
- Ontario Region, excluding the National Capital Region (NCR): $45,137,770
- Quebec Region: $18,964,385
- Pacific Region: $15,401,256
- NCR: $14,325,114
There is a note stating: *Includes active projects and projects on hold.
Recommendation 1
Improve the integration of CAP with departmental RP planning and priorities.
Effectiveness
Finding 2: The Capital Assistance Program is achieving its stated outcomes; however, there is a lack of formal reporting on the benefits of Capital Assistance Program projects, and the program’s effectiveness is constrained by its funding levels.
Why It Matters
CAP has the potential to better support the Department’s RP goals but is constrained by a lack of formal and accurate performance data, as well as baseline and dedicated funding levels. Collecting outcome-related data, such as estimated cost-savings, would enable the program to make data-driven decisions on how to allocate limited resources.
| Program Outcome | Data (FY 2019/20 to 2023/24) | Example |
|---|---|---|
| CAP contributes to the reduction of DND non-core infrastructure and services. | 8/22 ongoing and completed projects result in reduced DND non-core infrastructure. | The St-Jean Pump Station Project transfers the on-base wastewater pumping station (market value of $36,100) to the City of St-Jean. |
| CAP provides some cost savings and reduces DND liability by transferring assets and risk to third parties. | In a sample of five projects worth $26.3 million (actual and projected costs and incomplete data on operation and maintenance), CAP saved DND an estimated $1.4 million, and 8/22 ongoing and completed projects involve a transfer of responsibility that reduces DND liability. | The Bagotville Sewer Connection Project facilitates the transfer of all existing non-DND wastewater services from Garrison Bagotville to the City of Saguenay. This project transfers the risk of owning and maintaining the asset to the municipality and provides the Department an estimated cost-saving of about $2 million. |
| CAP improves shared-use infrastructure for CAF/DND, their personnel and families. | 22/22 ongoing and completed projects result in improved/maintained/new shared-use infrastructure. | The Vernon Storm Water Project allows for major repair requirements to be met while having the military camp’s storm water drainage system incorporated into the City of Vernon’s municipal infrastructure. |
Table 1 Summary
This table has three columns and four rows, including headings. The first column is labeled “Program Outcome,” the second is “Data (FY 2019/20 to 2023/24)” and the third is “Example.” Read the rows from left to right to learn the outcome, its associated data and an example of the outcome.
CAP does not systematically collect or report on data related to the benefits of CAP projects.
Performance measurement information is captured and maintained by the program, though not systematically and not measured as per the indicators of the terms and conditions. CAP does not categorize its projects by outcome; however, it does use a screening checklist to conclude whether a project meets at least one of the three main objectives of Treasury Board’s approved mandate for CAP. All the ongoing/completed projects were assessed as aligning with one or more of the three intermediate outcomes:
Figure 3 Summary
This figure is a Venn diagram which illustrates the alignment of CAP projects with CAP outcomes. There are three overlapping circles, each representing a program outcome. The program outcome is written beside each circle, with the number of projects aligned with that outcome over the total number of projects in parentheses: reduce non-core infrastructure, 8 out of 22; improve and/or maintain and/or build new infrastructure, 22 out of 22; and reduce and/or avoid costs, 8 out of 22.
The overlapping circles form seven sections. The distribution of projects in those seven sections is as follows:
- Reduce non-core infrastructure only: 0
- Improve and/or maintain and/or build new infrastructure only: 13
- Reduce and/or avoid costs only: 0
- Reduce non-core infrastructure and improve and/or maintain and/or build new infrastructure: 1
- Reduce non-core infrastructure and reduce and/or avoid costs: 0
- Improve and/or maintain and/or build new infrastructure and reduce and/or avoid costs: 1
- All three outcomes: 7
There is a note stating: *22 total ongoing and/or completed projects (excludes the 5 projects awaiting dedicated funding.
The eight projects that include the divestment of non-core infrastructure enable the rationalization of the Department’s RP portfolio and allow the Department to transfer risks associated with maintaining ownership of infrastructure. The program, however, lacks data on cost savings for its divestment projects. The evaluation found that in a sample of five projects worth $26.3 million (actual and projected costs, with incomplete data on operation and maintenance), CAP saved DND an estimated $1.4 million.Footnote 1 This data, however, was not readily available.
