Thank you, Madam Chair.
I'm joined today by our associate deputy minister, Les Linklater. We appreciate the opportunity to appear before you to discuss the Auditor General's studies of Phoenix. Public Services and Procurement Canada accepts the Auditor General's recommendations and has taken measures to respond to them.
I want to begin by acknowledging that this issue is fundamentally about people. This situation has put a strain on many public servants, for which I am deeply sorry. I know we've said it, but we're sincerely sorry.
This issue is also about those working hard to fix the pay system. I can assure you that we have extraordinarily dedicated teams that are working very hard to address their colleagues' pay issues. Without question, this situation has taken a heavy toll on too many employees.
The Auditor General's spring report examines the planning and development of Phoenix from April 2008 to April 2016. This period predates the senior leaders now working on pay at Public Services and Procurement Canada, but while the decision-makers have changed, the lessons of past actions cannot be forgotten.
There were serious flaws in the planning and implementation of Phoenix and in the broader transformation of the Pay Administration Initiative. We know that cost and timelines were prioritized. As result, poor decisions were made. Critical elements of the project, including some system functionality, testing, change management and training were removed or deferred. These decisions, coupled with the elimination of 700 compensation positions—and the resulting loss of critical capacity and expertise—led to a government-wide transformation that couldn't perform as planned and users who weren't prepared for this significant change.
Within the senior levels of PSPC, and I would say across government, the project's scope and implications were vastly underestimated. The Goss Gilroy Inc. report also cited this fundamental gap as a central failing of the project. When the deadline for implementation came, it was thought that the system was ready to go. Clearly, it was not.
I don't believe anyone acted with ill intent, but the two senior executives responsible for the project who reported to the deputy minister did not properly assess the complexity of the undertaking, the cumulative impact of their decision, or the seriousness of the early warnings.
The performance of these senior executives has been evaluated and appropriate measures have been taken. They are no longer involved in pay administration, and they did not receive performance pay for their work on Phoenix during 2015-16 when the system was finalized and launched.
As I mentioned, this situation has caused significant stress for many employees. Understandably, people want someone to blame. What has happened is unacceptable. The Auditor General has identified that senior executives at PSPC made significant mistakes, but he has also acknowledged that there were oversight and governance issues. I believe that there were multiple points of failure. We have to learn from all of them.
Accountability needs to be coupled with authority for projects like pay transformation to succeed. Public Services and Procurement Canada officials had full authority on Phoenix, but not over the government-wide human resources processes. For example, we should have had an integrated HR and pay approach all along.
We need to do better. We need to give our people the tools and the environment needed to succeed.
Madam Chair, we can't rewrite history, but we can benefit from it. The Auditor General's report provides invaluable advice that is helping us to move forward.
I'd like to turn now to the specific recommendations offered by the Auditor General in his spring report, which focus on future planning of IT projects. PSPC has a long history of managing many large-scale, complex, multi-faceted projects on behalf of clients, such as pension modernization and the Long-Term Vision and Plan for the Parliamentary Precinct. We currently manage over 430 projects with a budget of over $13 billion.
PSPC has rigorous and effective processes in place to manage large-scale projects. Our experience with Phoenix has highlighted the need for an enhanced approach for the management of complex enterprise-wide IT projects.
To fill this gap, PSPC will work with partners to develop a gating tool. This tool will determine if a specific project under our responsibility should be managed through departmental project management practices and processes, or through an enhanced government-wide IT project management approach.
We will also develop an enhanced project management playbook detailing how our government-wide IT projects are to be managed, clearly laying out the roadmap of what has to be done and by whom. It will address governance, and oversight project management principles, roles and responsibilities, and the audit function, among other elements.
These actions will allow us to respond to the Auditor General's recommendation, by ensuring that we have robust governance and oversight for all government-wide IT projects under our responsibility. This approach will also ensure that enterprise-wide IT projects include a stakeholder engagement plan to ensure active collaboration with departments and agencies. This engagement will allow us to better define system requirements and, importantly, validate system performance. These IT projects will also include a formal software upgrade plan and a comprehensive contingency plan.
Finally, PSPC will ensure that internal audits provide the deputy minister with the appropriate assurances regarding project governance, oversight, and management.
Madam Chair, work is under way to develop and formalize both the gating process and the playbook, but I want to assure members that the lessons drawn from Phoenix are already being applied within PSPC. For the here and now, our priority remains helping employees facing pay issues.
In November, we announced a suite of measures to stabilize the pay system and reduce wait times and late transactions for missing pay. These activities were based on the findings of the Goss Gilroy report and aligned with the Auditor General's fall recommendations. Oversight has been strengthened. Departments and agencies can now monitor and act on the quality of their data. Submission of timely and accurate HR information into Phoenix has a major impact on the timeliness and accuracy of pay.
In May, Minister Qualtrough visited the public service pay centre in Miramichi and announced the expanded rollout of a new pay pod approach, an idea that originated with the staff. Pay pods are teams of pay specialists who are assigned to exclusively serve a specific department or agency. A pilot of this approach reduced the case backlog of three pilot departments by 30% overall and their backlog older than 30 days has gone down by 41%.
We are very optimistic about the positive impact of the pay pod approach and we are looking forward to the impact, as it is rolled out across more departments over the next year.
Finally, we have increased capacity and service to employees.
As I mentioned, a critical gap was created when more than 700 compensation positions were cut in 2014. This meant that we implemented Phoenix with only 550 compensation staff. We have since almost tripled this amount.
Recognizing the need to provide more useful support to employees, we have also enhanced our Client Contact Centre and they have direct access to Phoenix as well as other systems. This allows employees to get detailed information about their pay files directly from public servants working at the centre.
We continue to refine and implement improvements and are beginning to see slow but steady progress.
Our most recent dashboard shows that our backlog is down 25,000 transactions from last month and, with minor fluctuations, has steadily declined since January 2018. As pay pods are expanded, we expect this decline in backlogged transactions to pick up speed.
Madam Chair, the ongoing public service pay problems are completely unacceptable and addressing them remains our department's top priority. We are working relentlessly to ensure that public servants are paid correctly and on time.
There were serious flaws in the planning and implementation of the pay transformation. It is clear that there were multiple points of failure. Our responsibility moving forward is to ensure that we learn from all of the mistakes made, so that something like this never happens again.
We look forward to your questions.