Government Operations Committee on Nov. 28th, 2017

[The Vice-Chair, Liberal, Yasmin Ratansi]

I call the meeting to order.

Ladies and gentlemen, our chair seems to be indisposed. He will be here momentarily. In the meantime, I'd like to welcome the minister and ask the minister to introduce the people who are accompanying her.

With that, Minister, you have 10 minutes for your opening remarks.

[Erin Weir, NDP, Regina—Lewvan, SK]

Before that, I was just wondering if we could clarify whether the minister is going to stay with us for a full hour?

[The Vice-Chair, Liberal, Yasmin Ratansi]

Yes. She's staying with us for a full hour. Isn't that right, Minister?

[Carla Qualtrough, Liberal, Minister of Public Services and Procurement]

Yes. You have me for an hour. I moved things around. It's all good.

Thank you. Good morning, ladies and gentlemen. It's a privilege to be here with you today.

Of course, this is my first meeting with your committee in my new capacity. I'm joined today by deputy minister Marie Lemay and associate deputy minister Les Linklater from Public Services and Procurement Canada, as well as Ron Parker, who is the president of Shared Services Canada. They each have a couple of officials with them. Both organizations provide services that are critical to federal government operations and to providing programs and services to Canadians.

Today I'll update members on key priorities in the supplementary estimates (B), but first I want to talk about our number one priority, which is to stabilize the Phoenix pay system, of course.

Madam Chair, there's no higher priority for our government than providing public servants with reliable and accurate pay. More than half of public servants are facing some form of pay issue, and I am truly sorry for the hardship this situation is causing them and their families. We're doing everything it takes to resolve this completely unacceptable situation.

Last week the Auditor General tabled his first report on Phoenix, which confirmed the findings of earlier reviews, such as Goss Gilroy. Our government accepts all of his recommendations and has already taken steps to fully act on them.

In my opinion, the decision by the previous government to treat pay modernization as a cost-cutting measure instead of a complex enterprise-wide business transformation exposed this project to significant risk. They spent $309 million to create an unproven and flawed pay system and prematurely booked $70 million per year in savings. The design and implementation were rushed and staff were not trained. In fact, 700 specialized compensation staff were terminated before Phoenix was launched. Many were given notice as early as April of 2014.

When Phoenix was launched, the existing pay system, which was slated for decommissioning, was in poor shape and at high risk of failure. Senior officials advised that Phoenix was ready to go. Frankly, there were no other options on the table.

With all this being said, while we didn't create this problem, it's ours to fix. Once launched, Phoenix's problems ran so deep that it took time to understand what was wrong and to identify solutions to stabilize the system. These serious issues continue to present challenges today.

As the Auditor General notes, there is no quick fix, but we're going to do whatever is necessary to ensure that public servants are paid accurately and on time. To get this right will require time and additional investments.

We are implementing a series of measures focused on bringing the pay system to the point of stability. These measures, developed with employees, departments, agencies, and unions, build on previous actions. They aim squarely at reducing the backlog of late transactions and wait times for missing pay.

Going forward, our efforts to stabilize the pay system fall into four broad areas, namely, governance and informed decisions; improved processes and technology; increased capacity and service; and partnership and engagement.

Robust governance is key to making accountable and informed decisions. The working group of ministers created by the Prime Minister in April is ensuring that we take a whole-of-government approach.

An integrated team of senior officials from PSPC and Treasury Board Secretariat is leading our overall efforts to stabilize the system. Their work is supported by a deputy minister's oversight committee and interdepartmental working groups.

To improve processes and technology, we are addressing the root causes of problems in connecting human resources to the pay system, including the inconsistency between Phoenix and the patchwork of 32 HR systems in place across government. Many current pay delays are the result of common HR practices and processes that don't work with Phoenix. Solving these issues means looking at how pay requests are generated in departments—the HR processes to enter transactions, approve them, and send them to Phoenix.

Our solution is integrated from initial staffing action to pay request to pay receipt. A holistic approach ensures our pay system works effectively and efficiently from start to finish.

