Government Operations Committee on Dec. 8th, 2011

[The Vice-Chair, Conservative, Mike Wallace]

Let's get this meeting started.

This is meeting number 21 of the Standing Committee on Government Operations and Estimates. Today, pursuant to Standing Order 108(3)(c)(i), we are undertaking a study of Shared Services Canada, a new entity. We are honoured today to have the Honourable Rona Ambrose, the Minister of Public Works and Government Services, with her officials, to give us a presentation.

The floor is yours, Minister.

[Rona Ambrose, Conservative, Minister of Public Works and Government Services and Minister for Status of Women]

Thank you, Mr. Chair, and my thanks to my colleagues from the House of Commons for inviting me. Thank you for the opportunity to address the subject of Shared Services Canada.

With me today are Liseanne Forand, the president of Shared Services Canada, and Grant Westcott, the chief operating officer.

Thank you for the opportunity to discuss Shared Services Canada with the members of the committee.

Joining me today are Liseanne Forand, President of Shared Services Canada, and Grant Westcott, Chief Operating Officer.

Madame Forand has a distinguished career in the public service and was the COO of Service Canada before joining us at Shared Services Canada. Mr. Westcott comes to us from the private sector. He was the executive vice-president of technology infrastructure for CIBC, for the global bank.

Shared Services Canada was established earlier this year to reduce duplication in Government of Canada information technology, or IT, infrastructure services, to modernize the way we deliver services to Canadians, and to improve the security of federal IT infrastructure. The Government of Canada is the first national government to undertake such a fundamental IT transformation. Consolidating our IT infrastructure is the smart thing to do. We will be guided in this initiative by our duty to provide good service and our commitment to value for taxpayers' hard-earned dollars.

Consolidating our IT infrastructure is the smart thing to do. We will be guided in this initiative by our desire to provide good service to Canadians and save taxpayers' hard-earned dollars.

Of course, the case for taking this direction could not be more persuasive. As committee members are no doubt aware, the Auditor General has raised concerns about aging IT infrastructure within the federal government.

In the spring 2010 report, it was noted by the Auditor General that many IT systems “are supported by old infrastructure and are at risk of breaking down”. The report stated, “A breakdown would have wide and severe consequences—at worst, the government could no longer conduct its business and deliver services to Canadians.”

As part of Budget 2010, the Government of Canada committed to a review of its operations to identify opportunities for administrative savings and improving efficiency while also improving delivery of services to Canadians.

The administrative services review, as you know, focuses on administrative and overhead costs. This is a commitment to transformation and modernization. While it is a key part of restoring budget balance, it also provides a unique opportunity to enhance the mission-critical IT infrastructure that enables the government to deliver services at a lower cost.

Before Shared Services Canada was created, every federal government department and agency set up and ran its own IT infrastructure. This produced cumbersome and expensive infrastructure: 100 e-mail systems, 300 data centres, and over 3,000 networks across government. Simply put, our IT systems overlap, they are outdated, and they are inefficient. The government is years behind the private sector when it comes to IT modernization, but when we are finished, I believe we will be a world leader.

Enterprise-wide IT consolidation has been studied in other levels of government and the private sector and has been proven to yield efficiencies and savings. As part of our due diligence, Public Works and Government Services Canada contracted with PricewaterhouseCoopers to undertake a data centre feasibility study. The study was aimed at identifying potential actions to improve the efficiency of data centre management and service delivery.

Recommendations from this study were considered, along with a wealth of real-world experiences from other governments and private sector companies, in charting our government's course. Other governments and private sector companies have demonstrated that streamlining and consolidating in the areas of e-mail, data centres, and telecommunications is indeed the smart thing to do, and they are reporting substantial savings and efficiencies. Modern efficiencies lead, of course, to better service to citizens.

The Government of British Columbia, for example, began its consolidation in 2002 and reduced its data centres from over 100 to two data centres by 2011. As a result, energy costs alone are expected to be 50% lower. This is a proven model of success and is considered an industry standard.

I would encourage the committee to consider the experiences with shared services consolidation of organizations such as IBM, Hewlett-Packard, or the Canadian banking industry. The opportunities before us—namely, the ability to make the federal government's IT backbone safer, greener, and more efficient, as well as simpler, more modern, and sustainable—are long overdue.

Between 2006 and 2008, Hewlett-Packard, for example, has gone from 85 data centres to six globally, generating significant savings and resulting in greener data centres. The Government of Ontario reports that, at maturity, their IT consolidation is saving $100 million annually, representing 10% of total IT spending and between 20% and 25% of IT infrastructure spending.

