Marine 5 Star Health & Safety Management System Audits

Marine 5 Star Health & Safety Management System™ Audits

The Safety Projects International series of Industry specific Health & Safety Management Systems is applied for aviation safety, marine safety, construction and manufacturing, warehousing, mining, oil & gas field loss control for insurance organizations, OHSAS 18001, and ILO guidelines-based checklists are incorporated to name a few.

When it comes to developing safety management audit systems, we’re not an overnight sensation, for good reason. While we had the insight to develop the world’s first safety management System and register the International trademark, “Marine 5 Star Health & Safety Management System™ back in 1982, our system has been guided and refined over time by people who understand the business of safety best, our clients. It has been a long-term relationship.

The overall objective of the audit system was to assess the consistency of, and the methodology and the approach to compliance of safety oversight with regards to Marine Safety, particularly in terms of the planning and conduct of vessel inspections and the reporting of results. The scope of the audit focused on the areas where Marine Safety expends a majority of its effort on inspection activities: domestic vessel, port warden, and port state control inspections. It was not the intention of the audit to evaluate the relationships between Transport Canada (TC) and marine stakeholders. The audit was conducted between March and October of 2005.

The Marine Safety organization is decentralized, with a HQ function and five regional offices. While HQ provides a mainly functional role, its regional counterparts conduct much of the regulatory oversight from the regional offices and Transport Canada Centers (TCCs).

Marine Safety is responsible for conducting domestic vessel and port warden inspections pursuant to the Canada Shipping Act (CSA) and its subtended regulations. The regulations require that vessels be inspected although certain classes, such as pleasure boats, are excluded. While the CSA does incorporate certain limited risk criteria, in the determination of inspection frequencies governing specific classes of vessels, it still requires inspections of all vessels. This precludes the Department from introducing a comprehensive risk-based approach to regulatory oversight in order to target individual vessels exhibiting a greater risk of non-compliance. In addition, because the Act places the onus on the vessel owners/operators to arrange their periodic inspections, Marine Safety does not routinely track domestic vessel certification expiry dates. Consequently, the risk exists that some vessels may operate with expired certificates.

The CSA provides limited direction on the conduct of domestic and port warden inspections. Marine Safety has not supplemented this direction with a comprehensive set of functional policies and procedures governing the conduct phase, the reporting of results and the resolution of identified instances of non-compliance. In particular, standard work tools, such as checklists, have not been promulgated. It was also observed that formal quality control mechanisms have not been implemented at the HQ or regional levels to provide assurance that the functional direction has been implemented and that inspections are conducted, and results are reported, in a complete and consistent fashion.

Overall, the limited functional direction provided, and the informal nature of quality control and supervisory review can foster an inconsistent approach to compliance oversight in the regions and the risk exists that not all identified instances of non- compliance are resolved in a timely fashion.

In addition, while the Ship Inspection Reporting System (SIRS) is used to record inspection findings, there was little evidence to indicate that the data in SIRS is used to assess industry levels of compliance, trends or causal factors to evaluate program performance/resource allocation decisions.

Marine Safety has recognized that improvement is required in these areas, as evident by its most recent strategic plan and by some internal studies that it has commissioned. Some regions have also adopted measures to address areas of perceived weakness in their compliance oversight activities. In addition, Marine Safety has proposed changes to the CSA that will allow the regions to institute formal risk management practices in the selection of vessels subject to regulatory oversight.

Our review of the Port State Control (PSC) inspection practices revealed that this program was more advanced in that certain risk factors, governing the selection of vessels, are incorporated in the Paris and Tokyo Memoranda of Understanding.

Consequently, while TC is committed to perform inspections on 25% of international vessels, those that are selected have a greater risk of being substandard. In addition, the functional direction promulgated to the regions is more comprehensive and there exists a standard mechanism governing the reporting of results and the resolution of instances of non-compliance. However, the limited nature of the formal quality control practices generates some risk of inconsistent inspection practices and unresolved instances of non-compliance.

The audit findings, depicted above, were based to some extent on qualitative evidence such as interviews. A more conclusive assessment was constrained by the technical nature of the activities examined, the limited data available for analysis and the lack of detail observed in certain vessel files and inspection reports. MANAGEMENT RESPONSE

Program management has reviewed this audit report and comments are found in section 3 of this report.

1. Introduction

1.1 Purpose

The purpose of the audit was to assess the consistency of the methodology and the approach to compliance safety oversight within the Marine Safety Directorate, particularly in terms of the planning and conduct of vessel inspections and the reporting of results.

1.2 Background

Marine Safety's authority is derived from several Acts, including the Canadian Shipping Act (CSA) and the Canada Marine Act (CMA). Marine Safety, through its regional offices and Transport Canada Centers (TCCs), provides a regulatory oversight role with respect to domestic vessels through its certification and inspection activities. Foreign vessels in Canadian waters are also inspected pursuant to international agreements and to ensure compliance with the Coasting Trade Act.

The Marine Safety organization is structured as the other Transport Canada (TC) service lines: a HQ function, and five regional offices. There are five branches at HQ: Regulatory Services and Quality Assurance; Program and Technical Training Services; Personnel Standards and Pilotage; Operations and Environmental Programs; and Design, Equipment and Boating Safety. The regional offices have the following responsibilities: Technical Services; Inspection Services; Cargo and Pollution Prevention Services; Compliance and Enforcement Activities; and Program Services. The regions carry out the operational role of Marine Safety through the regional offices and TCCs.

In 1997, Marine Safety's Strategic Plan recognized the need for more consistency in the levels of service provided. It also committed the organization to the development of a sound and systematic approach to risk management through:

 the development of a national database for Marine Safety activities; and,  the incorporation of effective risk management practices for regulation development and program delivery.

