Government Operations Committee on Nov. 6th, 2012

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

To our witnesses, first of all, I applaud you on your progress to date. I think it's great how much you've accomplished and great that you want to continue to streamline and reduce the duplication in our government IT services. It's still a bit mind-boggling why getting to this point has dragged on for so many years, but I'm glad that we're bringing all the services into I think this much-needed and efficient perspective in today's world of cybersecurity.

I wanted to follow up on my colleague Mr. Trottier's comments about the aspect of security. Yesterday I had the pleasure of hosting my provincial colleague, Minister Ben Stewart, from the B.C. government. I'm the member of Parliament for Kelowna—Lake Country in B.C. The British Columbia government has been very progressive on this initiative. I believe they received an award last night at the government and technology event, which is very timely. Thousands of people are in Ottawa this week talking about Shared Services Canada and the buzz in Ottawa, and how we can use that Canadian technology to help streamline and, as I said, reduce the duplication.

From the security perspective, though, I know that it's not only here but around the world.... I was in Japan last week with our trade committee, working with our Canadian embassy on concerns with international safety and security in the cyberworld. One of the things that we understand is unique in this procurement process is called the national security provisions—I think it's called the NSE. What does it stand for? I think it stands for national security enterprise or something to that effect.

[An hon. member]

Exemption.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

That's it—or national security exception, which I believe I read online.

The problem is that we're trying to ensure Canadian contractors and the safety of Canadians using Canadian companies as principal jobs.... Maybe you can explain to us a little more why the minister has gone down this road of NSE. Do you believe the concern with security will stop the untrustworthy vendors?

[Liseanne Forand]

Thank you for the question.

As was mentioned right from the outset here, perhaps in the first question I received, it has been obvious since the establishment of Shared Services Canada that one of the government's objectives, in addition to greater cost efficiency and better service, was to have a more secure IT infrastructure for the Government of Canada. We knew that security was going to be a focus of ours and a priority of ours from the beginning.

So from the very outset we consulted, as I mentioned earlier, with the Department of Justice, the Department of Foreign Affairs and International Trade, the Department of Public Works and Government Services, CSEC, and our Public Safety partners on what the vulnerabilities were that we would be facing as we built a new e-mail system and transformed the data centres and the networks.

As a result of this consultation, we came to the conclusion that in order to protect Canada's national security interests as we go forward with all of this, it would be relevant to invoke the national security exception. “Exception” is the word; it's the exception to the provisions of the trade agreements. That is essentially what it means. It's a provision that is in all of our trade agreements. It says that if it's required in order to protect national security interests, then governments can derogate from their obligations under those agreements.

But you have to do it in an organized way, which is what we did. There was a notification posted on MERX that summarized the analysis, which came to the view that because of the sensitivity of the systems, the interconnection of the systems, and the sensitivity of the information that is kept on those systems—all the private information of Canadians as well as national security interests—it was appropriate to invoke the national security exception. That's what we did.

What this does is remove us from the obligation of all of the provisions of the trade agreements. Essentially, the key ones are that we can specify country of origin without being subject to a trade tribunal complaint, and we can also not make public our requirements. You will understand that if we are designing the infrastructure and the architecture for a new, modern networking configuration for the Government of Canada, it's not something we would want to advertise. It's not something we would want to put on MERX—that this is what we're building, and this is how we're building it, and this is what we need you to do.

The NSE gives us the flexibility to keep things out of the public domain when we need to and to specify our requirements in terms of security, in terms of country of origin, etc.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Basically, it makes it as safe as possible for Canadians.

[The Chair, NDP, Pat Martin]

Your time has expired.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you very much. I wish you continued success.

[The Chair, NDP, Pat Martin]

Thank you.

John McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

I think you said at the beginning that you inherited something like 6,200 employees. As you look at these cuts of $150 million, plus a potential $80 million, how many employees do you think you would have when you're fully functioning in the new system—approximately?

[Liseanne Forand]

In the first instance, in looking at our deficit reduction action plan targets—I mentioned at the beginning that we looked at how we could save the $150 million over three years—we wanted to protect our operational capacity, and we didn't want to jeopardize our ability to complete the transformation in the timelines that had been provided to us by the government, so we identified the items that we did.

Our expectation is that the $150 million will not have a big impact on our labour force. That was actually also a consideration of ours.

For example, we've identified $25 million in reductions in internal services. As I mentioned, we're doing that by not building rather than by cutting, so we do not identify any FTE losses. Well, we identified 250, but they weren't people that we already had. That was money we received from departments which we had not used for staffing yet, so we have not had to declare any employees affected or surplus in Shared Services Canada as a result of this. The 250 FTEs are related to internal services—those are jobs we are not filling—and then an extra 50 jobs over the three-year period will be affected in the telephony area. We're confident that we can manage those reductions through attrition.

[John McCallum, Liberal, Markham—Unionville, ON]

So it will be only 50 out of 6,200 over a three-year period—

[Liseanne Forand]

Over the next three-year period to achieve the reductions that we've identified as part of budget 2012.

[John McCallum, Liberal, Markham—Unionville, ON]

It's not that I'm favouring firing people, but I would have thought that if you consolidated 42 departments into one you would have more people than you needed because of that consolidation.

