Government Operations Committee on Nov. 29th, 2016

[Erin Weir, NDP, Regina—Lewvan, SK]

One of the explanations that's been presented for not meeting the October 31 deadline is that the remaining cases are particularly difficult and complex cases. Wouldn't it always be a situation that the cases that are left at the bottom of the pile or that are resolved last are the most difficult ones? Shouldn't that have been anticipated?

[Marie Lemay]

It's interesting that you say that, because at the moment of implementation, there was a backlog of old transactions, which we did not expect, and those were transactions that we had to deal with at the moment, so at the starting point. As you know, we did not have the capacity to be able to process at the moment of transition, for a number of reasons. This was the implementation of a complex system, as you know. You would have a normal learning curve, except that, in this case, we underestimated the change management in the learning, plus we did not have the capacity to be able to mitigate that. We had to go out and rehire more than 200 people. That kind of made everything lag, so those big cases that we had, the ones from pre-Phoenix, as I say, are complicated and transactions that—

[The Chair, Conservative, Tom Lukiwski]

It's a complicated situation, but unfortunately I have to keep your answer brief.

We are now going to Madam Ratansi, for seven minutes, please.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

My questions are going to be addressed to you, Mr. Parker, for the first round.

According to the SSC's current quarterly financial report, you are forecasting $2.2 billion in expenditures. Could you tell me what is capital and what is operational? Is it split between capital and operational?

[Ron Parker]

It is split between capital and operational.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

How much?

[Ron Parker]

Alain, do you have the breakout of that, please?

[Alain Duplantie]

Certainly. If you were to look at the supplementary estimates page proofs, you would see that the capital is at $445 million, the operating is $1.3 billion—

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Fair enough.

[Alain Duplantie]

—and to that we would add just over $400 million in revenue, which would come in on the operating side, altogether bringing it up to $2.3 billion.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

But that was a budget expenditure. Why would you add your revenue to a budget expenditure? Was $400 million a revenue?

[Alain Duplantie]

The $400 million in revenue comprises a couple of factors. On the one hand approximately $160 million is collected as a result of the administrative services review formula. So when SSC was created, some of the reference levels were established by the transfer of appropriations, and some would be complemented, if you will, on an annual basis through the transfer of revenues from departments—

[Yasmin Ratansi, Liberal, Don Valley East, ON]

So it's a quid pro quo. Your revenue is cost-neutral.

[Alain Duplantie]

No, the revenue is covering a cost. In the case of the administrative services review formula, it's complementing our base reference level.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Okay.

The question I asked was why you would add revenue to your expenditure. That's okay. I have another question then.

I think you said $460 million was given to you in budget 2016. What was it for? Was it to support the transformation of the government IT systems?

[Ron Parker]

The funding was basically divided into two pockets. The first pocket was about $383 million and that was for the renewal of the mission critical legacy existing infrastructure. That's replacing equipment in place, whether it's networks, servers, storage, or whatever is deemed to be mission critical. It's not geared to transformation per se. The other $77 million was targeted at improving cybersecurity and IT security.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

In your supplementary estimates (B), you're asking for $4.1 million for the incremental cost of providing core information technology service. Is this a one-time cost, or is it a continuum?

[Ron Parker]

Mr. Duplantie will take that question.

[Alain Duplantie]

When it comes in through supplementary estimates, it's in-year only. It's not costed.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

So it will be an annual cost that you will ask for, because in 2015 you asked for $3.7 million. Are you going to ask for an incremental amount for this every year in your supplementary estimates?

[Alain Duplantie]

Sorry, which component of the supplementary estimates do you mean?

[Yasmin Ratansi, Liberal, Don Valley East, ON]

I'm looking at the $4.1 million that you're asking for this year in your supplementary estimates (B), but in 2015 you asked for $3.7 million. Is it because you were not able to properly predict the cost? Is it unexpected costs that you are trying to adjust for?

[Alain Duplantie]

There are different components to make up the $4.5 million. In some respects there are transfers between departments, which are mid-year in-year adjustments based on the evolution of plants. In one respect it's with regard to the weather radar project which is $1.6 million. It's starting in this fiscal year. Money is coming in through supplementary estimates. I anticipate that we will see it through the main estimates process, because there are planned expenditures over about a four- to five-year horizon on that project, starting in this fiscal year.

[Yasmin Ratansi, Liberal, Don Valley East, ON]

Thank you.

Madam Lemay, I have a question for you.

There was a question asked about IBM and whether you were satisfied or whether IBM was going to provide any compensation. You said IBM provided what it was asked to do. Given the confusion we have regarding the Phoenix system, if IBM provided the things we asked for, was there a fault in the RFP? If your RFP was not properly prepared, then you have a problem.

[Marie Lemay]

When we do the evaluation and when the Auditor General comes in, I'm sure different points will be identified.

I would say that the transition and the issues that the employees are facing right now have more to do with how at the time of implementation we underestimated the change management associated with this system, because it's actually a real change. It's an HR change. There are some real changes in HR and we did not, I believe, collectively provide the proper environment for employees and managers to understand them.