The 2003-10 Strategic Plan Update committed the organization to complete the service line review and to develop a risk-based inspection regime. 1.3 Objectives, Methodology and Scope

The overall objective of the audit was to assess the consistency of the methodology and the approach to compliance safety oversight with Marine Safety, particularly in terms of the planning and conduct of vessel inspections and the reporting of results. The scope of the audit focused primarily on the activities conducted by Marine Safety, with regards to domestic vessel, port warden, and port state control inspections. These are the three main areas where the greatest level of effort is expended on inspections in the regions. While Marine Safety is now required to conduct inspections on small passenger vessels, the focus of the audit of the domestic vessel inspection program was on the larger vessels. It was also not the intention of the audit to evaluate the relationships between Transport Canada (TC) and marine stakeholders.

The conduct phase of the audit commenced with a review of Marine Safety's mandate. A review of the functional direction was undertaken including the methodology governing the planning and conduct of compliance oversight activities, the reporting/evaluation of findings and the resolution of observed instances of non- compliance. Regional inspection programs were assessed to determine their individual approaches to program delivery and the degree of adherence to national direction. Review of documentation, database and inspection reports/files was supplemented by interviews with key managers and inspectors. Each regional office was visited, where interviews were held with Regional Directors, managers, and a sample of inspectors. As well, interviews were conducted with managers and inspectors at seven TCCs across Canada. The audit fieldwork was conducted between March and September 2005.

For domestic vessel inspections, the audit focused primarily on the inspections conducted after the first inspection and for the larger vessel types. The audit did not examine plan approval as Marine Safety's Quality Assurance (QA) Branch had recently completed a review that examined the issue of inconsistency in this area.

Since the program of regulatory monitoring is decentralized, the consistency of compliance oversight practices was evaluated in terms of the following criteria:

 the mechanism employed to establish and maintain the inventory of vessels subject to initial and periodic inspections;  the frequency of inspections and the use of common approaches to risk management in the establishment of inspection intervals and in the formulation of annual inspection plans;  the amount of resources employed in the discharge of similar inspection activities;  the extent to which national direction and methodology promotes the conduct of consistent inspection practices;  the training provided to inspectors in order to promote consistent application of the regulations and oversight;  the recording of inspection results using a common methodology and the uniform capture of such information for decision-making and for summary reporting;  the adoption of a common approach to the resolution of observed deficiencies and instances of non-compliance; and,  the extent to which the inspection activities are subject to delegation or the reasons that delegation of these activities have not been pursued.[1]

1.4 Structure of Report

The report is separated into findings, recommendations and a management action plan. The findings are broken down by inspection type: domestic vessel, port warden and port state control inspections.

2. Findings

2.1 Domestic Vessel Inspections

2.1.1. Background

The CSA, and its subtended regulations, requires that all vessels except pleasure craft be inspected prior to operation in Canadian waters. Only certain vessel types, as prescribed in the regulations, are inspected periodically thereafter by TC Marine Safety (MS). The legislation requires inspection of a ship's hull, machinery and equipment before it is put into service and periodic inspections are conducted while it is in service. The frequency of inspection for domestic vessels is stipulated in the regulations where certain risk factors have been considered in establishing the intervals between inspections. For example, passenger vessels are inspected annually while small fishing vessels are inspected every four years.

Marine Safety is aware of some of its challenges, as documented in the strategic plan titled The Next Wave and their last service line resource review (2004). One of the challenges is the need for further standardization of policies and procedures, which is an important step for developing a consistent approach towards inspection activities. Marine Safety is also aware that some variation may exist in the application of the methodology governing the conduct of regional inspection practices, in the reporting of results and in the follow-up and resolution of identified deficiencies.

2.1.2. Planning of the Inspection Program

2.1.2.1 Since Marine Safety does not routinely track vessel certificate expiry dates, the risk exists that some vessels could continue to operate with expired certificates.

The Ship Inspection Reporting System (SIRS) is a mechanism that captures most vessels subject to regulatory oversight after the initial certificate has been issued. In addition, it records vessel certification expiry dates and tombstone data. Inspectors are responsible to input inspection findings, and related data, into SIRS. The planning phase for inspections commences when managers and/or inspectors receive notification from vessel owners/operators that they require an inspection for recertification. Once notified of the requirement for an inspection, inspectors review SIRS and the vessel file to identify the regulatory requirements for the vessel, and they review the vessel's past history of compliance. Once they have reviewed the information and have the appropriate data to conduct the inspection, the inspection conduct process occurs.

Under Part 5 (Section 316), the CSA places the onus on the vessel owner to arrange for an inspection prior to the expiry of the certificate:

"It is the duty of the owner to have an inspection made under this section, and no steamship described in this section shall be used unless there is on board and in force a certificate or certificates issued under section 318 or 319, applicable to the voyage on which the steamship is about to proceed and to the trade in which it is engaged."

Consequently, it is not common practice to track vessel certificate expiry dates to identify those vessels that are due for inspections or to follow-up to determine why inspections have not been scheduled. While it is a common assumption within MS that vessel owners/operators that do not contact TC for vessel re-certification do not operate their vessels, MS inspectors have identified vessels operating with expired certificates. Statistics are not kept in this regard, resulting in MS not knowing the extent that industry is non-compliant. As a result, without the appropriate statistical information, it is not possible to determine the risk associated to vessels operating without re-certification. It is also important to note that the audit team was not able to determine the number of vessels that may be operating with expired certificates.