To increase capacity and improve service, the Government of Canada announced in May an investment of $142 million to hire more compensation staff. Since then, 380 employees have been hired, which brings the total number of compensation staff added since going live to 680, in effect more than doubling the staff complement we had when Phoenix was launched. We plan to add up to 300 more over the next several months.

Finally, we are strengthening partnerships and engagement.

A union-management committee on Phoenix meets regularly to discuss issues and solutions. Also, we are providing and will improve reporting and data analysis to departments and agencies that will better inform decision-making.

While our immediate priority is to stabilize the pay system, we are also exploring longer-term options to ensure we have a system that is sustainable, reliable, and efficient.

I would like to now turn to other key priorities, beginning with the review of Canada Post Corporation.

The committee's report provided important guidance to the government. We heard you loud and clear on the need to balance the delivery of an important public service with business sustainability.

Canadians can expect an announcement on the future of Canada Post Corporation in the not-too-distant future.

With regard to Shared Services Canada, our government has already taken concrete action to ensure it has the resources needed to deliver enterprise-wide IT infrastructure that is modern, secure, and reliable.

For initiatives that are now under way, $359 million in new funding was provided in the 2017 fall economic update. Another $106 million will support ongoing projects to better defend government networks from cyber-threats, malicious software, and unauthorized access.

This funding addresses key points contained in an independent external review, which concluded that a centralized shared service delivery model for IT infrastructure is the correct approach but which also found that Shared Services Canada has an operational funding gap.

Modernizing federal procurement is another key priority. Procurement needs to be simpler, faster, and better focused on results. Work is well underway to bring federal procurement firmly into the 21st century. For example, we are streamlining requests for proposals to make it easier to bid on government contracts, and are considering how we can pay our suppliers faster.

We are working toward a new e-procurement solution.

To increase competition and achieve better value for Canadians, we now allow bidders a second opportunity to comply with some mandatory requirements before making final assessments and contract awards.

Beyond making a purchase at the lowest price, we want to leverage procurement to effect positive change, grow our economy, and build a better country for all Canadians. The procurement strategy for aboriginal business, for example, is designed to foster aboriginal business development and participation in federal government contracting. I am pleased that this committee is now examining this strategy.

Our procurements must also be accountable, ethical, and transparent. Yesterday I announced that we will develop guidelines with respect to the ethical procurement of apparel. Canadians want to be assured that the clothing worn by public servants in uniform is made from ethically sourced materials.

I'll turn now to the national shipbuilding strategy, which is rejuvenating our marine industry, supporting Canadian innovation, and bringing jobs and prosperity to many communities across Canada.

In Vancouver, Seaspan Shipyards has completed the first of three offshore fisheries science vessels. This is a significant milestone for our shipbuilding industry.

In Halifax, the construction of the first two Arctic and offshore patrol ships is well under way, with the first ship over 60% completed. Delivery of this ship is scheduled for 2018.

We're also moving forward with the largest project, the Canadian surface combatant, which will form the backbone of the Royal Canadian Navy. Bid solicitation closes in two days, and the bids will be evaluated jointly by the Government of Canada and Irving Shipbuilding. This process is expected to be completed next spring, when a preferred bidder will be selected.

I have a few words now on the supplementary estimates (B) for 2017-18.

Shared Services Canada is seeking $23.5 million in additional funding. This involves transfers of $8.8 million from other departments, including Public Services and Procurement Canada, to support projects, as well as the re-profiling of $13.5 million from 2016-17 initiatives, such as the renewal of high-performance computing storage and services for Environment and Climate Change Canada.

I recently helped unveil the new supercomputer at the Canadian Meteorological Centre in Dorval, which will produce information that will benefit families, industries, and anyone who relies on accurate weather forecasts in their day-to-day lives.

Mr. Chair, I want to thank the employees of Shared Services Canada and Public Services and Procurement Canada for their commitment to excellence in all that they do. I especially acknowledge the employees at the pay centre and our satellite offices, as well as the compensation staff in departments and agencies not serviced by Miramichi for their tireless efforts to ensure that their colleagues are paid on time and accurately.

