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Minister's Message

I am pleased to present the 2010–11 Departmental Performance Report for the Federal Economic Development Agency for Southern Ontario (FedDev Ontario).

The Government of Canada is committed to supporting communities and businesses as they return to a cycle of prosperity. FedDev Ontario is a part of this vision of job creation and growth in southern Ontario.

Through programming created as part of Canada's Economic Action Plan, FedDev Ontario worked to meet the specific needs and priorities of the people of southern Ontario by investing in community development, innovation, and economic diversification, delivering on the Government of Canada's priority to create the right conditions for economic growth.

During the past year, FedDev Ontario played a leadership role through its investments in essential infrastructure, innovation and entrepreneurship, committing more than half a billion dollars in community and economic development funding to projects all across southern Ontario, while also delivering Canada's Economic Action Plan initiatives in Recreational Infrastructure Canada Program, the Community Adjustment Fund, as well as the Building Canada Fund.

As the Economic Action Plan moves into a new phase focused on long-term growth and prosperity, the investments made by FedDev Ontario will continue to create advantages, helping workers, communities and businesses position themselves to take advantage of opportunities as the economy recovers in Canada and around the world.

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Minister of State's Message

As Minister of State for the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), I am proud to submit the 2010–11 Departmental Performance Report.

The performance report outlines how FedDev Ontario is working to create a Southern Ontario Advantage by investing in people, businesses and communities. The FedDev Ontario mandate of promoting a strong and diversified southern Ontario economy has guided agency investment projects and strategic partnerships helping to create job opportunities and economic growth.

This year, FedDev Ontario promoted the development of a strong, competitive and diversified southern Ontario economy by:

• Committing $130.6 million in projects that support infrastructure.
• Delivering $246.5 million to projects that support community and business development.
• Concluding the first phase of initiatives under Canada's Economic Action Plan through Recreational Infrastructure in Canada, the Community Adjustment Fund and the Building Canada Fund.

Having laid the foundation for long-term economic growth, FedDev Ontario will continue to focus on building economic prosperity in communities across southern Ontario so the economy continues to grow now and into the future.

Section I: Departmental Overview

Raison d'être

Responsibilities

Mandate

The mandate of FedDev Ontario is to promote the development of a strong and diversified southern Ontario economy.

To fulfill its mandate, FedDev Ontario supports the competitiveness, innovation, and diversification of southern Ontario's economy by: delivering strategic investments to businesses, non-profit organizations and communities; establishing and strengthening collaborative partnerships with key economic stakeholders; and representing and advocating for the region's interests at the federal and national level.

Scope of Operations

FedDev Ontario is headquartered in Kitchener and has offices in Stratford, Peterborough, Toronto and Ottawa. Its catchment area covers southern Ontario, as defined by the following 37 Statistics Canada census divisions:

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According to Statistic Canada's annual population estimates for 2010, southern Ontario has a population of more than 12 million people, representing approximately 93 percent of Ontario's total population and 36 percent of the total population of Canada.

Governance

FedDev Ontario is part of the Industry Portfolio. Its President oversees agency operations and resources, and reports to the Honourable Gary Goodyear, Minister of State (Science and Technology), (Federal Economic Development Agency for Southern Ontario). The Executive Committee is the agency's main governing body. It sets strategic directions and develops, reviews, and approves plans, budgets and any other documents or submissions of strategic importance. The Executive Committee is composed of the agency President (who also acts as chair), Vice President of Infrastructure and Intergovernmental Affairs, Vice President of Business Innovation and Community Development, Chief Financial Officer, Director General of Audit and Evaluation, Director General of Communications, Director General of Strategic Policy, Director General of Human Resources and the President's Chief of Staff.

To support the overall governance of FedDev Ontario's work, a comprehensive internal committee structure exists including: Operations Committee, Policy Committee, Evaluation Committee, and a Senior Human Resources Committee.

Strategic Outcome and Program Activity Architecture (PAA)

The PAA below represents FedDev Ontario's inventory of program activities and program sub-activities for 2010–11, and the sole strategic outcome to which they are aligned. The PAA is supported by a performance measurement framework, which enables FedDev Ontario to track program-related performance and reflects informed decision making based on policy research and analysis, ongoing dialogue with stakeholders, and Government of Canada priorities.