Some TCCs acknowledge the risk associated with identifying vessels requiring re- certification, and do track vessel expiry dates. While there is no formal mechanism that routinely provides the TCCs with a listing of vessels with expired certificates, customized reports of this nature are available from SIRS, although when interviewed not all managers and inspectors were aware of this capability. Some TCCs also track expiry dates simply to produce efficiencies in scheduling inspections in selected geographical areas. This is conducted through the exporting of SIRS data into Excel and Microsoft Word tables. As well, some TCCs have notified owners of the pending expiration of their certificates by sending notification letters. However, other TCCs perceive this practice as a potential liability risk for TC.

Leaving the onus on vessel operators to ensure compliance with regulatory requirements, without a system to ensure that vessels are inspected at the prescribed intervals, could result in some vessels operating with expired certificates This situation would likely raise public concern in the event of an accident involving a vessel operating with an expired certificate.

2.1.2.2 Marine Safety does not apply a formal risk-based approach to target those vessels with a greater risk of non-compliance.

The CSA requires domestic vessels (with some exceptions) to be inspected and recertified at prescribed intervals. The established intervals incorporate some risk-based factors such as the vessel type, the geographic area in which the vessel operates, and the use of the vessel (e.g. passenger, cargo, tanker, etc.). However, other relevant risk factors are not considered; this includes compliance history and company instituted maintenance and quality control practices.

As a result, MS is in a reactive mode in that they are required to inspect each vessel at the prescribed intervals without considering all of the relevant risk factors. This may not represent the most efficient use of resources in that inspectors do not target more frequently those vessels with histories of non-compliance.

Marine Safety has recognized this weakness and regulatory changes are proposed to allow the regions to determine the frequency of inspections for each vessel and incorporate additional risk management practices into its program of regulatory oversight. The frequency of inspections will be based on specific risk assessment criteria, such as the history of the vessel, the age of the vessel, and previous instances of non-compliance.

2.1.3. Conduct of Domestic Vessel Inspections

2.1.3.1 The limited nature of the functional direction governing the conduct of inspections, and the measures established to monitor its application, does not foster a consistent approach to compliance oversight between regions. However, in some cases, the lack of report details and documentation on file precludes a conclusive assessment of how inspections were conducted or the scope of examination.

Once an inspector has reviewed the required information in SIRS and the vessel file, an on-site inspection is arranged. The inspector uses the SIRS pre-inspection report to target specific areas of a vessel to inspect. During the inspection, the inspector may target other areas that he/she determines should be inspected further. The CSA allows an inspector to use discretion during the conduct of the inspection. When the inspector is satisfied that the vessel is compliant with the provisions of the Actand the applicable regulations, a new certificate is issued for a prescribed period. If deficiencies are found, the inspector will issue an SI-7 to the vessel owner/operator, highlighting the issues of non-compliance requiring repair. Depending on the severity of non-compliance, a certificate may or may not be issued at the same time as the SI-7. As well, the inspector exercises discretion in determining if further visits will be required to ensure all issues of non-compliance have been rectified. The inspection findings and certificates issued are recorded in SIRS, and any information provided by the owner/operator will be included in the vessel file.

Functional direction on the conduct of inspections is provided through the CSA and its corresponding regulations. Functional direction is also provided through tools developed by Marine Safety such as the Marine Safety Management System (MSMS). The MSMS is comprised of three tiers, which consists of policies, procedures and work instructions for each program. Functional direction is further provided through TC Publications, the Marine Inspectors Bookshelf (MIB), Notice to Surveyors, as well as the National Training Program (NTP).

Functional direction is a fundamental mechanism to promote the consistent application of inspection practices. However, it is our opinion that existing functional direction is incomplete. The MSMS, which is intended to promote consistency through defining the process for performing routine functions, is not fully developed. Interviews indicated that Notice to Surveyors, which have been issued to the regions providing some guidance on the conduct of inspections and the interpretation of the CSA, have not been updated for some time. Interviews also indicated that standards that had been developed are not easily accessible; for example, standards provided to inspectors on small fishing vessels for the Equivalent Standards for Fire Protection in the late 1980s are not available to inspectors electronically. As well, no standard checklist (or inspection guidance type document) has been developed and promulgated to the regions, which has resulted in various checklists being developed at the regional/inspector level. While the SIRS pre-inspection report is used as a checklist by some inspectors, other inspectors considered it not sufficiently detailed to conduct inspections. Quebec Region is the only region that has developed a standard checklist for annual domestic vessel inspections.

Other mechanisms supplementing the functional direction are provided through inspector training and established quality controls. The goal of the NTP is to promote greater consistency of inspection practices by training inspectors how to conduct inspections. Part of the training program is to identify general procedures for intermediate and periodic inspections, as well as addressing safety requirements. However, only new inspectors are required to take courses for ship inspection and certification and there is no requirement for "refresher" training for existing inspectors. Thus there is a risk of differing inspection practices between new and senior inspectors. As well, there is no formal monitoring process on how inspectors conduct domestic vessel inspections. While most managers (as well as inspectors) agreed that such evaluations should be conducted to ensure inspections are conducted consistently, few evaluations have occurred, partly due to management's perception of a lack of time available. At present, an evaluation would only be initiated if a complaint were received.

It is understood that all vessels cannot be inspected in the same manner and only limited consistency can be achieved under the current regulatory environment. The regulations also allow inspectors certain discretion when conducting inspections. However, interviews indicated that there are cases where previous inspections did not highlight particular serious deficiencies, which in the opinion of inspectors, should not have been missed nor could have occurred solely in the time period between periodic inspections. It is not apparent that these types of findings are recounted to management on a regular basis or that corrective action takes place. While our file review and interviews confirmed some evidence of inconsistent practices, our effort was constrained by our limited technical knowledge and the lack of details in the SIRS reports and vessel files. Inspection practices were not well documented and it was particularly difficult to evaluate the scope of each inspection. We were also constrained by our inability to compare the relative level of inspector effort (resources) expended inspecting vessels of the same type. The data from the National Time Activity Reporting System (NTARS) for FY 2003/04 was reviewed, to try to assess inspection times for specific vessel types. However, based on the sample analyzed, the data was not sufficiently accurate to allow us to carry out a comparative analysis.

