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About This FAM
| Responsible Agency: | Office of the Comptroller General |
| Issued: | Aug 1988 |
| Last Updated: | Aug 1988 |
1. Introduction
The Government has adopted a privatization policy where by the Government supports and encourages the expansion of a strong northern private sector.
To this end the Government may arrange the delivery of existing programs and services to the private sector through registered businesses employing northerners in accordance with the following principles:
- The private sector must meet or exceed current Government standards of quality and timing in the delivery of certain programs and services at a reasonable cost to the Government; and
- The Government's moral and legal obligations with respect to employees involved in any arrangements must be satisfactorily met. This directive applies to all departments of the Government.
2. Definitions
| "privatization" | A process where it is arranged that Government programs, services or enterprises are delivered by the private sector. |
| "private sector" | The aggregate of all businesses registered in the Northwest Territories and eligible under the Business Incentive Policy other than those owned or controlled by governments. |
| "program managers" | Managers responsible for delivery of a program or service eligible for privatization. |
| "responsible department" | The department whose program or service is under consideration for privatization. |
| "improved property" | Any land which has buildings or works or which has had work done to it by the Department of Public Works and Services. |
3. Policy
4. Directives
| 4.1 |
Principles Where the officials of the affected departments are unable to arrive at a consensus for the transfer, lease or sale of assets, the decision is to be referred to the respective Ministers. In the event Ministers are unable to achieve consensus, the matter shall be referred to the Financial Management Board for resolution. |
| 4.2 | Land |
| 4.2.1 | The purchaser shall be responsible for making application to the Department of Municipal and Community Affairs for the lease or purchase of land which forms part of the privatization agreement. Until the settlement of land claims most of the Commissioner's Land is subject to a "lease only" policy and the prospective tenant/owner must be advised of the conditions relevant to, the specific land parcel. |
| 4.2.2 | The privatization agreement must provide for a conditional agreement for the transfer, lease or sale of land. It must also establish the monetary arrangement agreed to and any specific conditions. The advice of Legal Counsel must be sought on these matters. |
| 4.3 | Improved Property |
| 4.3.1 | The program manager shall prepare a proposal for privatization and include a proposal for disposing of any buildings. Buildings could or could not be part of the privatization. |
| 4.3.2 |
Where the buildings are an integral part of the privatization plan, the program manger shall determine any impact of the disposal of buildings on other Government programs and services. The market value of the buildings must be determined by a bona fide appraisal for inclusion in the privatization feasibility study. The appraisal is to be conducted by the Department of Public Works and Services or its agent. At the request of the program manager and with the concurrence of the Department of Public Works and Services, the building could be:
Options for sale could be included in any lease arrangement. The appraised market value of the building must be used to establish the selling price or rents and these must be included in the tenders for privatization or in negotiations where tendering has been waived. |
| 4.3.3 | Where a building will be disposed of by calling for tenders or proposals, the successful tender or proposal could be subject to a predetermined minimum dollar value established by Public Works and Services. If the building is sold for less than the predetermined value, Financial Management Board approval must be obtained by the sponsoring minister. |
| 4.3.4 | If a building is disposed of by way of negotiations, approval-inprinciple to proceed must first be obtained from the Financial Management Board by the sponsoring Minister. Subsequently, when agreement is reached, it must also be ratified by the Financial Management Board |
| 4.3.5 | If contractual agreements forming part of privatization plans include clauses whereby the asset could revert to the Government under certain conditions, then the agreement must provide for proper care and custody of the assets by the proponent, as set out by Public Works and Services. |
| 4.4 | Other Assets |
| 4.4.1 | Where other assets will be disposed of by calling for tenders or proposals, the successful tender or proposal could be subject to a predetermined minimum dollar value established by the Department of Public Works and Services. If the assets are sold for less than the predetermined value, Financial Management Board approval must be obtained. |
| 4.4.2 | If other assets are disposed of by way of negotiations, approval-inprinciple to proceed must first be obtained from the Financial Management Board by the sponsoring Minister. Subsequently, when agreement is reached, it must also be ratified by the Financial Management Board |
