Government Operations Committee on June 7th, 2018

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

Thank you. I wanted this to be official because that too is a part of this whole saga.

Now that Mr. Ferguson has been giving us his reports on Phoenix since last fall, one of the things that strikes me the most is the lack of logic in having dismissed or laid off almost 800 compensation experts in all of the departments of the government apparatus before the new system was even tested, and before we knew if it would perform effectively. We lost an extraordinary source of expertise and knowledge about the system when these individuals were dismissed or invited to retire. This is beyond me. How did this come to pass?

If my figures are correct, the cost of the project went from $155 million to $274 million, which is an enormous overrun. Were those compensation experts dismissed because of the need to control this increase in the cost of the project?

[Marie Lemay]

You raise a very important point. As I said at the beginning, there were in fact two projects at the outset; the purpose of one was to modernize the system used by 101 departments and federal organizations, and the other was a consolidation project.

A comparison with Australia, which launched the same exercise a few years earlier, showed that that country had not dismissed anyone. They kept their people and immediately increased staff when the project was launched. And so we were already behind when we started, because we had to completely rebuild the team of compensation officers, which really put us in catch-up mode right from the beginning.

[Alexandra Mendes, Liberal, Brossard—Saint-Lambert, QC]

For the record, with Australia, it was one department. It wasn't the whole of government and not even the whole state government. It was just one department, so there is a big difference in talking about the federal apparatus and talking about one department in one state in Australia.

Regarding this issue of letting go of expertise, Mr. Ferguson, I think this is something that is part of the culture in government when we think about savings and cuts. We have to be very wary of letting go of experts whenever we're trying to do any kind of transformation. It is a very dangerous thing to do, before we are sure that we have succeeded in whatever transformation we are aiming at.

Do you agree with that as an important factor?

[Michael Ferguson]

I think in the Phoenix situation, as the deputy minister said, there were really two projects, but the system development project was dependent on the success of the other project of the centralization of the pay advisers. There were very many indications, as we say in the audit, that the pay advisers were not prepared to deal with the amount of workload they were going to be asked to deal with, partly because of the changes that were made to the system. The fact is that one should have been on the critical path of the other. The centralization should have been on the critical path to make sure that was functioning in the right way, before the system was put in place, but they seem to have been kept separate.

As I said in the message, I think that when there are these transformative projects that are intended to result in savings, I think that governments—and I'm not just talking about the federal government, but governments in general—tend to try to build those savings into their budget process too quickly.

In this case, as a result of the changes that were made to the system, PSPC, in fact, should have gone back to Treasury Board and said, “We cannot deliver the $70 million a year in savings because the $70 million a year in savings were estimated, based on the system being able to do certain things and we have reduced that functionality.” I think—

[The Vice-Chair, Liberal, Yasmin Ratansi]

No. Time is up. Thank you very much.

Mr. McCauley, you have five minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Great.

Ms. Lemay, you mentioned earlier that we can't rewrite history, obviously, but we can benefit from it.

Can you tell me what concrete actions you're taking to benefit from this? I know my colleague was asking how we get past just meetings, meetings, and a culture of meetings, so that we actually get concrete actions done to address what Mr. Ferguson has written up.

How do we prevent a fiasco with the shipbuilding? I'll ask specifically, since we asked you and Minister Qualtrough. The Parliamentary Budget Officer, even though he has a right to it under the Parliament of Canada Act, was denied access to the RFP and a lot of the costing for the shipbuilding, which should be vital to the success of the project but also to taxpayers.

Here is a perfect example. We asked about it before and the comment that we got back from you was, “We weren't sure about it.” How do we get past the bureaucracy blocking the Parliamentary Budget Officer or other departments getting blocked by the bureaucracy? What concrete actions are you going to take, so that we benefit from this fiasco?

[Marie Lemay]

I can assure you that all future major projects are looked at differently. We look at the governance. We spend more time at the beginning of a project than we ever did before, to make sure that it is set up properly.

We know people change. It has to be set up so that no matter who goes and when, the information will flow.

[Kelly McCauley, Conservative, Edmonton West, AB]

Sorry, how are you doing that so the information will flow, so that there's transitional information? We see very clearly with Phoenix that there was nothing passed on from the DM churn, and also from government to government when there was a change.

[Marie Lemay]

If we look at the comparison with shipbuilding, it is also a major, complex project, but that's where the comparison ends. On shipbuilding, we have governance at several levels, including minister, deputy ministers, ADMs, and DGs, and we have three departments—

[Kelly McCauley, Conservative, Edmonton West, AB]

However, I just gave you an example of the bureaucracy blocking the Parliamentary Budget Officer from accessing what he should be able to access by right of law.

We've heard repeatedly from Mr. Ferguson, as well as from you and other witnesses, that everything was set up and should have worked, but bureaucracy, the culture, blocked it.

Here we have a perfect example of the culture blocking the Parliamentary Budget Officer. We're aware of it. It's televised. We all know about it. We knew about it two weeks ago, but nothing is changing.

[Marie Lemay]

I have to get back to you on that specific point, but I can assure you that in the case of shipbuilding, there are at least three departments involved on each decision, and central agencies are on board. A program such as shipbuilding is again a very long-term program, and cost and budget are important.

