Government Operations Committee on June 7th, 2018

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you for those answers.

Mr. Ferguson, one of your recommendations in the most recent report suggested that TBS should actually carry out mandatory independent reviews for government-wide IT projects. Would you see these as limited only to IT projects, or would you see an application for other large-scale projects, as well?

[Michael Ferguson]

The recommendations we made, obviously, were in the context of an IT project, but I think those recommendations need to be considered in the context of other large and complex projects, as well.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Thank you.

Mr. Blaikie, the floor is yours for three minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

We've heard a few times already just today that the two projects of consolidating the pay centre and implementing the new software were conceived as two separate projects. I think we've heard from the Auditor General that this was problematic, and that, at the very least, those two projects should have been considered together, even if they weren't merged into one project. I'm just wondering, for my own understanding, what was going on. Were the same executives who were managing this software transition also managing the consolidation, or was it actually being run by two different teams?

[Marie Lemay]

I believe it was the same. You have to realize that many people filled the different roles over the eight-year time frame. When we say that we have to be careful because over the eight years—and I haven't counted the number of different assistant deputy ministers, associate DMs, and DMs—a number of people were involved. But, yes, the two projects were managed through the same branch.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

I think part of the reason that's relevant is just trying to understand.... If the old pay system had been allowed to continue past the implementation of the new one, so it was available as a backup, that strikes me as the obvious best practice. It seems to me the reason that wasn't the case is that the consolidation was happening and the two projects weren't in each other's critical paths.

Consideration wasn't given to the fact that pursuing the consolidation too quickly would remove the possibility of preserving the old system until we knew the new one was working. Is that a fair characterization of what happened?

[Marie Lemay]

At this point it's hard for me to know what's in the past, whether they were linked, because the consolidation had an impact—

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Who could we ask, if it's not you?

[Marie Lemay]

It would have been how the two projects were conceived and the timing of those two. They did finish at the same time, which I'm not going to say was planned that way originally, but that's how they finished.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Ms. Lemay and Mr. Ferguson, I wanted to ask with whatever remaining time I have—I know it won't be a lot—I don't think we'll get to it, but I know that in an organization, from a management point of view, you don't want to create an environment where people feel they can't make any mistakes at all because you don't have any learning, but you certainly also need accountability. When you have catastrophic failure, you also send a wrong message. Without anybody being held accountable for this at the end of the day, which seems to be the situation, what kind of message does that send within the organization?

[The Vice-Chair, Liberal, Yasmin Ratansi]

He'll have another seven-minute round, so you can answer then.

We'll have time for a full seven-minute first round.

We're going to go with Mr. Ayoub.

You have seven minutes.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you, Madam Chair.

I thank all of the witnesses for being here.

Mr. Ferguson, your report is very clear. We had been waiting for it for a long time, particularly with regard to Phoenix and the way in which it was implemented. You spoke about culture, and on my side, I'd like to talk about philosophy. You can tell me if there can be a link between those two aspects.

One of my sources is the Office of the Information Commissioner of Canada, which commented on budget preparation around 2010 and 2011. The Minister of Finance was Mr. Flaherty. The government watchword at the time was very clear: cut, cut, cut and reduce budgets in order to eventually be able to control the deficit and have a balanced budget. This was called the Deficit Reduction Action Plan of the Office of the Information Commissioner of Canada. This goes back to the time when Phoenix was being developed. Seven hundred positions were cut, and everything was done to reduce costs by 5% to 10% everywhere.

In your report, in point 1.62, as an overall message, you say that:

[...] there was no oversight of the Phoenix project, which allowed Phoenix executives to implement the system even though they knew it had significant problems. [...] Phoenix executives were more focused on meeting the project budget and timeline than on what the system needed to do.

This is where philosophy and culture meet. I feel the report has identified a culture of fear. No one wanted to point out the problems because they did not want to be singled out. People knew they were headed for a wall but they moved forward anyway. They were so scared that they did not say so.

Now there are new public servants and a new government and they are being criticized. There are also employees involved who have not been named and whom no one wants to name. Honestly, it would not serve any purpose to do so. The culture is what needs to be changed, and that is what is happening. We have to adopt a new way of doing things and rehire resource persons. That is what is being done and that is what Ms. Lemay always tells us. We are trying to rehire the right people who know the proper practices and have experience.

Finally, it is the culture of fear and the philosophy of avoiding deficits at all costs that led to this situation. The Liberals are criticized daily about the deficit. This does not mean that there have to be deficits, but there are times when we must make philosophical and economic choices.