The extent to which CAP can achieve its objectives is constrained by its baseline and dedicated funding. CAP’s annual funding of $5.45 million per year is insufficient and results in projects that are deliberately prolonged. While the program’s baseline funding can be managed to ensure CAP contributes to the projects undertaken, it results in delayed project timelines and limited ability to uptake new projects. Further, CAP has $300 million in major capital projects pending dedicated funding. The projects that await dedicated funding face even longer timelines. The current funding ceiling and limited dedicated funding constrains CAP’s ability to achieve its objectives in a timely manner and limits its ability to support DND’s RP goals.
Efficiency
Finding 3: While the Capital Assistance Program has low administrative costs, the overall project monitoring process is not sufficient for larger and more complex projects.
Case study: Inuvik Runway Extension
- The evaluation found that the existing monitoring and reporting processes were not sufficient for a large project of that scale. Control measures such as third-party estimates of project costs and predefined reporting requirements were not in place at the outset. The program should review reporting requirements for larger, more complex future projects.
- The project’s budget grew from an initial estimate of $150 million to $230 million. Pricing was based on estimates from the past 10 years. COVID had an impact on product pricing and labour availability. The estimates were generated by the Government of the Northwest Territories, though DND worked closely with them.
- A revised Implementation Agreement was completed in January 2023 to reflect the new cost.
CAP has a low overhead ratio.
Due to its small size, with only two dedicated positions during the evaluation period, CAP maintained a low overhead ratio. As a result of the pandemic, the program saw an increase in its administrative overhead ratio, re-establishing a ratio of about 4 percent in FY 2023/24.
| FY | Total Admin Expenses (Y) | Expenditures (X) | Ratio Y/X |
|---|---|---|---|
| 2019/20 | $225,064 | $5,400,000 | 4% |
| 2020/21 | $190,941 | $5,400,000 | 4% |
| 2021/22 | $201,515 | $1,132,623 | 18% |
| 2022/23 | $199,659 | $2,550,910 | 8% |
| 2023/24 | $232,367 | $5,450,000 | 4% |
| Table based on baseline funding only. It excludes the Employee Benefit Plan and the salaries and administrative costs associated with the work of other departmental stakeholders, including RP ops, lawyers and DND/CAF subject matter experts. | |||
Table 2 Summary
This table shows the CAP overhead ratio for FY 2019/20 to 2023/24. The table has four columns with the following titles from left to right: FY, Total Administrative Expenses (Y), Expenditures (X) and Ratio (Y/X). The left-hand column lists FYs 2019/20 to 2023/24, with each FY in a separate row. The data for each FY is displayed across the columns in five rows. Read from left to right. The ratio is in the final column.
There is a note below the table stating: Table based on baseline funding only. It excludes EBP and the salaries and administrative costs associated with the work of other departmental stakeholders, including RP ops, lawyers and DND/CAF subject matter experts.
Finding 4: Capital Assistance Program project funding is often a long and complex process. The process timeline is mainly driven by the activities of other stakeholders that are beyond the program manager’s control. Improved communication and coordination amongst the various stakeholders would make project delivery easier.
Multi-stakeholder coordination complicates project timelines.
Factors external to the program can delay project timelines, requiring enhanced coordination with program stakeholders. In particular, the following activities contribute largely to the project timeline (stakeholders in parentheses):
| Spent Funding | |||
|---|---|---|---|
| FY | Budget (millions) | Spent (millions) | % Spent |
| 2019/20 | $5.45 | $5.4 | 99 |
| 2020/21 | $5.45 | $5.4 | 99 |
| 2021/22 | $5.45 | $1.13 | 21 |
| 2022/23 | $5.45 | $2.55 | 47* |
| 2023/24 | $5.45 | $5.45 | 100 |
| *Unspent funding was returned prior to the end of FY. | |||
Table 3 Summary
This table shows the percentage of CAP funding spent for FY 2019/20 to 2023/24. The table has four columns with the following titles from left to right: FY, budget (in millions of dollars), spent (in millions of dollars), and percentage spent. The left-hand column lists FYs 2019/20 to 2023/24 with each FY in a separate row. The data for each FY is displayed across the columns in five rows. Read from left to right.
There is a note in the fourth column for FY 2022/23 stating: Unspent funding was returned prior to the end of FY.
Recommendation 2
Ensure management actions underway are completed to enhance project guidance regarding:
- recipient reporting requirements;
- coordination between DND/CAF stakeholders; and
- cost-benefit analysis from DND/CAF applicants.