As a result of functional direction not being fully developed, nor formal quality control being implemented at the regional level, there is a risk that vessels are operating while being non-compliant with the CSA.

Marine Safety, in their 2004 Service Line Resource Review, recognized that there are no activity time/effort standards in place describing the average time required to conduct inspections on specific vessel types, and that there are inconsistencies in the conduct of inspections. Marine Safety also acknowledges that some of the CSA regulations are not clear and the manner in which they are applied can vary. Marine Safety's Quality Assurance Branch found during a review conducted in March 2003 that there is still uncertainty among inspectors about certain regulatory requirements, which can cause inconsistencies in inspection practices.

The Quality Assurance Branch has made some efforts to implement a quality assurance process to assess regional program delivery; however shifting priorities within Marine Safety has restricted its efforts. In October 2002, a Marine Safety Internal Communications Policy was developed to encourage the transfer of information to the Director of the Quality Assurance Branch, in order to facilitate the sharing of best practices nationally. Our audit fieldwork found that few inspectors and managers knew of this policy and most felt that the communication of new policies and directives regarding quality assurance was non-existent.

Regions have also implemented their own processes to try to address inconsistencies in inspection practices. For example, some regions rotate their inspectors to ensure they do not inspect the same vessels each year. This is to limit a perceived complacent approach to inspections, as well as allowing inspectors with various levels of experience to inspect vessels. Interviews indicated that this has resulted in minor deficiencies being discovered that had been missed during previous inspections.

It is also important to note that some regions/TCCs have implemented their own electronic tools as well to aid in the conduct of inspections. " which is an aid for managing inspections. It provides provisional guidelines and letter templates to improve the level of quality and standardization.

2.1.4. Reporting of Inspection Results and the Resolution of Identified Instances of Non-Compliance

2.1.4.1 Inspection results are not always reported in a complete, timely and consistent fashion. In addition, findings of non-compliance are not rolled-up or analyzed nationally for performance measurement purposes or to support resource allocation decisions.

The CSA requires inspectors to keep records of inspections performed and certificates issued, as stated in section 312 of the CSA.

"A steamship inspector shall keep a record of the inspections he makes and certificates he issues, in such form and with such particulars respecting them as the Chairman directs, and shall furnish copies thereof and any other information pertaining to the duties of his office that the Chairman may require."

Once an inspection has been conducted, inspectors are to record their findings into SIRS. SIRS is Marine Safety's principle mechanism for reporting inspection results, with supporting and additional information to be placed on the vessel file. SIRS captures regulatory information that pertains to each vessel inspected by TC, and allows inspectors the capability to review the compliance history of a vessel, previous inspection findings, past deficiencies and the tracking of expiry dates. Instances of non-compliance, recorded on SI-7s, are required to be input to SIRS, and copies of the SI-7s are to be placed in the vessel file. Once an inspection is complete, a SIRS post inspection report is to be printed and placed in the vessel file. While SIRS captures regulatory information and instances of non-compliance, the vessel file can also include other information including correspondence, copies of past certificates, SI-7s issued, and Board Decisions.

During the conduct of the audit, based on interviews and reviews of data/reports, issues with SIRS were identified. SIRS reports do not clearly articulate the scope of the examination of the inspection conducted, and instances of non-compliance are not referenced to the applicable section of the regulations. Also, as inspectors identified, data entry to SIRS is not always recorded in a timely manner, and there have been problems relating to the retention of data in SIRS. In addition, supervisors do not routinely review inspection results or SIRS reports, nor do the HQ functional authorities do this nationally. It was also observed that SIRS results are not employed to assess industry levels of compliance, trends or causal factors or for evaluating program performance/resource allocation decisions.

The audit team reviewed 331 vessel records in SIRS for vessels that were inspected during the fiscal year 2004/05. Approximately 45% of the sample (150 vessels) had been issued an SI-7. Twenty-one of the SI-7s (14%) had not been input to the SIRS system; only a reference to the SI-7 being on file was recorded. As well, some SI-7s were issued not for vessel deficiencies, but only to note the reason a short-term certificate was issued (e.g. underwater inspection due).

To prepare for vessel inspections, inspectors depend on the results of previous inspections to target risk areas and to ensure previously reported deficiencies were rectified. Supervisors cannot exercise proper quality control unless the scope of the inspection is clearly articulated, the findings are reported in a detailed manner, and instances of non-compliance are properly recorded. Such information is also necessary to evaluate the industry's compliance rate. The functional authority's ability to extract information for analytical purposes and to summarize industry compliance is also hampered by the inconsistent and incomplete reporting of inspection findings.

The Transportation Safety Board (TSB) recommended in 2001 that TC institute a formal process of monitoring inspection reports.[2] Reviews and audits have been conducted by Marine Safety that have highlighted similar issues with the reporting of inspection results. For example, some regions have conducted audits on small passenger vessel files, and the QA Branch has conducted a review of specific Ontario vessels that identified issues with consistent and timely entry of inspection data. In addition, the Ontario Region has begun reviewing certificates issued by the TCCs within the region to ensure that the information filled out on the certificates is correct and to ensure that the appropriate certificate has been issued. However, while these provide some examples of monitoring being performed, it is not a consistent practice across the regions. While limited functional direction for reporting is provided through the standard templates within SIRS, Marine Safety has recognized the need for standard reporting practices and guidelines to promote control and promulgation of inspection reports on a national basis. It has recently developed a policy for mandatory referencing to sections of the act on the SI-7s.

