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.