Remember, in Phoenix, we're being accused of cost and budget actually driving the problem, so we have to be careful to find that balance with the proper—

[Kelly McCauley, Conservative, Edmonton West, AB]

We're not accusing about that. Our concern, and what Mr. Ferguson talks about, is culture. You mentioned that you're learning from Phoenix and are going to benefit from it. I'm asking what concrete actions your department is taking to ensure that we're not here two years, five years, or 10 years from now with jets, the shipbuilding, or other things.

[Marie Lemay]

I will tell you again, at the beginning of the project, we spend a lot of time setting the governance and the oversight properly, and then making sure that the leadership is engaged on the large projects.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay.

When we look at Queensland, they commented that they were able to get to a steady state in four months. We're not at a steady state two and a half years later. Queensland addressed the issues at three weeks. As we've heard, Mr. Ayoub has been with us on this committee, as well as Ms. Ratansi, and I think Mr. Peterson and Mr. Drouin, from the very beginning, going back to January or February 2016 where we brought up the issues, and they weren't really addressed until five months later when we forced the emergency meeting in July.

Why did we wait so long to tackle it? Clearly, Queensland tackled it immediately and got to a steady state. We ignored it, and we're still not at a steady state two and a half years later.

[Marie Lemay]

There are a couple of very significant differences between Queensland and us. One was raised. It's not the same size. It's not the same scope.

They did not let people go, so they started with a full contingency of people and started adding right away. Also, in my understanding of it, they were seized with more acute problems right away.

Remember that our payroll started paying the ongoing pays, every two weeks, so the transfer of data—

[Kelly McCauley, Conservative, Edmonton West, AB]

Two months later, from your department, there were only 77 issues. If you were—

[The Vice-Chair, Liberal, Yasmin Ratansi]

Thank you.

[Marie Lemay]

I would just like to correct the record that we did act in June.

[The Vice-Chair, Liberal, Yasmin Ratansi]

I'm sorry. I will let you finish your answer, but Mr. McCauley, you can't ask the question.

Go ahead.

[Marie Lemay]

We did actually react before July. In June, we announced the setting up of satellite offices.

The first satellite office I believe was set up on July 4, or July 1, and we had to recruit. In July, it was not easy to recruit old compensation advisers who had been let go. Bringing the capacity back up to speed has been a real challenge. We've had to train many people. Les could speak to that. It's not an easy thing to build back the capacity.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Thank you.

We'll go now to Mr. Peterson for five minutes.

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

Thank you, Madam Chair, and thank you to the witnesses for being with us this afternoon. We always appreciate the time and effort that you spend with us.

I want to look back on the Auditor General's reports, report 1, which came out last fall. Within that report, there were six recommendations. They were addressed to both PSPC and the Treasury Board. Seeing that everybody is here today with the Auditor General, I thought it would be an appropriate time to just check in on the progress of those recommendations and see what has been implemented since that report and how we're progressing along that path.

Mr. Linklater, maybe.

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

Certainly. Thank you for the question.

We have been working very closely with the Treasury Board Secretariat and with departments and agencies across the government to follow up on the recommendations from the fall report. We have been looking at key root causes. We did set up a group last summer that had representation across government with IBM and others to do a deep dive with regard to root cause issues, whether they were technology, training, or change management.

We're now rolling out a suite of measures, which Minister Qualtrough announced last November, as a first pass of key early priorities for the interdepartmental community to work on with the leadership of my team. We have gone forward with governance improvements, as recommended. We have the interdepartmental committee, the oversight committee of deputies to which I report, which is chaired by the deputy clerk. We have structures at the ADM and DG levels that replicate that so that we can systematically bring through issues that will have an impact on addressing the queue and providing improved pay outcomes to public servants.

We have also been looking at the capacity building issues that Madam Lemay has alluded to. We have, in effect, almost tripled the staff complement across the country, in Miramichi and in satellite offices, to be able to really address the outstanding pay requests and facilitate the transition to our pod processing model, where we will now be looking at employees' files completely as opposed to transaction by transaction. Once they're clean and we're dealing with things in real time, they should not have any further issues with backlogs.

We've also been looking at a number of issues around the go-forward strategy that was announced in budget 2018 under Treasury Board's leadership. That work is progressing.

We've also been dealing with the technical issues that continue to occur, looking primarily at those change requests for the system that will have the biggest impact on system improvements and interface issues between the 32 HR systems and Phoenix, to make sure that, to the extent possible, we're getting better data alignment and allowing departments and agencies with new tools around timeliness and accuracy of data to look at their own internal processes—as Madam Lemay was saying—from employee to HR, before HR sends things to the pay centre in Miramichi.

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

Okay. Thank you.

Mr. Wallace, I think we have a minute left, so I'm sorry to cut....

Madam Hassan, if you want to....

[Sandra Hassan, Assistant Deputy Minister, Compensation and Labour Relations Sector, Treasury Board Secretariat]

[Inaudible—Editor] our recommendation, which was to work with PSPC to submit accurate information and to enable departments to meet the terms and conditions of employment, and also to support PSPC and departments and agencies in the development of performance measures to track and report on the accuracy and timeliness of pay, as Mr. Linklater alluded to. We're collaborating with PSPC as well as departments and agencies to address these recommendations, and we continue to work diligently to provide the information to this committee as soon as possible.