Government Operations Committee on July 28th, 2016

[The Chair, Conservative, Tom Lukiwski]

Mr. Weir, for seven minutes, please.

[Erin Weir, NDP, Regina—Lewvan, SK]

When I asked about the advisability of using off-the-shelf IBM software to run federal payrolls, the answer was that this approach was a proven success; but aren't there many examples, both within Canada and around the world, of IBM encountering problems in trying to run public sector payrolls? I'm thinking of a lawsuit between the Australian state of Queensland and IBM over a somewhat similar boondoggle there.

[Gavin Liddy]

I'm not aware of IBM's experience in other jurisdictions. When the decision was made to go with different options for a pay system back in 2009, a number of options were examined and it was felt that a commercial off-the-shelf product would be the best route to go. A competitive process was run and IBM came to the table with PeopleSoft, which I believe is one of the largest HR management systems in the world. As well, the Government of Canada was going with the PeopleSoft HR system as well, so it was felt that the HR and the pay system would be best able to talk together if they were using the same software.

[Erin Weir, NDP, Regina—Lewvan, SK]

When you say you're not familiar with the experience of IBM around the world doing public sector payrolls, presumably that's something the government looked at in making this decision.

[Gavin Liddy]

In 2009, I'm sure they did, but I don't know the specifics on that. I wasn't in the department then.

[Erin Weir, NDP, Regina—Lewvan, SK]

If you could come back to the committee with a bit more information on those international comparisons, I would certainly welcome it.

I suppose now that we're into this mess I wonder what kind of liability or contractual obligations IBM might have to try to fix the problem?

[Gavin Liddy]

Again, I think I'll go back to the deputy's opening remarks. It's a system of systems. Our experience to date is that the software is functioning as we told IBM to program it. For example, we didn't tell IBM to make sure that military service numbers could be used, which is something that we should have done as a department. But the IBM software is working as it was supposed to. They have a contract. If there are warranty issues that are a result of their fault, they fix them at no charge to the Government of Canada. But, as I said, the software is working. It's really about when you combine all parts of the system, meaning managers, individuals, HR specialists. That's where we have to get the system working better together so that people understand exactly what has to be done to get a pay transaction going. There are a lot of examples of where we have room to improve that.

[Erin Weir, NDP, Regina—Lewvan, SK]

Will the government be making public the terms and conditions of the contract with IBM that you mentioned?

[Gavin Liddy]

I'm not sure. I think there's commercial confidentiality with the firm and we'd have to get the firm's permission to do that.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay, I ask because this seems like an aspect of the issue that maybe merits further exploration. However, I guess you're suggesting that the problem is not with the software, but with the utilization of the software. In that vein I guess I would ask whether Miramichi was the right place to locate the Phoenix pay centre?

[Gavin Liddy]

There were a number of options studied and a number of criteria: did they have enough people, what was the population base, bilingual capacity, that type of thing? A number of options were presented to the government at the time. Miramichi fit all the criteria of those options when that decision was made.

[Erin Weir, NDP, Regina—Lewvan, SK]

It's been reported that a number of people who had expertise in federal payrolls were unable to relocate to Miramichi. Was that a problem in the implementation of Phoenix?

[Gavin Liddy]

I'll ask Rosanna to comment on that, but it was anticipated that not everyone would want to move from Winnipeg, Ottawa, or Edmonton to the pay centre. The training program was designed to take that into account and to train people from scratch—and it was a new system as well.

[Rosanna Di Paola]

We did put in place a professional development program, because we had estimated that very few people would actually move to the Miramichi. The training program was lengthy. It went on for two years. The movement of employee accounts to Miramichi was done very deliberately in small pieces to allow the compensation advisers to learn compensation. As the deputy mentioned, 27 collective agreements and 80,000 business rules are difficult to digest all at once, and it did take a two-year program. We brought 460 individuals through that program over a few years.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay, but it seems not to have worked. I wonder if the current approach of setting up these supplementary pay centres in Gatineau and other parts of the country implicitly acknowledges that trying to centralize the whole payroll operation in Miramichi didn't make sense.

[Marie Lemay]

Our assessment is not that it has not worked. Our assessment is that the transition is where the issue is and learning curve of everyone involved in the transition to the Phoenix system. Whether it would be in Miramichi or Ottawa or Chibougamau, it would be the same issue that people would have to deal with. Also, the temporary units are temporary until we reach the steady state.

[Erin Weir, NDP, Regina—Lewvan, SK]

Speaking of those temporary units, I just want to pick up on the CBC report that Mr. Richards also referenced about employees being hired at some of these temporary centres who do not necessarily have proper training with Phoenix or proper expertise. Do you have any response to that report?

[Marie Lemay]

I'm not sure which report you're referring to, but the compensation advisers have compensation adviser experience. They get training on Phoenix when we on-board them, so that's an onboarding thing. There's been confusion I think in the media between the Toronto call centre and the temporary units where we actually process cases with compensation advisers. As we discussed earlier, Toronto is a call centre, meaning that the people there don't have access to the information about employees and their data. They take the information and they transmit it to the pay centre. Those people don't need to have that same training.

[The Chair, Conservative, Tom Lukiwski]

Monsieur Drouin, for seven minutes, please.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you, Mr. Chair.

Ms. Lemay, thank you for accepting the committee's invitation. Some people would have preferred if the minister came, but I know ministers often rely on the people around them for their expertise. I also know that there is plenty of expertise here today.

You tested 16,000 pay scenarios, I think. Did all those scenarios work? What happened when the scenarios didn't work?

I see you've developed a plan. Had that plan already been developed a year ago or when the transition to the Phoenix pay system was being planned?

[Marie Lemay]

There are two aspects to that question. Gavin can start us off.

[Gavin Liddy]

I'll let Rosanna begin and then I'll take over.

[Rosanna Di Paola]

I'll talk about the testing we did on the Phoenix pay system and the 16,000 scenarios. We verified those scenarios, but we didn't apply them directly in July of last year because they had too many defects. There were too many major, critical defects for us to implement the Phoenix system. We therefore postponed the implementation date.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Last July, had you already established priorities one, two and three? Were you already anticipating these problems?

[Rosanna Di Paola]

No.