How can we reconcile this culture of reaching objectives at any cost and the mess we are still trying to clean up? Although we see some improvement, we still can't see the end of it.

[Michael Ferguson]

Any government has goals and objectives. The government must set the day's agenda. The public servants must always provide all of the information and all the details. Here we are saying that because of the preoccupation with the budget and the deadline, the executives in charge of Phoenix did not mention that the savings would be less than anticipated.

Whatever the environment may be, there are consequences. It is important that the public servants know what the consequences are and share them with the deputy minister and the minister. They must point out that the results will be different if it is not possible to reach all of the objectives.

There are always objectives, but it is the role of the public servants to explain what is possible and the issues they are facing.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Thank you.

That is indeed the role of public servants. However, since the messages did not get through, it is clear that there was a lack of trust. All of the officials did not receive the same information, particularly the ministers who were in place when the Phoenix system was launched.

What is particular about this case is that businesses like IBM normally carry out pilot projects and do project management when initiatives of this scope are implemented. However, all of the usual basic conditions that one would normally expect were skipped. I am staggered to learn that no pilot project was carried out, despite this being such a major change. That step was deliberately skipped over. Given these conditions, bad surprises were inevitable. In all cases, there are pilot projects. There may have been a semblance of a pilot project. We were told that the project was given the go-ahead, but before that, perhaps the project had not been studied in sufficient depth.

I heard it said that some employees were no longer there and that others had been assigned elsewhere. Recently, we did a study here on whistleblowers.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Mr. Ayoub, you'll have to wrap up. You have two seconds.

That's it.

Thank you very much.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

However, this type of thing amounts to sabotage.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Next is Mr. McCauley for seven minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

My colleague talked about a culture of fear. Considering all the information that was brought forward on the issues of Phoenix.... We heard testimony in this committee that in January 2016 the unions were bringing it forward. We've seen documents from all the heads of HR and the heads of finance for all departments. They all brought the issues forward. I would suggest that it's more a culture of non-accountability than a culture of fear that we're suffering through right now.

Ms. Lemay, I want to read a quote from you from the previous report. This is paragraph 1.78 of the fall 2017 report. It says:

We found that 16 months after the pay problems first arose, there was still no comprehensive governance structure to resolve the underlying causes of the problems. In contrast, Queensland Health, a government department in the Australian State of Queensland, which had similar problems with a pay system, put in place a comprehensive governance structure within four months of pay problems arising.

I want to get back to why it took us so long.

We talked about capacity. We have an Order Paper response from the government, signed by Mr. MacKinnon, saying that there were no capacity issues. Was that just part of this internal problem of not accepting that there was an issue?

I also want to bring up the bit about hiring and addressing the staffing ramp-up. We did another Order Paper question that showed that we had one job posting for 10 days between January and July for pay advisers. We said that we were trying to find some, but the information provided to us from the bureaucracy shows only one posting for 10 days. When that expired, we did not post any other.

We also have the report showing that capacity was not an issue at Miramichi. Obviously it was an issue, but the government says in writing that it wasn't an issue. Is this again part of the whole problem of the culture, whereby people are just putting forward wrong information to cover up?

[Marie Lemay]

Mr. McCauley, I have been speaking to this committee since the July 2016 special committee meeting—

[Kelly McCauley, Conservative, Edmonton West, AB]

I've been at them all.

[Marie Lemay]

—and I've been as open as I can be with you every time in terms of where we are with this.

The capacity building has been an issue. There's no compensation out there. We have to train them. That's part of it. We've tried many things. We've tried with the unions, we've tried posting—I can have Les speak more to it—and now we have to train them. That is a real issue.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Ferguson's comment, again—and this was last fall—was:

We found that 16 months after the pay problems first arose, there was still no comprehensive governance structure to resolve the underlying causes of the problems.

We had numerous meetings. Why, 16 months after, did we still not have a governance structure set up to address the problems?

[Marie Lemay]

You'll remember that at the beginning, when the launch happened, many people expected to see some issues. You'll remember that the first.... I think it was in May that we were thinking there were just a few issues. Then in June—

[Kelly McCauley, Conservative, Edmonton West, AB]

I'll correct that “May”. In February and March, people on this side of the table brought up repeatedly that it's much larger. It was only the government that said it's not an issue, or that it was a small issue, so I'll correct you there.