Evidence of meeting #180 for Government Operations and Estimates in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was departments.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Bill Matthews  Deputy Minister, Public Services and Procurement Canada, Department of Public Works and Government Services
Les Linklater  Associate Deputy Minister, Human Resources-to-Pay Stabilization, Department of Public Works and Government Services
André Fillion  Assistant Deputy Minister, Defence and Marine Procurement, Acquisitions Program, Department of Public Works and Government Services
Michael Vandergrift  Associate Deputy Minister, Public Services and Procurement Canada, Department of Public Works and Government Services
Glenn Purves  Assistant Secretary, Expenditure Management Sector, Treasury Board Secretariat
Karen Cahill  Assistant Secretary and Chief Financial Officer, Treasury Board Secretariat
Baxter Williams  Executive Director, Employment Conditions and Labour Relations, Treasury Board Secretariat
Jacquie Manchevsky  Corporate Secretary, Next Generation HR and Pay Team, Treasury Board Secretariat

3:55 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Colleagues, we are convened in public.

We welcome our witnesses here today.

Mr. Matthews, thank you for being here with your officials on relatively short notice. Of course, as you well know, the estimates have already been tabled, so this round of interventions will be slightly more informal. I understand you have a very short opening statement, and then we'll go to questions.

To my colleagues, rather than having a preordained, formal list of questions, if you do have questions for our witnesses, please indicate that by a show of hands, and we'll do it fairly informally. We'll try to get through this as quickly as we can.

We have Mr. Jowhari, Mr. McCauley, Mr. Blaikie and Madam Ratansi. We'll go in that order. Once we have completed all of the questions committee members may have, we'll be in a position, perhaps, to dismiss the panel.

Mr. Matthews, please proceed.

3:55 p.m.

Bill Matthews Deputy Minister, Public Services and Procurement Canada, Department of Public Works and Government Services

Thank you, Mr. Chair. I'll be extremely quick.

Thank you for inviting us back. The only thing I want to highlight to you is that, in addition to the same cast of characters we brought with us the last time, we've asked Dr. Janet King, who is responsible for the federal science infrastructure initiative, to come. There was some discussion last time on that topic, so we thought we should have her here with us.

The second point is that there were some outstanding questions from last week's meeting. I believe we have tabled answers to those questions with the committee, so I believe they are with you.

I will stop there.

Thank you.

3:55 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Thank you very much.

Also, committee colleagues, Mr. Matthews and Mr. Bombardier have generously agreed to dispense with their opening statements, which I have with us. I am suggesting that if we can get a consensus on this, we accept both of those statements as read and have them appended to the evidence. Do we have agreement, committee members?

3:55 p.m.

Some hon. members

Agreed.

3:55 p.m.

Conservative

The Chair Conservative Tom Lukiwski

[See appendix—Remarks by Bill Matthews]

[See appendix—Remarks by Denis Bombardier]

That's fine. In that case, we will proceed directly to questions.

Mr. Jowhari, we'll start with you for five minutes.

3:55 p.m.

Liberal

Majid Jowhari Liberal Richmond Hill, ON

Thank you, Mr. Chair.

Welcome back again.

I'd like to go back to the challenge we started with last year. It's been almost four years since we started in our current mandate, the 42nd Parliament, with a challenge on our hands, i.e., Phoenix. I understand that a lot of progress has been made, but I'd like to get a summary, as this may very well be the last meeting of this committee in the 42nd Parliament. Can you give me a sense of where we started and where we are now? As we are shutting down and going through the summer, we're going to knock on doors and a lot of constituents are going to ask us what we have done. I'd like to be able to respond with the top three or four things and to say that we are moving forward.

I'll stop there and give you the time you need to be able to retool us before we talk to our constituents.

Thank you.

3:55 p.m.

Deputy Minister, Public Services and Procurement Canada, Department of Public Works and Government Services

Bill Matthews

Just to eliminate the middleman, all questions on Phoenix are going to Mr. Linklater.

3:55 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Mr. Linklater.

3:55 p.m.

Les Linklater Associate Deputy Minister, Human Resources-to-Pay Stabilization, Department of Public Works and Government Services

Thank you, Mr. Chair.

I think if we look back to the rollout of Phoenix, it's no secret that there were significant challenges, and that there are still challenges, with HR-to-pay stabilization. That said, over the course of the last three years, the government has made significant investments, both in capacity—meaning human resources—and in financial support to ensure that we are eliminating the backlog of transactions as quickly as possible and that we are investing in new ways of processing pay through additional stabilization efforts.

Back in the day, the workload management model, if you will, consisted of working transaction by transaction, which was not what the unions told us we needed to do. It was not what the staff on the floor told us we needed to do, and so we have listened to the input from staff, from bargaining agents, from public servants. They've asked us to work from a more holistic perspective, which has resulted in the pay pod model, which has been established in Miramichi. With it we are aligning dedicated resources to departments or a single department or a group of departments that have comparable collective agreements, to be able to align the HR and the finance groups within those departments with the pay pod people who are actually managing the compensation on the ground. Therefore, we are able to resolve issues much more quickly and we're able to process all transactions coming in now as they come in, so that new never becomes old. This allows us essentially to stop adding to the backlog and, at the same time, with capacity in the pods, to look at cases related to the new intake that's coming in, and also to focus on key priorities for departments. Departments have more of a say in what's being processed and when, on the assumption that new is not becoming old.