In short, the on-the-ground experience acquired by both the public and private sectors indicates that there are important and real savings to be achieved through IT consolidations such as the one we have launched. This is about transformation and modernization.

Going forward, we are intent on maintaining productive relationships with our employees. They are very talented people who understand how we can achieve our objectives to transform the way the government does business to better serve Canadians. It was encouraging to learn that the Professional Institute of the Public Service of Canada supports in principle the streamlining and standardization of the government's IT systems to achieve efficiencies and cost savings, as well as the creation of Shared Services Canada.

As the minister responsible, I am confident in how we are creating this fundamental change. Shared Services Canada officials are actively implementing their strategy to engage employees, the IT sector, and client departments. Their governance model has been completed and is in the implementation stage.

Public Works and Government Services Canada employees who were already supporting IT infrastructure services became Shared Services Canada employees on August 4. Responsibility for e-mail, data centres, and network services in 42 other departments and agencies was transferred to Shared Services Canada in mid-November.

The new senior management structure of Shared Services Canada has been announced. The transition plan that will guide Shared Services Canada to become a stand-alone department by April 1, 2012, is well under way.

I am very excited about what we're going to accomplish and I am confident that this initiative will produce savings and reduce the government's ecological footprint, while strengthening the safety and security of government data. It will also create efficiencies by realizing economies of scale and making it more cost-effective to modernize services, while improving infrastructure and service delivery.

I want to add that we are committed to ensuring that this initiative contributes to the deficit reduction action plan.

Information technology is essential to supporting our business and delivering services to Canadians, but it costs taxpayers more than it should. We can do better. Like other departments, Shared Services Canada will identify 5% and 10% savings for consideration by the government, including areas in which it will streamline and save. The results of this work will be reported in Budget 2012.

We will move to one e-mail system. This will save money and make it easier for Canadians to find the people they need to contact and for public servants to conduct their work. Information technology should support accountability, and we are determined to make sure it does.

We will save more taxpayer dollars by reducing the overall number of Government of Canada data centres and ensuring those that remain are robust, secure, and energy efficient. Over the medium term, this will mean reducing the number of data centres from over 300 to fewer than 20, while shifting to more modern and efficient systems.

We are also committed to reducing the number of networks that connect to data centres and to streamlining networks in our buildings.

To support this work, and when it makes sense to do so, the Government of Canada will pursue public-private partnerships.

In conclusion, our approach to IT is modelled on proven success in both the private and public sectors and is the smart thing to do. It's the safe thing to do, it's also the green thing to do, and it is the sustainable thing to do.

Canadians rightly expect our government to manage taxpayer dollars in a fiscally prudent and responsible manner. l am confident that the establishment of Shared Services Canada will result in modern, reliable, and secure IT infrastructure services at a reduced cost to the Canadian taxpayer.

After examining the evidence and hearing the witnesses, l'm sure you will agree with me.

l would be pleased to answer any questions you may have.

Thank you, Mr. Chair.

[The Chair, NDP, Pat Martin]

Thank you very much, Minister, for that interesting presentation.

I know that committee members have been eager to get started on this study of the new entity of Shared Services Canada. I'm sure they have many questions. We'll begin right away with the official opposition and Denis Blanchette.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you, Mr. Chair.

Welcome, minister.

I hope that we will have the opportunity to see Ms. Forand and Mr. Westcott again so that they can answer more questions. What we have before us is very important. The President of the Treasury Board—I think it was last week—talked about transforming the public administration. This is the first example of that transformation. I feel that an in-depth study on this would be worthwhile.

You said that public servants were doing excellent work, and we agree with that.

The report says that the transition will cost $145 million. Logically, that means that we have to invest to be able to save money later, if that is the actual goal.

I would like to know how you plan to really generate savings in the short term as part of the government's budget-balancing exercise.

[Grant Westcott, Chief Operating Officer, President's Office, Shared Services Canada]

Mr. Chairman, our transformation program is estimated to cost in the order of $375 million. That's to take us from 100 e-mail systems down to one, to consolidate approximately 300 data centres down to less than 20, as the minister has mentioned, and to do a substantial amount of work in the corresponding networks that support the execution of the data centres.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Westcott, I know that you will give me a detailed explanation of all that. I hope that you will do so when I see you again.