[Liseanne Forand]

We have put in place something we called our workforce management strategy. The focus of that workforce management strategy is really to manage our way through this transformation. One of the provisions of that strategy is to favour continuity of employment for indeterminate employees. We want to manage it. We have a five-to-six-to-eight-year runway, if you will. We want to manage attrition. We want to manage our contingent workforce, whether they're casuals, terms, or contractors, in such a way as to provide continuity of employment for our indeterminate staff.

But with respect to the 300 FTEs to date, that is with respect to the 150. I think, as one of the other committee members said, that IT is continually evolving. So it's difficult for us to predict now what that IT infrastructure staff complement will look like in six or eight years, because we will have new and different kinds of requirements.

[John McCallum, Liberal, Markham—Unionville, ON]

Coming back to this long list of contracts, I didn't add it up, but it looks like it's somewhere between $1 billion and $2 billion. Will the value of these contracts be smaller than it is on this list? Is that one of the sources of savings?

[Liseanne Forand]

Yes. As we go through our transformation exercise, we are moving from 63 e-mail systems down to one. We will have some way of sourcing a supplier for that e-mail system, which will operate one solution across all of government. Right now, our 43 departments have at least 63 different contracts out there. That's just a small example. Without going to a single mega-contract, we will be maintaining a diversity of suppliers, but not diversity to the extent that you are seeing here.

[John McCallum, Liberal, Markham—Unionville, ON]

So you will have a smaller number of contracts. Will you have a smaller total value?

[Liseanne Forand]

We expect that we will, yes.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you.

[The Chair, NDP, Pat Martin]

Costas Menegakis.

[Costas Menegakis, Conservative, Richmond Hill, ON]

Thank you, Chair.

My thanks to our witnesses for appearing before us today.

I think everybody would agree that SSC is a new department. It has an ambitious mandate. In your concluding remarks, Madam Forand, you stated that a lot has been done, but that you need to do a lot more to realize all of the objectives the government has set for the department. I think you should be commended on the tremendous work that has been done so far in such a short time.

I wonder if you could share with us some of the economies of scale that you have realized by consolidation. Would you be able to share some of those economies of scale with us?

[Liseanne Forand]

Thank you.

We do have a wealth of opportunity when it comes to economies of scale. For example, when we inherited—of course, we inherited people, equipment, and contracts, etc.—we also inherited projects. When we started looking at these projects last winter, we estimated that we had inherited 750 projects “in flight” across the 43 departments. Those projects are already under way. They've been approved by the individual departments.

What we found in going through those projects is that there were several places where they might have five video conferencing projects all going on at the same time, with five different suppliers, five different ways of going about it, and five project management teams. We've been able to consolidate some of those projects. We've cancelled some. We've ended some. That's one example.

This is another very practical example. One department had a data centre in Regina that was nearing the end of its life, and it was part of their plan to build a new data centre on a floor of an office building in Regina. We found that another department in Regina had space in a different data centre, so we were able to not do that build there.

Earlier I mentioned CommVault data centre services, with which we have a contract. We've consolidated and will be saving $15 million and avoiding costs of $15 million over the next three years.

As I said, our back office received a transfer from departments of 13% to set up our internal services. We are aiming for internal services of no more than 11%, so we're just slashing 2% off the top, because we figure that we are able to use common business processes, and we're able to go on financial systems and human resource systems that other departments have put in place, because we believe in doing things that way. As well, we can leverage technology and look at self-serve kinds of solutions for our employees going forward.

Those are examples, but we have had a lot of them. We had a video conferencing system that Agriculture Canada had in place that was one of the better ones among all of the departments, and we were able to bring four other departments onto that same video conferencing system instead of having them develop their own.

That has permitted, among other things, service quality, which is part of this as well. Passport Canada, as a result of being able to use Agriculture Canada's video conferencing, can now video conference with its regional offices, which it couldn't do before.

Those are just some examples.

[Costas Menegakis, Conservative, Richmond Hill, ON]

One of the other things we're looking at in this committee is energy efficiency across our government infrastructure. What can you tell us about some of the environmental benefits arising from the consolidation?

[Liseanne Forand]

I'm going to turn this one over to Grant, because particularly on the topic of data centres I think it's very promising.

[Grant Westcott]

You've seen the numbers before. We've said that we have about 300 data centres. That breaks down into 20 large ones, with 65 in the middle, and a balance of smaller ones. In aggregate, that adds up to about 600,000 square feet of data centre floor space.

I've had an opportunity to actually visit 18 of the original 20 big ones. By and large, all of those data centres were built in the late seventies and the early eighties, using standards that existed at that time. Two things have happened through data centre evolution. The first thing is power efficiency and cooling efficiency, because those two things come in tandem in a data centre. When you power something, it creates heat, and you have to turn around and cool it, so you get that double effect.

New data centres are much more efficient. They're built to much higher standards, so there's a bonus in that you use less power. They're enormous power hogs.

The second thing, because technology is a lot more compact, is that you can use much less floor space. We estimate that instead of using 600,000 square feet, by the time we've finished all of the work we'll get to somewhere around 200,000 square feet, so there is a 3:1 space advantage just by taking advantage of advances in technology and that sort of thing.

All of that adds up. By the time you have increased efficiency and less floor space, you're going to end up with an environmental bonus at the end.