Government Operations Committee on Oct. 20th, 2009

[Maurice Chénier, Chief Executive Officer, Information Technology Services Branch, Department of Public Works and Government Services]

Thank you, Madam Chair.

Members of the committee, my name is Maurice Chénier. I am accompanied by Mr. John Rath-Wilson, Chief Operating Officer, Information Technology Services Branch, and Renée Jolicoeur, Assistant Deputy Minister, Accounting, Banking and Compensation Branch, who is leading our department's pension transformation project.

We are pleased to be here to discuss the department's management of large IT projects and the service delivery approach for the GENS initiative.

Members of the committee may be familiar with some of PWGSC's large IT projects, such as SIGMA and the pension transformation project. In every large IT project, we are guided by the four criteria for success outlined in the 2006 audit by the Auditor General, Ms. Fraser: good governance, sufficient organizational capacity, effective project management and strong analysis leading to sound business cases.

For example, last year PWGSC successfully implemented SIGMA, a new financial and materiel management system. The SIGMA initiative adopted the Auditor General's four criteria and delivered the project on time and within budget.

Our pension transformation project will replace 40-year-old technology with state-of-the-art, commercially-available software products, streamline business processes, and centralize pension services within PWGSC. This initiative is also currently on budget and on schedule to meet its 2012 completion date.

I will now turn to Government Enterprise Network Services, a key initiative under the government's plan to modernize its data and voice networks. Our role at Public Works and Government Services Canada is to enable departments to use the GENS-related service and to assure quality performance and service delivery compliance.

GENS is a procurement vehicle that will permit departments, on a totally optional basis, and based on a validated business case in their own departments, to contract and consume readily available services from the industry.

The Auditor General, at the March 24, 2009, meeting of the Standing Committee on Public Accounts, stated that GENS is not a major information technology project. Rather, it is a contract for services. However, in developing GENS, we have been guided by industry best practices and are mindful of the Auditor General's recommendations. A dedicated, multi-departmental team has been set up to develop and deliver on GENS. We have implemented effective project management practices. We have put in place a sound governance structure, which is led by a multi-departmental steering committee.

Currently, each department is responsible for its own cabling, wiring, network, and communications services. Naturally, this has led to multiple service contracts, a duplication of resources and services, and excessive costs in the long run.

The long-term goal of GENS is to rationalize 124 separate government networks into fewer shared networks. The gradual standardization and use of shared telecommunications capability and capacity will yield benefits. IT security will be enhanced for the Government of Canada. Collaboration among departments will be easier. The government will be faster and more agile in deploying new applications. And there will be overall savings to the Government of Canada.

GENS' first partner is Human Resources and Skills Development Canada, which has more than 450 sites across Canada and requires urgent modernization of its telecommunications services. No other department will be migrated to GENS until it has developed its own business case and a cost-benefit analysis.

To engage private sector companies in the process and to hear their views, we have consulted broadly and will continue to do so. Three separate requests for information were conducted between 2006 and 2008. We held formal industry consultations between December 2008 and February 2009. In May of this year we released our operational justification business rationale and summary report on the findings to date. The draft solicitation of interest and qualification document, which sought more industry comment, was released in July and August.

While industry reaction has been generally positive, some concerns have been raised. In response, the department has incorporated changes to its procurement approach. Notably, general professional services have been removed from the statement of work, as requested by some small and medium enterprises.

While we are still analyzing the most recent input, we anticipate further changes to the procurement approach before going forward.

As we move forward in modernizing the government's IT environment, PWGSC will continue to engage industry in an open dialogue. We will also ensure balance between meeting the government's operational needs and the interests of suppliers, while providing best value to Canadians.

We would be happy to answer your questions.

[The Chair, Liberal, Yasmin Ratansi]

Merci beaucoup.

We will go to the first round. We'll go to Madam Foote for eight minutes.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

Thank you.

Thank you to you, as well, for appearing before us today as witnesses.

You know that we have had the discussion about Secure Channel and the issues associated with that and the take of the Auditor General and the public accounts committee on Secure Channel.

I'm interested in learning a little more from you about GENS and where we are with that, given the Auditor General's comments with respect to Secure Channel.

You say that each department will be responsible for developing its own business case for participating in GENS.

[Maurice Chénier]

Yes.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

And what involvement will Public Works Canada have in that, in terms of working with the department and looking at the associated costs the department comes up with?

[Maurice Chénier]

That's a very, very good question, and I will do my best to clarify the method that has been put in place to actually go forward with the GENS initiative.

Madame Corinne Charette, the CIO of Canada, made the same distinction as Madam Sheila Fraser made about large IT projects. There are two types of IT projects in the Government of Canada. The first type is to acquire a set of pieces of technology and to build a new solution for the Government of Canada, which is what we are doing with the pension modernization project, where we are building a business solution that requires Treasury Board approval and funding, etc.

The second type of IT project, which is very important, establishes a set of procurement vehicles for departments to use these services on an as-needed basis, if these procurement vehicles make economic sense when they reach the end of the life cycle of their IT infrastructure.

Going back to GENS, to be very clear, GENS' first client is HRSDC. We have consulted with the industry on how many contracts we will do—and we're not done. We have changed the approach so that HRSDC, upon the result of the next step in the procurement of GENS-related services, will update their business case and make the final determination if the pricing obtained from the competition of the GENS service is indeed yielding the return on investment and the cost/economic benefits associated with the GENS service.