There is one thing I'd like to know. My question is for the minister. It seems that we first need to invest in creating the infrastructure necessary for the required computer tools, so that we can then save money. Isn't it premature to think that we can save money in the short term? I think that savings will be generated in the medium term, but that will not immediately contribute to the return to balanced budgets. That's my question for you, minister.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Sure. There are three... If you look at this, because this is of course an eight-year plan, as you know, and as you rightly indicated, there are quite a bit of savings in the long term, but there are also savings in the short term. As you know, in the last few months since establishing Shared Services Canada, a lot of it has been about stabilization: stabilizing the workforce and stabilizing the services, remembering that our IT delivers critical services and essential services to Canadians. It's important as we move forward to always ensure that we can continue to operate and that our client departments can deliver those important services to Canadians.

Then, of course, as you know, we're talking about e-mail, networks, and data centres. Consolidation is the next step. Then we move to the opportunity for transformation. We are able to foresee, just in the consolidation of certain elements—like contracting, for instance—savings that we can harvest in the very short term. But for the larger savings for a transformation project like this, you're right to say that they will happen in the long term.

Grant, did you want to add anything to that?

[Grant Westcott]

Yes. By way of example, in terms of generating short-term savings, because we've consolidated 43 departments together, we get a consolidation dividend because we need less management and less corporate overhead.

The second thing, as the minister has said, is that we've also inherited a whole series of contractual arrangements that were negotiated within the context of each individual department for all ranges of things: software licensing, hardware maintenance agreements, and this type of thing. By examining those contracts, we can look at all the contracts that are there. We know already that there are wide variances in pricing. By consolidating them, we can then go to the lowest price by aggregation of the contractual arrangements and thereby reap savings that way.

A third way is though telephony modernization. By way of example, today the Government of Canada has 330,000 Centrex phones. That's a technology that was invented by Nortel approximately 60 years ago. Today that continues to cost $31 a month per phone. We can substitute the voice over IP phones that cost $15 per month. There is another example of a short-term benefit.

[Denis Blanchette, NDP, Louis-Hébert, QC]

That's okay, but I would like us to discuss this further later on. Our committee time with a minister is precious. We are very happy to have her with us.

[The Chair, NDP, Pat Martin]

Denis, I'm afraid there's no time to ask a further question anyway, as we're well over time.

Next, for the Conservatives, Mr. Jacques Gourde.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you, Mr. Chair. I also want to thank the minister for joining us today, given her busy schedule. I thank her for setting an hour aside for us, and I think all the members of the committee appreciate it.

Minister, in your opening statement, you said you were intent on maintaining productive relationships with employees, owing to their considerable talents. Employees understand how to save money, create money-saving opportunities, and enhance IT security and structures within the government.

How did you consult employees about the creation of Shared Services Canada?

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

Chair, as I indicated in my opening remarks, we have a great capacity within the Government of Canada in terms of our public servants working in the IT field. In fact, across the government departments, the reaction from employees working in IT is that they are very excited about this undertaking.

We have been briefing all our bargaining agents in order to keep not only employees but also union officials informed of the developments. Senior officials, including the president, have met with the presidents of both the Professional Institute of the Public Service of Canada and the Public Service Alliance of Canada, and five of these high-level meetings have taken place so far. In addition, Shared Services Canada officials have also met with other union officials.

We also held a workshop recently between Shared Services Canada and the Professional Institute of the Public Service of Canada to outline the next steps for working together and supporting employees. This meeting then resulted in a joint transition steering committee and four subcommittees that will work on issues such as staffing and labour relations, communications, and a consultation framework and governance.

Shared Services Canada has identified contact leads for each of the 43 departments and agencies, and mechanisms for regular communication and consultation have been put in place to ensure that all employees are kept informed. There have been many, and will continue to be many, site visits to meet as many employees as possible.

Again, going forward, we are intent on maintaining productive relationships with our employees. They are very talented people who best understand how we can achieve our objectives.

It's important to remember that this is about improving services to Canadians. We do need a modern, reliable, secure infrastructure to provide Canadians with the quality of services they deserve, and, frankly, employees who work in this area know this best, so we are calling on them for ideas. They want to be a part of this transformation. They are excited about it.

Liseanne has been the one working very closely with the unions and with employees, so I will ask her to just make a further comment.

[Liseanne Forand, President, Shared Services Canada]

Thank you, Minister.

Very briefly, we have offered to approximately 85% of our employees the opportunity to take part in an information session with either Grant Westcott or me or with some of our ADMs. We've all been really encouraged by how eager they are to contribute. What we hear a lot at these sessions is they recognize that the way in which the Government of Canada currently operates is not as efficient as it could be. They are the experts. They know that, and they all have ideas on how they would like to contribute to the transformation we're talking about.