The transition to the pay pod model took a considerable amount of time and effort, as well as investment in training and development, to make sure that we had the right leadership in the pods—the coaches, the trainers, and the supports for the staff, who were able to, through on-the-job training and coaching, as well as classroom training, grow their skill sets. This has reached the point where we have seen a decrease in the global queue of about 33% since January of 2018 when it peaked.

We are continuing to see incremental declines, as we demonstrated in the dashboard that was posted last week. Our service standards continue to fluctuate, but have been improving over the course of the three years. There's still a long way to go until we get to where we need to be—dealing with 95% of all transactions within 20 working days—but we are making significant progress. All of this is happening at the same time we are processing a significant number of collective agreements that the Treasury Board Secretariat has negotiated. Essentially, we've issued $1.9 billion in retroactive pay, which has required our staff not only to work in Phoenix, but also to go back into the old processing system, extract data, run calculations on retroactive pay, and then work through any remaining residual manual work that the system was not able to process.

We've also continued to invest in the system. We've added functionality that wasn't there in 2016. We have continued to work on process improvements. We're now in a place where we have regular and predictable technological releases, and we are able to test, which we had not been able to do in the past.

4 p.m.

Conservative

The Chair Conservative Tom Lukiwski

Thank you very much.

Mr. McCauley, you have five minutes.

4 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

Mr. Linklater, I have nothing for you, but I just want to say thank you for all the help you've given our constituents when they've run into very difficult Phoenix problems.

I think for Mr. Fillion, I just want to discuss the AOPS. The first five cost about $400 million a ship averaged out. The sixth one, we hear, is going to be $812 million. We asked the Minister of Defence in committee of the whole what the seventh and eighth would cost, and he wasn't able to provide information. The minister was here last week and said they would be less expensive than the $400 million. I'm trying to figure out why the sixth one is more than double the cost, and why the seventh and eighth are going to be cheaper.

4 p.m.

André Fillion Assistant Deputy Minister, Defence and Marine Procurement, Acquisitions Program, Department of Public Works and Government Services

When you refer to the $800-million figure, that is for the authorities that were sought when the decision was made to add the six AOPS to the program of work. That authority included the price of the ship, which is around $400 million, as well as other things. There was also $150 million associated with the fact that there was a mutual decision made between the Government of Canada and the yard to slow down production between AOPS 3 and AOPS 6 to actually help close the gap of production between AOPS 6 and the first surface combatant.

4 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

So...

4 p.m.

Assistant Deputy Minister, Defence and Marine Procurement, Acquisitions Program, Department of Public Works and Government Services

André Fillion

I'll just finish, if you don't mind.

There was an additional $250 million associated with all six of the ships, related to inflation, exchange rates and such things. The actual price of the six ships is in the region of $400 million, but as we went to seek these authorities, these other decisions were also included as part of that, so going forward, for AOPS 7 and 8, we will leverage certainly what we refer to as the learning curve, the efficiencies, the production line—

4 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

I understand that. To reiterate my question, Kevin McCoy testified in the Senate that the $400 million would be for about the third ship, and the costs would then come down, with the first ship costing around $500 million and the cost then coming down. You're now saying that the sixth ship would cost $400 million, when Kevin McCoy in the Senate committee testified that it would be less expensive. Why is it $400 million?

4 p.m.

Assistant Deputy Minister, Defence and Marine Procurement, Acquisitions Program, Department of Public Works and Government Services

André Fillion

What I can tell you is that the sixth ship.... Okay, I'll tell you two things. The sixth ship has been negotiated at about $400 million. We're also tracking what we refer to as the “learning curve” between ships.

4 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

Right.

June 12th, 2019 / 4 p.m.

Assistant Deputy Minister, Defence and Marine Procurement, Acquisitions Program, Department of Public Works and Government Services

André Fillion

It's taking about 33% fewer labour hours to build the second ship versus the first ship, and about 10%—

4 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

Is it a fixed cost, a price cap or how?

4 p.m.

Assistant Deputy Minister, Defence and Marine Procurement, Acquisitions Program, Department of Public Works and Government Services

André Fillion

There is a cap for all six, but we're also tracking where the efficiencies are between ships, and like any learning curve in a shipyard environment, at some point the curve starts to flatten. In fact, it's not really just with the ship, but in other learning curves like the production environment, where you start seeing the curve starting to creep up because of inflation at 2%, 3%, 4% or 5%. At some point, your learning curve flattens, but inflation catches up.

4 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

What's the cap on the seventh and eighth ship?

4 p.m.

Assistant Deputy Minister, Defence and Marine Procurement, Acquisitions Program, Department of Public Works and Government Services

André Fillion

It has not yet been negotiated.

4 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

Is it a cap? Will it be cost plus?

4 p.m.

Assistant Deputy Minister, Defence and Marine Procurement, Acquisitions Program, Department of Public Works and Government Services

André Fillion

The Coast Guard and we will be negotiating. It will be a cost reimbursable, with an incentive scheme much like the first six ships to incentivize the yard to deliver on time and on budget.

4 p.m.

Conservative

Kelly McCauley Conservative Edmonton West, AB

There was $150 million, again, to smooth out the production gap, but we gave them an extra ship to smooth out the production gap. Now we're giving them two more ships that further fill out the production gap, so we're on the hook for three extra ships and an extra $150 million. Why was there the first $150 million if we gave them an extra ship and two extra ships, and why is there the continuing production gap?