2.1.4.2 There exists a risk that not all identified instances of non-compliance are resolved in a timely fashion.

When instances of non-compliance are found on a vessel, an SI-7 is issued to the owner/operator describing the deficiencies that need to be rectified. If an inspector judges the deficiencies to be serious, a certificate will not be issued until another inspection is carried out to verify the deficiencies have been corrected. If the deficiency is considered not serious, an inspector may issue a certificate along with an SI-7 allowing the vessel to operate while the deficiencies recorded on the SI-7 are being addressed. Inspectors apply the regulations using their professional judgement to determine whether the deficiencies warrant withholding a vessel's certificate, issuing a new full-term certificate, or "short-terming" the certificate. For example, an inspector may issue an SI-7 and an annual certificate, which states the certificate is valid once the issues of non-compliance are rectified. In the same situation another inspector may short-term a certificate, to ensure that a follow-up inspection is conducted to verify all issues of non-compliance have been rectified before issuing a new full-term certificate. It is important to note that it is the owner/operator's responsibility to contact Marine Safety to state that the deficiencies have been addressed.

Functional direction governing the resolution of deficiencies is promulgated through the CSA, in terms of the use of short-term certificates and certificate extensions. However, inspectors exercise discretion in terms of how they verify, and record, that the instances of non-compliance have been rectified. They will establish the time frames, and can decide on whether to issue a full-term or short-term certificate for a vessel.

When the audit fieldwork commenced, it was observed that functional direction on the use and issuance of SI-7s was limited. During interviews and based on documentation reviewed, it was found that the manner in which SI-7s were issued varied across the regions as well as between TCCs within regions. There was also evidence of undocumented follow-up action, and interviews indicated that there were instances where SI-7s were not always recorded in SIRS in a timely fashion. While SIRS can capture SI-7 information, there is no formal system to track outstanding SI-7s and ensure deficiencies are rectified before the vessel commences operations. As well, there was no consistent supervisory review to ensure deficiencies were resolved in a timely fashion.

As a result, some vessels may continue to operate with unresolved deficiencies and in the event of an accident, there may be no formal records documenting if or when deficiencies were rectified.

Atlantic Region tracks deficiencies by issuing short-term certificates when an SI-7 is issued. As a result of issuing short-term certificates, tracking is conducted through the certificate expiry date recorded in SIRS; as well, it is necessary for owners to contact the regional office/TCC when their certificate needs to be re-certified. This approach decreases the risk of owners operating with unresolved deficiencies. While other regions/TCCs short-term certificates, Atlantic Region is the only region using short- term certificates as a formal way of tracking the resolution of identified instances of non-compliance.

Marine Safety HQ has recognized that regions have various approaches (e.g. other than SI-7s) for recording deficiencies and recommendations, and that there was a need for clear and concise instructions to report deficiencies. In July 2005 Marine Safety implemented a new policy for SI-7s with the objective of ensuring national consistency in the use of an SI-7. Within the procedures, general guidance is provided for the issuance of the SI-7 forms. The policy requires inspectors to identify instances of non-compliance that are compulsory and reference the appropriate section of the regulations. The policy also directs managers to monitor inspectors to ensure that the policy and procedures are followed in the use of SI-7 forms. Included in the new SI-7 procedures is the requirement for owners/operators to advise inspectors when deficiencies are rectified.

2.1.4.3 Vessel files are not maintained in a complete and consistent fashion, thereby constraining efforts to plan subsequent inspections and to confirm that identified deficiencies had been resolved in a timely fashion.

The vessel file is a fundamental source of data to plan inspections and to record inspection results. Vessel files are maintained in each TCC; the file does not follow a vessel, resulting in the possibility of more than one file for the same vessel at various TCCs. The file may include SIRS reports, correspondence, copies of past certificates and SI-7s issued, and Board Decisions. The file can also include faxes and receipts for repairs highlighting what owners have done to rectify issues of non-compliance as identified on the SI-7s they were issued. Some of the files also include other information that inspectors have decided is relevant. Marine Safety, in response to a 2001 TSB recommendation, prepared instructions to inspectors addressing compulsory information that is to be included in inspection reports. However, interviews indicated that inspectors were not aware of this document. As a result, the contents of the file are at the discretion of inspectors, leading to inconsistent information being included. It is also possible that information is missing; for example, not all certificates have been entered into SIRS, as found by the MS QA Branch. There is also a lack of supervisory review of the file contents. Reviews conducted by the QA Branch have also confirmed this as an issue.

With incomplete files, inspectors may not have the complete history of a vessel as SIRS reports may not contain all the necessary information. Reviewing the vessel file is a fundamental step in planning periodic inspections. The file should provide a complete compliance history, and a record of deficiencies identified as well as corrective action taken. Such information is necessary for inspectors to formulate inspection plans and evaluate risk. A review of the file by supervisory staff is also fundamental to ensure inspections are properly conducted and deficiencies are addressed in a timely manner.

In response to TSB recommendations on this matter, MS stated that it had prepared instructions addressing compulsory information to be included in a vessel file. In addition, the Information Management Branch, Pacific Region conducted a review in early 2005 for the Victoria and Prince Rupert TCCs, identifying that the multiple vessel files located at various TCCs may be an issue. The review proposed the creation of a central file for a vessel that would be shared between TCCs. Marine Safety Pacific Region is currently determining the feasibility of implementing this proposal.

2.2 Port Warden Inspections

2.2.1. Background

Port warden inspections are conducted with the objective of ensuring that certain high-risk cargo is loaded in accordance with approved practices, relevant regulations and codes to ensure proper vessel stability, structural integrity and securing of deck cargo (i.e. timber). TC conducts port warden inspections, as articulated in Part 8 of the CSA. The CSA outlines the type of vessels to which the regulations apply, the requirements needed for the vessel to comply with the regulations, as well as identifying that the responsibility to conduct port warden inspections falls under the Minister of Transport. The duty of the port warden for carriage of grain is described in the CSA as the following: "Before beginning to load any chamber or compartment in any ship, the port warden shall see that all the requirements of the regulations for the loading and carriage of grain cargoes are complied with, and issue a certificate accordingly."