Annex A: Management Action Plan
ADM(RS) Recommendation
1. Improve the integration of CAP with departmental RP planning and priorities.
Management Action
Management Action Plan (MAP) 1:
ADM(IE) agrees with this recommendation and will act to increase visibility of CAP’s potential at the senior management level through increased engagement internally with DND stakeholders.
In progress:
- Consult with Treasury Board Secretariat (TBS) on DND recommendations to revise the terms and conditions and align the program with RP plans and priorities for consideration:
- Develop a gap analysis to identify what areas could align more closely with National Real Property Portfolio Plan priorities such as increased divestment of non-core, lower-tier infrastructure; Indigenous collective infrastructure owner as an eligible recipient; NORAD modernization; and the modernization of energy and water supply.
- Increase engagement with L1 to L3 audiences to improve integration of CAP with departmental RP planning and priorities.
- Increasing robustness of CAP language, inclusion of CAP requirements in NRPPP, in RP requirements gathering processes (e.g. DND Consolidated Demand List Call Letter) as well as increase CAP awareness at various departmental RP management tables. Increase education through communication material, prepared for various audiences and delivered to professional development sessions, senior management committees and governance boards that will address revisions made to CAP as a result of consultations with TBS.
- Through existing departmental processes, explore options for managing CAP funding allocation based on a three-year cycle. The intent is to revise the current $5.4 million per year funding requirement and allocate funding based on a three-year forecast within our current reference levels.
- This would improve the alignment of the budget allocation with the program’s financial pressures, which fluctuate on a year-to-year basis, and departmental priorities. Approval would be sought through a senior management executive brief with committees and governance boards.
Target date: November 30, 2026
OPI: ADM(IE)
Deliverable: This MAP will be considered closed when ADM(IE)/Director General Infrastructure and Environment Engineering Services completes the gap analysis of the terms and conditions, including recommendations for revisions and consults with TBS. The revisions would be organized into an implementation schedule and communications plan to present to senior management. This would include a formal process to address funding requirement fluctuations and would be endorsed at the L1.
Risk Statement: There is a risk that a failure to complete TBS consultations and reach an agreement would mean that CAP will be governed by existing terms and conditions. This would leave the program less integrated with departmental RP planning and priorities. As a result, this may lead to inefficient senior management decisions, decreased potential divestment, reactive project decision making and an inability to meet the challenges of an anticipated increase in CAP funding applications.
ADM(RS) Recommendation
2. Ensure management actions underway are completed to enhance project guidance regarding:
- recipient reporting requirements;
- coordination between DND/CAF stakeholders; and
- cost-benefit analysis from DND/CAF applicants.
Management Action
MAP 2:
ADM(IE) agrees with this recommendation and will act to enhance CAP project guidance through increased education internally with DND/CAF stakeholders.
In progress:
- Enhance requirements for recipient reporting with:
- a developed procedure for recipient reporting that includes guidance within CAP documentation on roles and responsibilities of stakeholders; and
- a revised contribution agreement with legal services to explore the possibility of including the results of TBS consultations and reporting requirements by recipients. Improve coordination between DND/CAF stakeholders to ensure overall program efficiency and an enhanced CAP Project Guide and Procedures Manual.
- Enhance project community knowledge of the CAP direct funding approach through project-related submissions by a formalized CAP project process with roles and responsibilities established:
- a templated letter of intent, with legal services, that allows project teams with the CAP program manager to initiate works with municipalities that could be eligible for CAP contributions;
- a revised contribution agreement template that provides options of legal substitutions for articles that may require frequent revision and legal guidance to shorten the Contribution Agreement development and approval period; and
- where data is available, the development of a more rigorous cost-benefit analysis process with various stakeholders, for eligible CAP projects, included in the CAP Project Guide and Procedures Manual.
Target date: November 30, 2026
OPI: ADM(IE)
Deliverable: This MAP will be considered closed when ADM(IE)/Director General Infrastructure and Environment Engineering Services completes updates/revisions to the CAP Project Guide and Procedures Manual. This will be presented through professional development fora with project teams and PowerPoint presentations for engagement sessions with senior management.
Risk Statement: If the revisions do not align with revised terms and conditions, the program will have limited ability to improve education and coordination with various stakeholders and to direct project teams and eligible recipients regarding procedures. This will limit the ability to instate a reporting requirement for eligible CAP recipients and the program’s ability to enhance reporting on cost savings and benefits of the program.