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Organizational Priorities

Performance/Priority Status Legend

The following Performance/Priority Status Legend, as defined by the Treasury Board of Canada Secretariat in Part III: Report on Plans & Priorities (RPP) & Departmental Performance Report (DPR) Supporting Documents, applies throughout this document.¹

Status of meeting Priority 1: Establish the agency's internal services.

Priority	Type2	Strategic Outcome(s) and/or Program Activity(ies)
1. Establish the agency's internal services: Build an internal service structure and capability that allows the agency to effectively manage its affairs and minimize the amount of services procured under Memoranda of Understanding and contractual arrangements.	New	Program Activity 2.1 – Internal Services
Status: Mostly Met
During the 2010–11 fiscal year, the agency was able to build an internal service structure to administer its affairs. Throughout the course of the fiscal year, several key objectives were attained, such as consolidating all program payment processing at the Kitchener headquarters, allowing the agency to reduce its reliance on other service providers. With a significant increase in staffing levels throughout the year, the agency's internal service function was able to increase its self-sufficiency and reduce the risk posed by reliance on external service providers.

Status of meeting Priority 2: Develop the agency's organizational structure, plans, procedures and processes.

Priority	Type	Strategic Outcome(s) and/or Program Activity(ies)
2. Develop the agency's organizational structure, plans, procedures and processes: Adopt a proactive approach to planning and introduce efficient processes and policies for effective management.	New	Program Activity 2.1 – Internal Services
Status: Mostly Met
The agency continued to improve procedures and processes for Parliamentary relations, Access to Information and Privacy (ATIP), and Ministerial correspondence as well as establish a more robust internal service structure with improved financial, human resource, communication, audit and strategic policy groups. A Framework for Action establishing strategic directions and priorities for FedDev Ontario for 2011–12 was developed. The exercise engaged agency staff, at all levels and locations, through working groups and focus group sessions. The work resulted in the creation of a cross-agency working group focused on long-term planning. The Business, Innovation and Community Development sector (BICD) introduced more effective processes for stabilizing and centralizing its reporting and coordinating its various files processes. The agency continued to solidify and leverage a comprehensive internal committee structure that includes Executive, Operations, Policy, Evaluation, and Senior Human Resource Committees. This structure was established in 2009–10 to support the overall governance of FedDev Ontario's work and was augmented during 2010–11 to include a Review Board aimed at ensuring fairness in contracting and due diligence on large contributions. The agency established its first PAA and accompanying Performance Measurement Framework (PMF) and continues to engage in PAA and PMF renewal exercises to further define its objectives and performance and improve reporting and accountability to Canadians.

Status of meeting Priority 3: Develop the agency's research and policy capacity

Priority	Type	Strategic Outcome(s) and/or Program Activity(ies)
3. Develop the agency's research and policy capacity: Ensure the agency has the capacity to undertake research and policy analysis to help guide its programs and priorities.	New	Strategic Outcome 1 – The economy of southern Ontario is competitive and diversified
Status: Mostly Met
Through staffing, research and outreach activities, the agency created a base of knowledge and developed its capacity for policy analysis. For example, the agency now produces a monthly internal report on key economic indicators for the region, and has undertaken research and policy analysis that informed the development of the agency's new suite of Southern Ontario Advantage (SOA) initiatives and has supported the successful renewal of the Eastern Ontario Development Program (EODP). The agency continues efforts to engage partners and stakeholders, and to strengthen capacity in order to develop its knowledge base and provide timely intelligence and policy advice on the regional economy.

Status of meeting Priority 4: Develop program delivery capacity, such as fully trained staff, etc.

Priority	Type	Strategic Outcome(s) and/or Program Activity(ies)
4. Develop program delivery capacity, such as fully trained staff, etc.: Build community and business development program capacity to a level comparable to established infrastructure program delivery capacity.	New	Strategic Outcome 1 – The economy of southern Ontario is competitive and diversified
Status: Mostly Met
All agency staff had the opportunity to attend training on internal processes (e.g. Information Security, Briefing Note writing), and training tailored to specific areas of expertise (e.g. Risk Assessment to all Business Development Officers, Canadian Environmental Assessment Act screening). A Business Development Unit was established in the Business, Innovation, and Community Development sector for centralized reporting and coordination of sector files. Agency-wide training and information sessions were provided to introduce the newly created suite of seven SOA initiatives developed as part of the Southern Ontario Development Program (SODP). FedDev Ontario employees throughout the agency have Personal Learning Plans and Performance Management Agreements in place and new employees have completed or registered for required training courses offered by Canada School of Public Service.