The CSA also highlights similar requirements for the port warden for timber deck and concentrate cargoes. Only certain cargoes are targeted as they pose a higher risk of vessel capsizing due to the potential shifts in cargo, including from overloading or overstressing the hull.

Overall, grain is the prominent port warden activity in Canada, representing approximately 73% of the vessels inspected. While port warden inspections are conducted in each region, port warden workload is greater in the Pacific and Quebec regions. Marine Safety inspectors conduct all port warden inspections, except in the harbour of Quebec, which is not included under the CSA.

Some of the regional offices (Pacific, Ontario and Quebec) have dedicated resources that are primarily responsible for port warden activities. For TCCs, the manager decides how inspectors are assigned to port warden inspections.

2.2.2. Planning of the Port Warden Inspection Program

2.2.2.1 While the regulations require that TC inspect all vessels loading grain, timber or concentrates (excluding Quebec harbour) bound for export (i.e. ocean voyage), no formal risk-based approach is applied to target those vessels at greater risk of non-compliance.

For the planning of port warden inspections, managers receive a list of vessels coming in to port, usually on a weekly and/or daily basis from the port agents. The manager will then assign a vessel to an inspector, based on availability. For the inspector, planning for the inspection mainly consists of setting up the time to inspect the vessel prior to loading. Inspectors must be flexible on when the inspection will start, as delays can occur due to unforeseen circumstances, such as bad weather or unforeseen loading issues.

Pursuant to the CSA, 100% of the vessels loading grain, concentrates and timber bound for export, are required to be inspected. The type of cargo inspected prescribed in the regulations exhibit evidence of the use of risk management criteria from the perspective that only grain, timber and concentrates are targeted for inspections. Thus, MS must inspect all such vessels prior to issuing a Fitness to Proceed certificate. While the regulations exhibit some risk management by limiting the requirements for a port warden inspection to vessels carrying specific types of cargo, vessels with a history of non-compliance are not targeted more frequently. 2.2.3. Conduct of Port Warden Inspections

2.2.3.1 Direction governing the conduct of port warden inspections, promulgated through the Canada Shipping Act and its subtended regulations, is limited. Consequently, a risk exists that port warden inspections are conducted in an inconsistent fashion.

A vessel is inspected to ensure that the loading of specific cargo is in compliance with the CSA, regulations, as well as national and international codes. For grain cargo, two certificates are issued. First, the inspector reviews and verifies the crew/ship documents, ensures that the vessel stability calculations are correct, and conducts a physical inspection of the cargo holds. Once the inspector is satisfied with these three components, a Readiness to Load certificate is issued. After the vessel is loaded, the inspector will inspect the holds to ensure that the grain has been loaded properly and the hatches have been closed correctly. If the inspector is satisfied with the loading, a Fitness to Proceed certificate is issued. These steps are described in the Grain Cargo Regulations in section 8 of the CSA.

As previously mentioned, functional direction is a fundamental mechanism to promote the consistent application of inspection practices, which is supplemented by quality control and training. However, functional direction for port warden inspections is incomplete. Much of the MSMS has yet to be fully developed; notices to surveyors need to be updated; and there is no standardized training provided for port warden inspections. Interviews indicated that training is carried out in regions through mentoring. Inspector exchanges between regions have also occurred to promote harmonization.

As well, there is little evidence that formal supervisory review of inspection practices is performed at the regional level, nor is consistency in inspection practices evaluated from a national perspective. Only some managers are performing evaluations on the conduct of inspections.

Interviews indicated there were some inconsistencies in how port warden inspections were conducted. For example, there was some variance in how inspectors reviewed the stability calculations. While some inspectors would review all the stability calculations, others would only review the summary calculations. Some inspectors stated that only reviewing summary calculations could lead to incorrect final stability calculations. The audit team was constrained in comparing inspector effort expended on port warden inspections, as NTARS data did not capture effort expended on individual vessels. Therefore, it could not be determined if there were significant variances in the time spent by inspectors in conducting port warden inspections of the same vessel and cargo types. Inconsistent approaches to port warden inspections could result in more time expended than is necessary, or could result in the issuance of certificates where inspections were not conducted to the level of detail required to adequately assess compliance to the regulations.

Regional interviews indicated that the Cargo and Ship Port Interface Branch in HQ does provide some direction to the regions when needed. For example, the Branch provides ship safety bulletins, board decisions, and internal memos to the regions. It will also be involved with meetings between the regions when there is a need for clarification (e.g. 'harmonization meetings').

However, principally it is the regions that tend to make decisions on the conduct of port warden inspections. To address inspection inconsistencies, some regions have implemented their own initiatives by developing their own policy and regional procedures for its inspectors. As well, some TCC managers have also restricted the number of visits to a vessel during the conduct of port warden inspections.

2.2.4.1 Instances of non-compliance are not formally recorded and tracked.

The CSA stipulates that if a vessel is found unfit, the port warden shall "withhold the certificate and notify the master or agent of the ship, detailing his requirements in accordance with regulations and approved practice." If deficiencies are found, the master of the vessel is instructed either verbally or through the issuance of an SI-7 to fix the deficiencies. If the master of the vessel refuses to comply, the inspector is required to notify the port's chief officer of customs that the vessel has not been given clearance and will not be until the deficiencies are rectified and a certificate is issued.

