Thank you very much, Madam Chair.
Before I begin, I would like to acknowledge that this is a tough day for members of the House of Commons and families and friends. I offer my condolences. We all have heavy hearts and I want to acknowledge that it's a difficult day for all of us. Please accept my sincere condolences to Gord Brown's family, friends, and members of his caucus.
I am pleased to appear before you as Minister of Public Services and Procurement and minister responsible for Shared Services Canada to discuss the 2018-19 main estimates. Joining me here from PSPC are Deputy Minister Marie Lemay, Associate Deputy Ministers Les Linklater and Michael Vandergrift, and Chief Financial Officer Marty Muldoon.
Here from Shared Services are the President, Ron Parker; Alain Duplantie, Senior Assistant Deputy Minister and Chief Financial Officer, Corporate Services; and Graham Barr, Acting Senior Assistant Deputy Minister, Strategy.
Both organizations fill critical roles in support of federal government operations and the delivery of programs and services to Canadians.
Allow me to begin with Public Services and Procurement Canada, which is requesting $3.2 billion in the 2018-19 Main Estimates.
This includes $2.54 billion for property and infrastructure, including the parliamentary precinct and support for the G7 summit; $215 million for payments and accounting; $122 million for government-wide support programs; $117 million for the purchase of goods and services; and $235 million for internal services.
Allow me to begin with an update on the work of PSPC and Phoenix. Last week, I was at our pay centre in Miramichi to announce the expanded rollout of the new pod approach, following a very successful pilot. Under this approach, pay employees are set up in teams that serve specific departments, allowing them to gain expertise and build relationships with their client departments.
This pilot shows that, from December to March, pay pods reduced the backlog of the three pilot departments by 24% overall, and the number of employees with pay issues dropped by 11%. In comparison, the numbers elsewhere remained relatively stable.
What's interesting is that the pod idea came from the employees themselves. In Miramichi last week, I felt a degree of optimism among staff, an appreciation that their voices are being heard and a sense that the challenge before them can actually be surmounted.
Our approach going forward is to continue to engage with the people who know best: pay centre staff, the unions, and the employee users of Phoenix.
Pay pods are but one of the measures we announced in November to stabilize the pay system. For instance, we're increasing capacity. Since starting with 550 employees when Phoenix was launched, we have reinstated the 700 positions eliminated by our predecessors and further invested to nearly triple the number of staff processing pay at the pay centre and in satellite offices across the country. We have added about 200 public servants at the client contact centre. They now have direct access to Phoenix so that they can provide public servants with real-time details about pay issues.
Budget 2018 provides $431 million in support of these efforts. Our most recent dashboard shows progress. Our backlog is down by 5,000 transactions from last month, and with minor fluctuations, it has steadily declined since January 2018. As pay pods are expanded, we expect this decline in backlogged transactions to pick up speed. To all those employees who have been affected, I promise that we will resolve their pay problems and, over time, restore their trust. Beyond Phoenix, PSPC is leading other important work such as the acquisition of critical equipment for the Canadian Armed Forces.
Under the national shipbuilding strategy, the first large ship, the offshore science and fisheries vessel, is complete and is expected to be delivered to the Canadian Coast Guard later this year. The Royal Canadian Navy's first ship, the Arctic and offshore patrol ship, is undergoing final assembly.
In addition, this year, we will select a preferred bidder for the design of the Canadian surface combatant, which will form the backbone of the navy.
In addition, this year we will select a preferred bidder for the design of the Canadian surface combatant ships that will form the backbone of the navy.
This work matters. Contracts awarded under the shipbuilding strategy are contributing $8.9 billion in GDP and creating or maintaining almost 9,000 jobs per year. We look forward to providing regular updates on our progress.
Shifting from sea to sky, to meet the air force's interim needs, we continue to work with our Australian counterparts to finalize the purchase and delivery of F/A-18 aircraft and spare parts beginning in 2019. The open and transparent competition that we announced last December to permanently replace Canada's fighter fleet is also well under way. Both PSPC and ISED have held industry engagements. These meetings are critical to ensuring that the procurement process is effectively designed and that Canadian suppliers are provided with opportunities to participate.
As the government's central purchaser, the department is simplifying and streamlining procurement. It is seeking ways to leverage the government's purchasing power to not just to buy but buy better.
We are increasing opportunities for diverse suppliers, such as women, indigenous peoples, persons with disabilities, and visible minorities. We are also making sure that our procurement supports other important goals, such as the fight against climate change.
I especially want to reduce the red tape and other barriers faced by small and medium-sized enterprises trying to sell to the government. While SMEs already account for 80% of our contracts under $1 million, and over 30% of our contracts over $1 million, we want those numbers to grow.
I know this committee has been studying this topic, and I look forward to your report and recommendations. We are already making great progress. Since last July, suppliers have been able to submit bids electronically, which is faster, greener, and more efficient. By the end of this year, we expect at least 70% of bids to be submitted this way.
Over the longer term, PSPC is adopting an e-procurement solution that will simplify contracting for both the government and our suppliers, and make bidding more accessible to the visually impaired. We will take the time to do this properly, and ensure that lessons from the development of Phoenix, many years ago, inform our approach.
Here in the parliamentary precinct, our collective objective remains to ensure a seamless transition of operations from Centre Block to the new House of Commons in West Block this summer.
While final IT, multimedia, and security devices are being installed and tested, we continue to work closely with our parliamentary partners to mitigate any risk of delay.
Turning briefly to Canada Post, just last week I announced the appointment of five new members to the board of directors. They will join the recently appointed chair, Jessica McDonald, to continue efforts to implement the renewed vision for the crown corporation and its priority of service to Canadians. Critical to renewal will be the focus on building more collaborative relationships with employees, communities, and other stakeholders.
Let me now speak about Shared Services Canada. Through the main estimates, Shared Services Canada seeks $1.5 billion in funding to continue providing modern, reliable, and secure IT infrastructure services in support of the digital delivery of programs and services to Canadians. This amount includes an investment of $17.3 million related to the G7 summit in La Malbaie, Quebec, to improve cellphone coverage and access to high-speed Internet in the region, legacies that will remain long after the summit ends.
To support the Government of Canada's digital vision, Shared Services Canada will modernize and enable cloud services, while sustaining its core operations, and implement business tools to secure and deliver digital services.
In March, I noted here that SSC has begun brokering public cloud computing services for unclassified data for the federal government. Many customer departments are now using these services for a range of IT needs. This year, the department will begin to offer cloud services for classified data up to the Protected B level. SSC will also continue to migrate departmental workloads to the public cloud or to new enterprise data centres where appropriate and based on direction from enterprise governance. SSC recently opened its third state-of-the-art data centre in Ontario to help it better protect government and citizen information and IT systems.
Budget 2018 proposes over $2 billion over six years to help Shared Services Canada address evolving IT opportunities and needs, including cybersecurity threats, and to deliver the kinds of digital services Canadians expect. This funding marks a reset for both SSC and government IT.
Thank you, Madam Chair.
I look forward to your questions.