Status of meeting Priority 5: Conduct outreach and consultations

Priority	Type	Strategic Outcome(s) and/or Program Activity(ies)
5. Conduct outreach and consultations: Champion dialogue with key stakeholders and citizens across southern Ontario.	Ongoing	Program Activity 1.1 – Community and Business Development; Program Activity 1.2 - Infrastructure
Status: Mostly Met
Agency officials have undertaken a number of formal and informal outreach activities and consultations with a variety of stakeholders, clients and potential partners, including: not for profit organizations, post-secondary institutions, industry associations, the private sector, other federal departments and agencies, and other orders of government. These activities helped to shape the SOA initiatives created in fall of 2010. Building on a number of engagement strategies and outreach plans that have been developed for specific stakeholder groups, a cross-agency working group was established to work on a comprehensive agency-wide engagement strategy. The President of FedDev Ontario is the Chair of the Ontario Federal Council – a venue to enhance coordination and collaboration with federal stakeholders in the region.

Status of meeting Priority 6: Develop effective program delivery mechanisms

Priority	Type	Strategic Outcome(s) and/or Program Activity(ies)
6. Develop effective program delivery mechanisms: Continue to develop program delivery approaches that maximize benefits to southern Ontario clients, e.g., broadening the scope of potential program delivery partners.	Ongoing	Program Activity 1.1 – Community and Business Development; Program Activity 1.2 - Infrastructure
Status: Met All
FedDev Ontario created and launched seven new SOA initiatives designed to support businesses and other organizations through partnerships and investments in skills and training, innovation, research and development, and increased productivity. The initiatives are strengthened by third-party delivery mechanisms involving a broad range of partners, including: PSIs; angel networks and associations; not-for-profit organizations; and, industry/sector organizations. The agency obtained an additional $1.7 million for the Community Futures (CF) Program designed to support Community Futures Development Corporations (CFDCs) in delivering support to southern Ontario-based businesses and communities. The agency also conducted a review of CF, which led to an improvement in the efficiency and effectiveness of the program and enabled better alignment to the overall FedDev Ontario mandate and strategic direction moving forward. FedDev Ontario has also successfully renewed EODP, which supports the 15 CFDCs in rural eastern Ontario. Both programs build on the successful delivery model of using CFDCs as third party delivery partners. FedDev Ontario also strengthened partnerships with other federal departments and agencies. For example, the agency established a $45 million partnership with the National Research Council's Industrial Research Assistance Program, enabling FedDev Ontario to extend its reach to small- and medium-sized enterprises (SMEs) to boost research and development capacity, increase innovation, create jobs and bring ideas from the laboratory to the marketplace.

Status of meeting Priority 7: Manage Economic Action Plan initiatives

Priority	Type	Strategic Outcome(s) and/or Program Activity(ies)
7. Manage Economic Action Plan initiatives: Since the Recreational Infrastructure Canada (RInC) and Community Adjustment Fund (CAF) expire in March 2011, give additional attention to performance and results measurement.	Ongoing	Program Activity 1.1 – Community and Business Development; Program Activity 1.2 - Infrastructure
Status: Mostly Met
RInC program supports the renewal and rehabilitation of recreational infrastructure projects representing a total multi-year federal investment of $188 million. By March 31, 2011, the program oversaw the completion of 342 projects with another 417 projects expected to produce final reports/confirmation of completion in 2011–12.3 In 2010–11, $121.6 million was paid out to 362 recipients and supported 761 projects under the RInC program. A reprofiling of funds from 2009–10 allowed RInC to increase its funding to projects beyond the originally planned $94.6 million, which produced greater results for the program than initially forecasted. The Building Canada Fund-Communities Component (BCF-CC) Top-Up was launched with a federal investment of $196 million to accelerate 187 projects in Ontario communities. As of March 31, 2011, a total of $100.8 million was paid out to recipients, which contributed to the completion of 82 projects with the program still awaiting final reports/confirmation of completion from 42 others (expected in 2011–12). On December 2, 2010, an extension of EAP initiatives to October 31, 2011, was granted, which included 230 RInC projects and 72 BCF-CC projects. The Community Adjustment Fund mostly met its objectives as 97 projects were completed and 15 projects were underway by March 31, 2011. A further 18 projects received extensions until October 31, 2011. CAF initially committed $123 million towards 130 projects in 79 communities across the region for 2010–11. On average, every federal dollar invested leveraged an average of 57 cents from recipients and these funds had a variety of purposes including: increasing production capacity, commercializing products, increasing access to capital, developing business incubators, strategic planning, as well as revitalization projects.