Functional direction, other than that contained in the regulations, has not been promulgated to the regions in order to ensure inspection findings are reviewed, and instances of non-compliance have been correctly rectified. Only some managers review the vessel files to ensure that all the appropriate information is collected. It is not a standard practice across the regions.

The Cargos and Ship Port Interface section in HQ prepares an annual Port Warden report, which describes the number of port warden inspections conducted within each province and port. In addition, it reports the total weight of cargo loaded, and the revenue received from the inspections. The report does not include any analysis of the type and volume of deficiencies or the number of SI-7s issued. The lack of relevant compliance related information precludes any assessment of inspection practices; the nature of the findings/deficiencies; nor how issues of non-compliance were addressed.

2.3 Port State Control Inspections

2.3.1. Background

As a signatory to the Paris and Tokyo Memoranda of Understanding (MOU), Canada is responsible for the inspection and examination of foreign vessels within its waters to ensure that those vessels are in compliance with international standards established in the appropriate texts and conventions (such as the International Convention for the Safety of Life at Sea and the Convention on the International Regulations for Preventing Collisions at Sea, among others). The Paris MOU governs the Atlantic waters while the Tokyo MOU governs the Pacific jurisdiction.

At its essence, Port State Control (PSC) is a system designed to incorporate risk in the selection of vessels subject to inspections, and Canada has agreed to target 25% of all international cargo vessels within its waters. The aim of the inspections is to target the vessels that are most likely to be substandard and have an increased risk of causing damage or harm to its crew or the environment. This targeting is based on a list of ranked risk factors (such as the age, flag and type of ship), which are used to classify vessels as high, medium or low risk. In addition to the primary risk factors, other factors are also taken into account (e.g. volatility of cargo, reported complaints received, multiple detentions by member states in the region) to determine if a vessel will be subject for a mandatory inspection.

2.3.2. Planning of the Port State Control Inspection Program

2.3.2.1 The existing functional direction promotes the application of a consistent methodology governing the selection of foreign vessels entering Canadian waters for inspection.

Port State Control inspections are conducted at the TCC level in the regions. Planning for PSC inspections usually entails the TCC manager reviewing all incoming vessels and assessing them against the established risk factors to select vessels that require inspections and to determine the order of inspection, as outlined within the Paris and Tokyo MOU. Inspectors are required to review the PSC database to identify past inspection results and issues of non-compliance.

In addition to the international agreements, a MS policy exists that directs inspectors to inspect 100% of tankers on their first visit to Canada and annually thereafter, regardless of their condition. Also, Pacific Region, together with the United States Coast Guard, has decided to conduct a pilot project to inspect all seasonal passenger vessels (i.e. cruise ships).

The international standards for PSC require all inspections to be recorded into the International Port State Control database within a 10-day period. As a result, information is kept up-to-date and offices are able to determine which vessels require inspections based on the established international risk based factors.

2.3.3. Conduct of Port State Control Inspections

2.3.3.1 While international agreements and functional direction promotes consistency in the conduct of Port State Control inspections, the limited application of quality control measures constitutes a risk that inspections could be conducted in an incomplete and inconsistent fashion.

In the case of bulk carrier structure inspections, once an inspector has been assigned a vessel to inspect and has reviewed the information on the PSC database, the master of the vessel is informed of the requirement for an inspection. This allows the Master to get the tanks ready for the upcoming inspection. The same advance notice is granted to passenger vessels, as well, in order to accommodate their busy schedules and their short stays in port. In all other cases, the Master of the vessel is unaware of the inspection until the surveyor arrives at the vessel. During the inspection, the appropriate certificates, licenses, and documents for the vessel and crew are checked and verified and a general physical inspection of key areas takes place. If the inspector finds areas of concern a more detailed inspection will occur. Deficiencies or detainable items will be noted and the proper rectifying action will be administered under the discretion of the inspector. The inspector will then provide the master with originals of the inspection forms and enter the results into the PSC database.

Functional direction governing the conduct of PSC inspections is provided through international agreements and supplemented by three volumes of PSC manuals. These manuals provide outlines for inspection procedures, the forms necessary for PSC inspections. A checklist of the inspection procedures is provided in Volume III. These manuals are consistently updated and are made available to MS inspectors through the MSMS.

The MS Inspection and Operation Standards Branch also provides functional direction. The Branch is responsible for issuing Port State Control Instructions, the purpose of which is to disseminate general information and to provide guidelines on miscellaneous matters related to PSC. They help to explain and elaborate on PSC procedures for the purposes of encouraging uniformity of inspection application. They have also made available several policies, guidelines, and instructions to assist regions with the inspection of certain types of vessels.

In addition to the national guidelines, some regional offices have developed supplementary procedures to aid in the inspection process. These include procedures governing the scheduling of inspections, information on follow-up inspections, and timelines for the completion of required paper work. As well, some regions have instituted their own informal, undocumented mentoring programs in which new inspectors are paired with their more experienced colleagues when conducting PSC inspections.

Other mechanisms to promote inspection consistency are training and quality control. Training is provided through the NTP, and is mandatory for all inspectors who conduct PSC inspections. However, formal supervisory review is limited. Not all managers conduct evaluations on the conduct of PSC inspections.

While there are documented procedures for the conduct of PSC inspections, inspectors discretion is still a component for the conduct of vessel inspections. Without formal supervisory monitoring of the conduct of inspections, a risk exists that inspections could be conducted differently between the regions and/or TCCs. Interviews indicated that supervisory reviews only occur if severe deficiencies are found, or they are specifically requested to do so by the vessel operator.