| 4.4.3 | If contractual agreements forming part of privatization plans include clauses whereby the asset could revert to the Government under certain conditions, then the agreement must provide for proper care and custody. of the assets by the proponent, as set out by the Department of Public works and Services. |
| 4.4.4 | Where other assets are an integral part of the privatization agreement, the program manager shall prepare a schedule for the disposition of these assets. |
| 4.5 | Administration |
| 4.5.1 | Contractual arrangements, including requests for tenders/proposals, must be in accordance with the Government Contract Regulations and the 3300 series of directives on contracts, also in this manual. |
| 4.5.2 | Where credit is granted, the Financial Management Board Secretariat must be requested to provide a credit report on the potential client with the Comptroller General's recommendation to grant or not to grant credit. This report must be considered by the Minister(s) in approving plans. |
| 4.5.3 | Where the assets being disposed of are commercial enterprises that have bank accounts, the unused cash is to be returned to the Consolidated Revenue Fund and the bank account is to be closed out by the Comptroller General's office. |
| 4.5.4 | Where materials and goods inventory are involved, an inventory -count must be taken in accordance with standard procedures. |
| 4.5.5 | Transactions relating to the privatization agreement are to be properly recorded in the accounting and management systems of the Government: Communications and Office Services Inventory, Mobile and Fixed Assets Management System, Land Inventory, Financial Information System and Insurance Portfolio. |
| 4.5.6 | The future liabilities of the Government must be adequately disclosed in the privatization plan. |
| 4.5.7 | The responsibility for existing receivables and payables of commercial enterprises must be identified in the agreement. |
| 4.5.8 | The department responsible for the privatization of the program service or enterprise must be held liable for any bad debts arising from credit arrangements. |
| 4.5.9 | All departments affected by the privatization of programs, services or enterprises are to reach a consensus on the sale, lease or transfer of assets. In the event they do not, the sponsoring minister is to seek the direction of the Financial Management Board. |
| 4.5.10 | All documents are to be signed by the Minister or if delegated, the official exercising the Minister's authority must have been delegated the appropriate level of signing authority. |
| 4.6 |
Legal All contractual arrangements which provide for the transfer, lease or sale of assets shall be reviewed and found acceptable by the Department of Justice before being entered into by Ministers. |
| 4.7 |
Checklist To ensure the process is completed properly, the checklist in Appendix "A" must be completed by the sponsoring department, signed by the Department Head, and forwarded to each of the effected departments prior to the finalization of the privatization agreement. |
| 4.8 |
Labour Relations In consultation with the Labour relations division of the Financial Management Board Secretariat, Deputy Ministers considering privatization initiatives that might entail staff layoffs must satisfy the Government's moral and legal obligations under the collective agreements with the N.W.T. Public Service Association and the N.W.T. Teachers' Association or any other written or implied contracts. |
5. Guidelines
| 5.1 | Principles |
| 5.1.1 | Where a decision is made to privatize programs, services or enterprises which involve the transfer, lease or sale of assets, no commitment should be made on behalf of the Government without prior consultation with the department responsible for the ultimate disposal of the assets. |
| 5.1.2 | The consultation process should provide for sufficient lead time to ensure an adequate review of the issues. The department being consulted should not delay its response unreasonably so as to affect the implementation of the privatization opportunity. |
| 5.2 |
Improved Property Where the buildings are not included in the privatization plan, the normal Dpartment of Public Works and Services disposal process will apply. However, the program manager may request that the building be retained on the Government’s asset list for a specified "contract initiation" period in the event of default. |
| 5.3 | Other Assets |
| 5.3.1 | The schedule referred to in paragraph 4.4.4 of this directive should provide for the sale, lease and/or no cost transfer of these assets to the proponent. The market value of the assets should be determined and used as a basis for the final decision on disposal. |
| 5.3.2 | Where other assets are not an integral part of the privatization agreement and are declared surplus, these should be declared for subsequent disposal by the Department of Public works and Services. |
| 5.4 |
Checklist The checklist referred to in subsection 4.7 of this directive should be monitored throughout the privatization process by the sponsoring department rather than completed immediately prior to the final agreement being adopted. |