Thank you. I'm happy to answer any questions.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Minister.

Thank you also for agreeing to be with us for the full hour to allow our committee members to ask questions. I know originally we had scheduled you from 11 a.m. to 12 noon.

Mr. Parker, Ms. Lemay, it's good to see you both again.

We'll start immediately with questions. We'll go to a seven-minute round, starting with Ms. Ratansi.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you, Minister, for being here. I'm hoping that you're settling well into your new role.

As you know, we've been seized with Phoenix because we believe that nobody should be left without pay. I'm sure you all agree with that.

In the Auditor General's report, we note that 1,200 pay advisor positions were eliminated in 2014. This elimination of institutional memory has caused some of the challenges that you talked about. The savings of $70 million that were recorded were premature, so it was ill thought through. The complexity of what Phoenix was supposed to do, the merging of 46 departments and then another 101 departments, was not realized by the previous government. We understand there is no plan B, that there's no alternative to Phoenix, and so the government will not scrap it.

Going forward, to ensure that we do have some sustainable solutions, what are some of the steps you're taking, Minister, to ensure that we have certain structural changes? If you could help us understand what's going on, it would be appreciated.

I see that Mr. Les Linklater is here, who is perhaps the Phoenix expert.

[Carla Qualtrough, Liberal, Delta, BC]

Thank you for the question.

There's a lot of detail in there, but I'll focus on the actions moving forward.

We have put our measures into what I would call four buckets, or bigger areas of focus, as we move forward towards stabilization and ultimately a fully functional, integrated HR-to-pay system.

I pause to say how important it is to understand that this isn't just about a piece of software; this is an end-to-end user experience in which the way people input the data into HR systems, the way the HR system then connects and interacts with the pay system, and the way the pay system then generates pay are all connected. We talk about Phoenix, but what we're really talking about is a massive end-to-end HR-to-pay experience. When I use the term “Phoenix”, I'm going to be using it in that broad context, not simply as the PeopleSoft software that is the IT piece of this.

Anyway, of the four areas that we are focusing on, first is our governance and oversight. We're putting rigour and thought into how we are ensuring accountability and oversight, starting with the ministers' working group, then the integrated team led by Les—which is also a partnership with Treasury Board—and then the deputy ministers' oversight committee.

As we move forward, we're going to build and maintain those governance structures. We have a project management office. We are looking at a performance measurement and reporting framework in developing performance metrics. There are metrics that we track already, and have for some time, but what other metrics can tell us that there's continuous improvement and that we're steering in the right direction? We're looking to establish an expert advisory panel, which is well under way.

The next thing is business processes and how we are going to improve them. We're looking at adjusting the pay centre delivery model and implementing the concept—which Les could elaborate on, but I won't, due to time—of pod pilots, whereby we really focus on getting the same group of people to attack the same type of transaction over a long period of time.

We're conducting and assessing a root cause analysis to implement short-term priority fixes, so we're looking to understand not only the root causes of these technological and business process challenges but also what we can do now as short-term fixes. Quite frankly, these could be workarounds or could make a system more clunky, but in the meantime we want to know what short-term fixes we can put in place>

We're doing an HR-to-pay assessment. We're looking at what policies we have to change. For example, is it how we manage acting pay that causes a challenge when that acting pay request is put into the HR system and then flipped to Phoenix? All these different processes have to be looked at under the lens of the end end-user experience, and of course we're looking at the technological changes, challenges, and fixes, if you will, that will have to be put in place.

Increasing capacity is the third big bucket, primarily referring to the human resource capacity. As you've said, and as I've said in my speech, we've already hired 380 people. We're putting in place 300 more to try to augment the human resource capacity needed to actually run these systems. We've created a client contact centre to help public servants get the support they need to navigate this system. We are realigning the IBM contract to add some capacity there—

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Minister, I probably have one minute left. I'm just going to ask you one last question.