Status of meeting Priority 8: Continue to deliver legacy programs

Priority	Type	Strategic Outcome(s) and/or Program Activity(ies)
8. Continue to deliver legacy programs: Deliver programs on behalf of Infrastructure Canada through the FedDev Ontario regional network.	Ongoing	Program Activity 1.2 - Infrastructure
Status: Met All
During this reporting period the agency administered 2,619 projects across all the infrastructure programs that it delivers. An increase in project files was in large part due to the addition of EAP programming. Across the suite of infrastructure programming that FedDev delivers, $2 billion of federal investment leveraged a total of $7.2 billion in infrastructure investments. The agency oversaw the close-out of the Canada-Ontario Infrastructure Program (COIP) as a total of $680.7 million was allocated to over 500 projects during the entirety of the program.

Risk Analysis

Operating Environment

FedDev Ontario operates in a complex and rapidly changing economic landscape. The agency was created during a period of global economic crisis and was tasked with delivering a diverse set of programs in a timely and efficient manner, each with their own unique complexities. The agency launched SOA, an entirely new suite of seven initiatives, in its first full year of operation while continuing to administer existing critical infrastructure (i.e. RInC) and economic development programs (i.e. EODP); as well as deliver funding announced under Canada's Economic Action Plan (SODP, CAF, etc.). The agency has faced challenges on these programs and on a number of other priorities, all while working to develop the internal capacity required of a newly-created government department.

FedDev Ontario's operating environment continues to evolve as the economy recovers and the Government of Canada focuses on restoring fiscal balance. Due to the fact there was no ramping-up of funding across the five-year mandate, coupled with the continued establishment of internal capacity, the agency has faced difficulties allocating all funding in early years. While southern Ontario as a region faces a number of risks, its growth and prosperity will increasingly depend on its success in competitive global markets, the development of a highly skilled workforce, and a productive and innovative economy.

Risk Analysis

For southern Ontario, various external factors such as: international competition; declining manufacturing base; access to capital; skill shortages; a high Canadian dollar; and the need for a competitive, knowledge-based economy continue to pose potential risks and challenges. These challenges are heightened by a domestic and global economy that though recovering, continues to be uncertain and must be addressed in the context of government priorities that are shifting from stimulus to fiscal restraint. FedDev Ontario's focus prioritizes the agency to identify and demonstrate the value added in its strategic investments through solid research and analysis, innovative and efficient delivery, and timely evaluation of results.

The key internal factors and management challenges of FedDev Ontario to fulfill its mandate are linked to development phase as an organization. The ambitious targets and expected results associated with its programming, as well as the range and diversity of stakeholders and partners in the region also contribute to the challenges. The agency has worked hard to stabilize the organization over its first 18 months with the introduction of several new initiatives and enhancements to programs and processes that have improved its ability to respond to the involved parties. However, the focus remains on continuing to build a strong knowledge-base and capacity, implement sound management control, accountability frameworks, and mature governance practices, and to continue to establish and improve relations with external stakeholders and leverage their expertise.

Significant human resource challenges continue to exist considering the many diverse skill sets and competencies that are needed to ensure due diligence, delivery, and official language requirements are met. Critical to success is the attraction and retention of experienced people that collectively possess the necessary knowledge and capabilities to help build the organization. Furthermore, the continued focus for all staff to address identified gaps in intra-agency communications regarding program and policy changes, as well as personal learning and development plans, will be crucial to success.

With the creation of FedDev Ontario in August, 2009, an initial lack of internal capacity resulted in a number of services being provided by external sources. This reliance on external service providers posed a risk for the agency and efforts were made to reduce the dependency for various services including financial, administrative, and auditing functions. With a significant increase in staffing levels in 2010–11, the agency's internal service function was able to increase its self-sufficiency and adopt processes tailored to the requirements of FedDev Ontario to reduce the risk posed by reliance on external service providers.