2.3.4.1 Functional direction provides for standard reporting of results and recording instances of non-compliance.

Information and results, regarding PSC inspections, are input to the Canadian Port State Control Database. This system is accessible nation-wide, which provides a vessel's inspection history relating to PSC detentions. Inspectors are required to complete their data entry within ten business days of the inspection. As well, inspectors have to communicate their inspection results to HQ (including deficiencies found). Interviews indicate that the database is to be reviewed in Ottawa every two days to verify the information, and the information on the inspection template is reviewed to ensure it has been properly completed. HQ will follow-up with the regions if any discrepancies are found.

As prescribed in the PSC manual, in the event that deficiencies are found, it is up to the discretion of the inspector to take the appropriate course of action. If the deficiency poses no direct emergency or threat to the crew or environment, the inspector can insist on corrective measures within a specific time period (e.g. fix the deficiency "before departure", "in next port", or "within fourteen days"). Follow-up may involve the master faxing in the invoice of the repair, or the inspector conducts a follow-up inspection, as permitted by the master during regular work hours. Follow- up may also be done through the database, where at the next port visited by the vessel an inspector at another TCC/regional office will ensure that all recommendations for the repairs of deficiencies have been satisfactorily completed.

If a deficiency is safety related, an inspector can ask for repairs to be completed before a vessel can continue its operations. This is evident in the statistics provided in the 2004 PSC annual report, where approximately 6% of international vessels were detained. Repairs can be confirmed in person or with sufficient evidence sent to the TCC.

3. Recommendations and Action Plan

It is recommended that the DG Marine Safety:

Recommendation Management Action Plan with Expected Completion Date 1. Review the risk, associated with not This recommendation is fully supported tracking vessel certificate expiry dates, and the impact of not tracking vessel with regional managers and amend the certificates will be assessed. practice if warranted. Institute a mechanism to record and collect observed Currently the Ship Inspection Reporting instances of non-compliance relating to System (SIRS) can be searched to vessels found to be operating with expired determine the expiry dates of inspection certificates. As well, determine if TC is certificates and when an inspection is due. liable regarding the practice of sending The onus is on the owner/operator to ensure letters to owners notifying them of that the relevant ship inspections are upcoming re-certification requirements. conducted in order to have valid certificates for that vessel. SIRS can be searched to determine the vessels that are due for inspection; this can be done for specific TC Marine Safety offices.

TC Counsel has advised that letter to owner notifying them of upcoming certification requirements can be sent.

MSE has considered this issue and all ships will be advised. A stand-alone letter is being prepared in both official languages. All Marine Safety officials, for the purpose of notification, will use this letter.

Information will be collected in instances of vessels operating with no or invalid safety certificates. This information will be recorded and appropriate action taken. CSA 2001 will allow the issuance of monetary penalties for vessels operating in violation of regulations made under the Act.

Target date: Partially completed/ongoing. 2. Implement a formal, risk-based Under CSA 2001, TCMS is developing a approach governing the inspection of frequency inspection program for domestic vessels and those subject to the inspection of domestic ships similar to that port warden regulations. conducted under the Port State Control program. Whilst existing and future legislation requires 100% Port Warden inspections, the program will be assessed to determine if them is merit in establishing a targeting system, which would require regulatory change. This program is also being studied as a part of the current departmental comprehensive review.

Compliance with the Cargo Regulations will, in the future, be recorded in the Bulk Cargo database which has been approved for development.

Target date: May 2007 3. Evaluate existing functional direction, Whilst the recommendation is agreed, in light of the audit findings, and TCMS does use a multitude of ways to supplement where necessary to promote a advise and train inspectors on reporting and consistent approach to the conduct of maintaining details of inspections. The domestic vessel and port warden current material available to Marine Safety inspections, the reporting of results, the Inspectors, such as is contained on the maintenance of vessel files and the intranet, Notices to Inspectors and resolution of observed instances of non- guidelines, will be evaluated and updated compliance. where necessary.

Revised TP 4937 (2005), Notices to Inspectors, is currently on the TC’s intranet site.

The Marine Inspector’s bookshelf is continuously updated and distributed to all inspectors.

Advisory notices are continuously sent from the DG advising of any pertinent subject.

A Communications Plan to advise Inspectors on where to locate relevant Material will be made.

Managers will be charged to review inspection records made by their inspectors and this will be contained in their performance accords.

In order to foster a more consistent approach to compliance between regions, methodologies will be explored including exchanges of inspectors between regions and periodic national workshops for inspectors to better harmonize the conduct of inspections, reporting practices and to ensure that appropriate follow up actions are taken on instances of non compliance.

Target date: November 2006/ongoing. An improved methodology of recording non-compliance with regulations will be implemented through better utilization of the Ship Inspection Reporting System (SIRS). 4. Develop a framework to capture and A Marine Safety Management System analyze inspection results in support of Policy that incorporates Procedures and performance measurement and resource Instructions on the recording of deficiencies allocation decisions. has recently been approved. SIRS has been updated to capture these deficiencies and their rectification in a separate field.

Target Completion Date: Completed/ongoing 5. Develop a framework to formally Quality control mechanisms will be monitor the application of functional implemented to better ensure that direction governing domestic vessel, port inspection methodologies are more warden and PSC inspections. In consistently applied. particular, ensure that observed instances of non-compliance are addressed in a Managers are required to evaluate timely fashion and that evidence of inspection information, conducted by their corrective action is formally recorded. inspectors, documented accordingly and appropriate follow up action taken where necessary. Target is for 10% of files to be reviewed by the Managers including the matching of invoices against the post inspection reports.

The National Managers Technical Committee is currently reviewing the practices associated with invoicing for inspections to better promote national consistency.

Target date: Ongoing

[1] While this item was included in the original scope of the audit, it has been excluded and may be conducted as a separate audit at a later date.

[2] TSB Report - Marine Investigation Report - Sinking and Loss of Life Passenger Vessel "TRUE NORTH II" off Flowerpot Island, Georgian Bay, Ontario