We know they are excited. We're working with them, and at the same time we're working with their bargaining agents to make sure we can help them appreciate how to organize their representation for people stretched across 43 different departments, and how we can streamline the processes between those departments and Shared Services Canada.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Minister, the Minister of Finance recently addressed the Canadian Club of Toronto. He announced that pre-budgetary consultations would start at the beginning of next month. He also said the 2012 budget would continue prioritizing economic growth, the protection of Canadian jobs, deficit reduction and the return to a balanced budget in the medium term.

You said in your opening statement that Shared Services Canada would contribute to the deficit reduction action plan and that the results of those efforts would be included in the 2012 budget. Could you please expand on that a bit?

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

As I indicated, we believe it's important that Shared Services Canada also contribute to the deficit reduction action plan. It allows us the opportunity to work toward our goals of consolidation, because as Grant has expressed to you, some of the benefits of consolidating across 43 departments are immediate. We can harvest those savings and we can be a part of the deficit reduction action plan. Shared Services Canada, like all other departments, will put forward a 5% and 10% recommendation for savings toward the deficit reduction action plan.

The side benefit of that is that we are able to consolidate, and that will actually create better services for Canadians, while saving money for taxpayers and resulting in efficiencies.

[The Chair, NDP, Pat Martin]

Jacques, that concludes your time. Thank you.

Thank you, Minister.

For the NDP, Alexandre Boulerice.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

Minister, thank you for joining us this afternoon.

I would first like to clarify the following. We all agree with public assets being used efficiently. We do want people's money to be spent in the most efficient and effective way possible. I think that, in general, what you're aiming for is commendable. However, we are worried about how you plan to get there, how you intend to handle certain matters.

You will reduce the number of data centres from 308 to 20. I would like to know how many jobs will be cut once that measure is implemented.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

I appreciate that question.

As I said, and you reflected as well, this is about improving services to Canadians. Our employees are very involved in the desire to see that transformation as well. From what the Auditor General said, the Government of Canada clearly needs a modern, reliable, and secure infrastructure so we can provide the quality of services they deserve. The current approach is clearly inefficient. It's duplicative, it is aging, and it's fragmented, which means we are spending too much money and we're spending it on the wrong things. We're not spending it on making sure those services are delivered efficiently.

We will be examining a variety of options and business models as we move forward. Once we've identified the best options, we will be developing detailed plans in each of these three areas. Until that work is completed, any impacts, including the nature and size of the workforce that will be required, are not known. In the event there are FTE reductions, Shared Services Canada will manage those reductions through careful human resource planning and with a view to minimizing the impact on indeterminate staff. As I said before, we will respect our commitments to employees and we will keep them informed as these plans move forward.

As Liseanne said, we have had good meetings with employees. They want to be a part of this transformation. I feel very strongly that we have a lot of good capacity within the Government of Canada working on IT to help us with this IT transformation as we move forward. Every step of the way we will not only include our employees in these plans but keep them informed.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, minister.

I am surprised, even stunned. This is one of the rare times I have heard of employees being enthusiastic about losing their job at the end of the process.

A little earlier, you talked about the money that could be saved through outsourcing. I would like to get an idea of how much expertise will be lost in the public service once whole sections of Shared Services Canada start being handled by the private sector. What role will subcontractors and their supposed savings play?

In a previous life, I often heard about savings generated through outsourcing, but that was not always the case at the end of the year. What percentage of services will subcontracting account for in this new organization, Shared Services Canada? Are we talking about 20%, 40%, 50%?

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

In what area? What is your specific question?

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

You talked about using outsourcing to save money. That's what you said earlier. How much will subcontracting be used? What services will be outsourced to the private sector? What will be the impact of the loss of expertise in the public service?

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

I think you're referring to my remarks in my opening statement that as we move forward, and where feasible, we will also examine public-private partnerships.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Don't you have a more specific answer about the use of subcontracting and the private sector? Will it be done systematically, will it be very extensive?

Outsourcing to the private sector may lead to a loss of expertise in terms of our computer systems. In the province of Quebec, the Duchesneau report showed the dangers of losing expertise in the public sector. That loss makes it impossible to assess whether or not the contract submitted by the private company is reasonable.

[Rona Ambrose, Conservative, Edmonton—Spruce Grove, AB]

I think you're getting a little bit ahead of where we're at now, which is stabilizing the workforce and looking at consolidation of existing contracts across the 43 departments, which is what we are working on now and what Grant was alluding to.

I said in my comments that as we move forward over the next eight years, when we look at different options and models, public-private partnerships will be something we will also obviously consider. We're looking to not only expertise within the public service but also meeting with the SMEs and the ICT sector, which we're also doing consultations with.

[The Chair, NDP, Pat Martin]

That is all the time you have, Alexandre.

Next is Bernard Trottier.