March 15, 2004Vancouver, B.C.BackgroundOn March 15, 2004, the Honourable Stephen Owen, Minister of Public Works and Government Services Canada (PWGSC) announced a moratorium on Government of Canada (GoC) advertising activities, until June 1, 2004.Q.1 WHAT IS THE PURPOSE OF THE MORATORIUM?A1. The purpose of the moratorium is to allow time to finalize and implement the changes to the management of GoC advertising, which were announced in April, 2003. The moratorium will also allow the GoC to address the concerns raised by the Auditor General in her November 2003 report, and fine-tune the advertising process.Q2. WHAT WERE THE AUDITOR GENERAL'S CONCERNS REGARDING THE MANAGEMENT OF GOVERNMENT OF CANADA ADVERTISING?A.2 With respect to the government's advertising, the Auditor General was specifically critical of:The competitive process which was not used in the selection of several advertising contracts;The fulfillment of contractual obligations and oversight of the Agency of Record; and Obligations under the Financial Administration Act were not always met. Q3. WHAT CHANGES WERE ANNOUNCED IN APRIL 2003? A3. In April 2003, the former minister of PWGSC announced a series of changes that would be phased in over the following 12 to 18 months with continued input from stakeholders. The following key changes were announced to the Government's advertising practices:A Canadian content requirement of 80 percent will be established. This means that 80 percent of the labour, goods and services provided by a supplier must be Canadian. This requirement replaces the previous requirement that the firm providing the service be 100% Canadian-owned;The number of suppliers that the Government draws on will be increased, as will opportunities to compete and the variety of contracting tools that can be used. Competitive national and regional Standing Offers, Supply Arrangements and Requests for Proposals will all be used as contracting mechanisms;Labour-based hourly remuneration will be used most predominantly, as opposed to commission-based remuneration, which was used in the past. Other methods of payment - such as retainers and performance-based methods - will also be considered when warranted;A competitive process has been launched to select an Agency of Record. In preparation for that competition, a draft scope of work was released for consultation and comment over a two-week period;Internal government capacity in advertising management will be strengthened, both corporately through PWGSC and in individual departments;Annual reports will be issued on government advertising activities; andThe new system will undergo an internal audit in 2005. Q4. ARE THERE OTHER AREAS OF GOC ADVERTISING THAT WILL BE IMPROVED, AS A RESULT OF THE MORATORIUM? A4. The moratorium will also allow the GoC to address systematic problems with the current system, specifically: Advertising campaigns are focused mainly on departmental mandates, rather that on the government's corporate agenda;Lack of central funding negates the GoC's ability to quickly respond to crises; The current system does not adapt to the increasing number of horizontal (multi-departmental) priorities, such as children and seniors; There is little incentive for departments to regionalize their messages;Lack of centralized planning negates the GoC's ability of take advantage of the benefits of "bulk buying" and consequently getting maximum value from its single Agency of Record (AoR) for media placement. Q.5 WHAT ARE THE OBJECTIVES OF THE GOVERNMENT'S NEW APPROACH TO ADVERTISING? A.5 The Government's new approach to advertising is:To improve the management of Government of Canada advertising, by focusing on whole of government priorities, rather than on departmental initiatives; To address findings and recommendations of the Auditor General, in her November 2003 Report;To increase openness, transparency and accountability;To target and tailor national advertising campaigns to reflect regional sensitivities; andTo reduce the overall expenditures on government advertising.Q.6 WHY HAS THE GOVERNMENT OF CANADA FROZEN FUNDING AT THE 2002-03 LEVELS?A.6 The Government has frozen funding at 2002-03 levels to place a ceiling on overall expenditures and thereby encourage cost efficiencies.Q.7 WHAT DOES THE SPENDING FREEZE REPRESENT?A7. The freeze represents a 15% reduction of 2002-2003 fiscal year expenditures excluding production costs (the cost of actually designing the ads). This represents a reduction from approximately $83 million in 2002-2003 to $70 million per annum until 2006-2007. It is important to note that the freeze does not affect Crown corporations, which do not fall under Schedules 1, 1.1 and 2 of the Financial Administration Act (FAA). Q8. WHY HAS THE MORATORIUM BEEN PUT IN PLACE UNTIL JUNE 1?A8. There has been a significant amount of work done over the past year since the former Minister, Ralph Goodale, announced a series of changes to the way advertising activities are managed (announcement in April 2003);We are moving aggressively to complete the job but we need to get the changes right;A selection committee is finalizing the results of an open competition to hire a new Agency of Record. The committee's recommendation will be submitted to Treasury Board ministers for approval with a view to having a new firm in place by June 1;A manual for management of the Agency of Record will also be completed;New Supplier Arrangements and Standing Offers will be set up, for access by departments;PWGSC is also putting a new electronic Advertising Management Information System into place. Q9. WHAT ARE THE CRITERIA FOR EXEMPTIONS TO THE MORATORIUM?A9. The criteria for exemption are:Advertising for mandatory GoC business (e.g. CRA's Income Tax Campaign);Advertising related to a pressing emergency in which delay would be injurious to the public interest;Campaigns for which contracts have been awarded using the new contracting model (e.g. DND's recruitment campaign); Public Notices continue, as required; andCrown Corporations not subject to the Schedules 1, 1.1 and 2 of the FAA (e.g. Canadian Tourism Commission, Business Development Bank of Canada).
