Delegated arrangements

What are delegated arrangements?
Delegated arrangements are a form of Alternative Service Delivery. Services are provided in partnership with organizations outside government. In Alberta , the most common form of delegated arrangement is the Delegated Administrative Organization (DAO). Supported by legislation, DAOs operate at arms-length from government through independent directors, some of which are appointed by the Minister and required to report annually to the Minister on progress and financial status.

Day-to-day operations are performed by DAOs, limiting legal and financial liability of government. DAOs are self-funded and raise revenue through fees and service charges.

Government Involvement
Government provides the mandate for the DAO, establishes performance and outcomes expectations in consultation with DAO management and reviews the results, taking action as necessary to refocus activities.

Specific activities in which government is involved include:

  • Establishing supporting legislation
  • Establishing stakeholder-driven governance bodies
  • Appointing government officials to the DAO board
  • Approving business plans
  • Reviewing audited financial statements, annual reports and program audits.

The government can influence the actions of the DAO through its board membership, but has little authority on the day-to-day operations of the organization, except through developing legislation.

Where are they used?
There are three DAOs that manage provincially regulated recycling programs:

Alberta Labour's Petroleum Tank Management Association of Alberta and the Alberta Energy and Utilities Board's Oil and Gas Orphan Abandonment and Reclamation Association administer similar programs for activities with a higher environmental risk. There are some voluntary arrangements in Alberta that do not require supporting legislation such as the industry-led recycling initiatives for rechargeable batteries, cell phones, plastic bags and medicines, and the Alberta Pesticide Container Collection Program.

Examples in other jurisdictions include:

  • Ontario uses a similar organization called a Delegated Administrative Authority.
  • British Columbia uses Industrial Product Stewardships in which industry stakeholders create associations with the support of legislation.
  • Manitoba has Special Operating Agencies that are extensions of government rather than independent legal entities.

Tool Performance:

Pros

  • Successful track record.
  • Shifts administration costs from government to an arms-length body.
  • Promotes private sector expertise.
  • DAO funds are solely dedicated to their assigned task and can be carried across fiscal years.

Cons

  • Can have high start-up and administration (such as ongoing supervision) costs for government and the organization.
  • The partner is often concerned about taking on liability for its actions. Legislation may be required to provide additional protection to the partner.
  • The focus of the delegation can change as needed, but changing legislation can be difficult.

Special Considerations:

Thorough evaluation of the suitability of the program and the potential partner must be undertaken before transferring authority for delivery out of the government. Some programs, especially those that do not have well defined processes or goals, are not suited to delegated arrangements.

Mechanisms to dissolve the delegation should be established at the start of the arrangement. No Canadian delegated arrangements have been dissolved to date ? this not only reflects the success in achieving objectives, but also reflects the difficulties and costs associated with dissolution.