As processes stabilize, and initial delivery and capacity issues are addressed, it will become increasingly important to demonstrate the value and stewardship of agency activities. FedDev Ontario will respond to these risks by placing a priority on staffing and retention strategies, learning and development priorities, and strategies that allow FedDev Ontario to leverage outside expertise. In addition, FedDev Ontario will continue to explore best practices for more efficient delivery, stronger advocacy, enhanced research and partnering capabilities, improved measurement and reporting practices and a mature evaluation framework.

Summary of Performance

2010–11 Financial Resources ($ millions)

Financial Resources from 2010–11 in Millions of $

Planned Spending	Total Authorities	Actual Spending
507.0	593.1	405.6

FedDev Ontario's financial resources directly impacted the ability of the agency to achieve its Strategic Outcome and deliver on its Program Activities as shown in the PAA. At the outset of fiscal year 2010–11, the agency's Planned Spending (based on its 2010–11 Main Estimates) totalled $507 million. Further adjustments through Supplementary Estimates during the year resulted in $593.1 million in Total Authorities.

The variance between Actual Spending and Total Authorities is largely as a result of lapsed money in SODP ($87 million); RInC ($39.4 million); and CAF ($28.1 million). SODP faced the combined challenges of building capacity while launching a new suite of Southern Ontario Advantage initiatives in 2010–11. RInC was granted an extension to October 31, 2011, as part of the EAP extension and 18 CAF projects were also extended to the same date. FedDev Ontario's financial resource breakdown is provided below by Program Activity and is further detailed for the above-mentioned programs in Section II of this document.

2010–11 Human Resources (full-time equivalents=FTEs)

Human Resources from 2010–11 in full-time equivalents

Planned	Actual	Difference
180	174.154	(5.85)

The table above provides a summary of the total planned and actual human resources for FedDev Ontario for fiscal year 2010–11. FedDev Ontario very nearly met its planned FTE target of 180 for the fiscal year, allowing the agency to stabilize its internal capacity and processes and reduce the risk posed by reliance on external service providers. The FTE breakdown by Program Activity and the resulting differences between planned and actual are presented in Section II of this document.

Strategic Outcome: The economy of southern Ontario is competitive and diversified

Performance Indicators	Targets	2010–11 Performance
Annual Gross Domestic Product (GDP) growth rate for southern Ontario.	3%	Exceeded target. 2010 real GDP growth rate for Ontario is 3.4%5

Program Activities for 2010–11 for Community and Business Development and Infrastructure

Program Activity	2009–10 Actual Spending6 ($ millions)	2010–117 ($ millions)				Alignment to Government of Canada Outcomes
		Main Estimates	Planned Spending	Total Authorities	Actual Spending
Community and Business Development	N/A	395.0	395.0	400.7	257.9	An innovative and knowledge-based economy Strong economic growth
Infrastructure	N/A	98.4	98.4	172.4	130.6	Strong economic growth
Total	N/A	493.4	493.4	573.1	388.5

Further information on the financial resource totals above can be found in Section II: Analysis of Program Activities by Strategic Outcome.

Program Activity for 2010–11 in millions of dollars for Internal Services

Program Activity	2009–10 Actual Spending ($ millions)8	2010–11 ($ millions)
		Main Estimates	Planned Spending	Total Authorities	Actual Spending
Internal Services	N/A	13.6	13.6	20.0	17.1

Expenditure Profile

Departmental Spending Trend

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The chart above demonstrates the progression of spending at FedDev Ontario from 2009–10 to 2010–11. The agency was not established until August 13, 2009, and, as a result, did not have a Main Estimate figure for fiscal year 2009–10. Reduced spending in 2009–10 when compared to 2010–11 can also be attributed to the need to staff the agency, develop programs and build capacity, while also establishing relationships with clients and stakeholders. These efforts to build agency capacity, coupled with the challenges of delivering a full suite of programs in 2010–11, limited the agency's ability to fully allocate all of its funding. With a greater complement of staff and program delivery processes in place, the agency will be in a better position to fully expend its future allocations.

The variances between Actual Spending and Total Authorities in 2010–11 are further detailed in Sections II and III of this document.

Estimates by Vote

For information on our organizational votes and/or statutory expenditures, please see the
2010–11 Public Accounts of Canada (Volume II) publication. An electronic version of the Public Accounts is available on the Public Works and Government Services Canada website. ⁹

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