We are not seeking Treasury Board approval for $1 billion in the sense of putting accountability on the Government of Canada for $1 billion. The contract that will go out for GENS will be a no-revenue guaranteed contract, meaning that it will cost zero dollars if the departments who are building their business cases one by one don't think it makes sense when their contracts expire. So if it doesn't make sense, they will use other vehicles and GENS will be totally optional.

So in working with Madame Corinne Charette, the real importance of this is when we engage government liabilities up-front, locking in a huge investment, and there are governance and take-up issues later. This is why GENS has been broken into.... The approach is to look at what the industry has to offer, to look at the market pricing in each department, starting with HRSDC, and no other department, on a scale of probably not more than $5 million to $10 million—if they go with the first chunk of services. HRSDC will proceed as the first client of GENS, and after that, departments will send business cases to Public Works and Government Services Canada and we will make the calculation whether the pricing of GENS is indeed better than their own method of running their network when it's at the end of its life cycle.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

And the objective is to have fewer contracts out there?

[Maurice Chénier]

The objective is to take advantage of shared capacity in major cities, and all of that. Definitely.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

You said there is some concern out there among SMEs with respect to procurement as a result of going down this path and having fewer contracts, and you anticipate some changes there. Give me an example of what those types of changes will be.

[Maurice Chénier]

Okay. The concern, first of all, has been around trying to make sure everyone understands—and we have been doing consultation to hopefully try to alleviate and put clarity in those technology dialogues, which is not always easy.

There is no such thing as a pre-committed $1 billion contract on GENS, first of all. It is optional. All of the departments have their own money to run their networks. They don't need new money to replace their networks. It's an ongoing operation. They need a vehicle to do so.

The small and medium enterprises have been rightfully concerned that maybe one contract would commit everything in one chunk of work to one industry player and that there's no other option or everything is locked.

There is still residual concern that GENS, the way it is packaged today, had some pieces of professional services still embedded in it that could be procured separately. We have issued a draft statement of interest for qualification this past July-August.

We have received a fair amount of very good feedback from large, medium, and small firms, and we are doing the analysis now to see what residual components of those concerns are still there, to see if more changes will be brought in.

[Judy Foote, Liberal, Random—Burin—St. George's, NL]

You're saying it's voluntary by department. So if a department has a really good relationship with a supplier, are they going to be allowed to continue that, even though the objective of GENS is to try to come out with fewer contracts?

[Maurice Chénier]

Yes. Where business requirements and operational reasons are clear, we are not eliminating the other contracts that are also providing data communications services. We are not putting all our eggs in one basket.

[The Chair, Liberal, Yasmin Ratansi]

Thank you.

We will go to Madame Bourgeois.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Thank you, Madam Chair.

Welcome to the committee, Mr. Chénier. I want to have your role here clear. Can you tell us where you were before you became being Chief Executive Officer, Information Technology Services? What were your duties, and where were you?

[Maurice Chénier]

Before obtaining the position of Chief Executive Officer, I was Chief Operating Officer at the Department of Public Works. So I was in charge of computer infrastructure operations for our department, Public Works and Government Services Canada. Just before that, Ms. Bourgeois, I was in charge of large projects in connection with the year 2000 conversion for that department. I oversaw the implementation of systems with Citizenship and Immigration Canada and Justice Canada and I also acted as architect and engineer for the Secure Channel project.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

So you were involved in Secure Channel.

[Maurice Chénier]

I played a role in Secure Channel.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

What sort of role? Were you in charge of Secure Channel?

[Maurice Chénier]

My role was as director of the implementation project, so it involved putting the project in place, with a project management approach and discipline, based on the needs expressed to me by the Treasury Board of Canada and our partner departments.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

So when the Auditor General of Canada said that there was no business case for Secure Channel, you were the manager?

[Maurice Chénier]

No ma'am, not at that point. I took over the project a little later, at the start of when operations were implemented.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

At the point when you took up that position in the Secure Channel project, did you present a business case?

[Maurice Chénier]

Yes, that was in 2005, I think. An analysis of costs and of how costs could be recovered in the long term was submitted to Treasury Board, which established parameters for striking the right balance and determining how to put the system into production, in December 2006.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

And yet in 2006, if I am not mistaken, the Auditor General of Canada identified deficiencies in this regard.

[Maurice Chénier]

Exactly. If I recall correctly, Ms. Fraser pointed to five elements in relation to Secure Channel. In 2004-2005 a business case was submitted, containing parameters that did not all materialize, for example maximum use of the secure channel. Some departments experienced a slowdown in their capacity to use Secure Channel.

Another aspect Madam Fraser actually noted was that governance, which was multi-departmental governance, led by Treasury Board, actually could have been tighter to make sure that there was commitment from every department to get on board as planned.

Madam Fraser also said that Secure Channel, as a project management delivery, with the other three projects she evaluated, has been well managed. In fact, if we look at page 25, paragraph 3.110, Madam Fraser said that in its entity as a project management delivery organization the solution was delivered. There's been some take-up issue and a governance issue in ensuring that it is there at the time everybody needs it.