In all these governance structures that you have implemented, what are some of the challenges you are encountering?

We've heard about the ministers' working group and the DMs' working group, Madam Lemay has been here about six times already, and we've heard repeatedly about moving forward. The underlying problem hasn't been solved. Could you give us some analysis of what's being done there and what the challenges are that you face?

[Carla Qualtrough, Liberal, Delta, BC]

The overarching challenge is understanding the whole-of-government approach to getting this steering in the right direction. This is not just the responsibility of PSPC and Treasury Board, although the leadership and accountability definitely lie there. This is a whole-of-government approach, because it isn't just the pay centre in Miramichi. It's the satellite offices. It's the other departments that have HR and pay in place. We have to look pan-governmentally at all the challenges, the systemic challenge, whether it be policy, process, technology, or training. That all has to come together. I think we now have a pan-governmental view on where we need to go and how to get there.

[The Chair, Conservative, Tom Lukiwski]

Thank you.

Mr. McCauley is next.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you. Welcome, Minister. It's nice to have you with us.

First of all, I want to express my disappointment. Both we and the NDP reached out to the other side, making it clear that we wanted to make this a non-partisan meeting to work toward agreement. We're disappointed that you would start right off with your talking points attacking the previous government and placing blame, which your predecessor was so good at. We just want to get on.

The PBO has stated that as of June, we still didn't have a comprehensive plan for Phoenix. When will we actually see a published, comprehensive plan?

[Carla Qualtrough, Liberal, Delta, BC]

I'm very confident the measures we have in place.... Les, is it published? Is it online?

[Les Linklater, Associate Deputy Minister, Department of Public Works and Government Services]

Yes.

[Carla Qualtrough, Liberal, Delta, BC]

Yes. The measures that I just talked three-quarters of the way through are published online. This is a working, breathing assessment of the steps we are taking moving forward as we adjust and reset course.

I do apologize for the beginning. My comments were only meant to explain my assessment of the reasons we got here.

[Kelly McCauley, Conservative, Edmonton West, AB]

I think if you had read all the 15 other meetings and the AG report, you would have gone in a different direction.

The AG report states that you've engaged an external consultant about a working plan. Is that the one you said you've published online?

[Carla Qualtrough, Liberal, Delta, BC]

We have engaged Pricewaterhouse and we have a plan from which we've built our own set of measures and a comprehensive approach to this, so yes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Whose decision was it to re-engage PricewaterhouseCoopers? I understand through looking at this that they were a big part of the problem from the beginning. Am I correct on that?

[Marie Lemay, Deputy Minister, Department of Public Works and Government Services]

I can answer that. In June or July, right after launch, I had a conversation with them as to whether there was any way they could look at the processes and come up with some suggestions, as we were focusing on addressing pay issues. We re-engaged them toward the end of the fall to look at this comprehensive approach.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay, thanks.

Minister, the Auditor General has commented that the HR-to-pay integration makes things more complex for Phoenix, and of course we've heard from day one that the complexity of the system is a big part of the problem.

Is this going to make it worse, and do you agree with the Auditor General's comments?

[Carla Qualtrough, Liberal, Delta, BC]

I agree that this is a very complex system—

[Kelly McCauley, Conservative, Edmonton West, AB]

It was specifically on the HR-to-pay—

[Carla Qualtrough, Liberal, Delta, BC]

I would have liked to have seen a system design that took the HR component into account. I think the Auditor General is absolutely correct that this makes it complex, but that's the reality we're living in.

People don't enter the data into Phoenix right now; they enter it into an HR system, which then interacts with Phoenix, which then generates pay. It's really important we see that, because if we don't have HR systems that properly connect with the pay system, no matter how great the pay system is, it's going to be clunky on the HR side.

[Kelly McCauley, Conservative, Edmonton West, AB]

So you agree with the AG?

[Carla Qualtrough, Liberal, Delta, BC]

I agree that this is a very complex system, yes.

[Kelly McCauley, Conservative, Edmonton West, AB]

That's fine.