Government Operations Committee on May 11th, 2017

[The Vice-Chair, Liberal, Yasmin Ratansi]

Ladies and gentlemen, welcome. We are studying the estimates. We have with us both the Department of Public Works and Shared Services Canada.

Madam Lemay, I believe you have 10 minutes of opening remarks. I'd welcome you to introduce your colleagues.

Mr. Parker, I believe you also have 10 minutes of opening remarks, and I would suggest that you introduce your colleagues as well.

The floor is yours, Madam Lemay.

[Marie Lemay, Deputy Minister, Department of Public Works and Government Services]

Thank you very much, Madam Chair and members of the committee.

Thank you for this opportunity to discuss the main estimates and the departmental plan for Public Services and Procurement Canada. With me today is Les Linklater, our associate deputy minister, who joined us in early March; our chief financial officer, Marty Muldoon; and Lisa Campbell, our ADM responsible for our military procurement.

Let me first say that our hearts go out to the many Canadians who have been affected by the floods. As you know, our department is responsible for managing federal buildings and vital infrastructure. During the peak of the flooding, our officials closely monitored the situation to assess its impact on our bridges and on our dams.

We also worked closely with the Department of National Defence and other partners, and maintained contingency plans to assist them with any emergency requests for suppliers such as sandbags.

As you know, Public Services and Procurement Canada, or PSPC, delivers a broad range of services that are essential to the federal government's day-to-day operations, from real property management to procurement to translation.

As the government's central purchasing agent, our department strives to use its spending power to generate meaningful economic and social benefits for Canadians.

For example, it's estimated that contracts awarded to date through the national shipbuilding strategy will contribute close to $7.7 billion to Canada's GDP and create or maintain more than 7,000 jobs a year, on average, between 2012 and 2022. The strategy is spurring the economy and equipping our navy and coast guard with the ships they need to protect and serve Canadians.

Public Services and Procurement Canada is also home to the translation bureau, which supports the federal government's efforts to communicate with Canadians in both official languages. In February, Minister Foote announced measures to strengthen the bureau's capacity to carry out its mandate.

Two days ago, I announced the appointment of Stéphan Déry as the new chief executive officer of the translation bureau. I am confident that he will provide the leadership needed to build strategic alliances and partner with stakeholders to position the translation bureau for long-term sustainable success.

Here on Parliament Hill, our important rehabilitation work continues. The West Block, the Government Conference Centre and Phase 1 of the Visitor Welcome Centre are progressing on time and on budget and will be ready as planned in fall 2018.

I will now turn to Phoenix. I would like to begin by reminding the committee members how we got to the current situation.

In 2009 the government approved the transformation of pay administration initiative, which included two interconnected projects—the consolidation of pay services, which led to the creation of the public service pay centre in Miramichi, and the pay modernization project, which focused on replacing the government's antiquated pay technology.

Much of the attention related to pay issues was focused on Phoenix, the technology, but pay consolidation played a significant role in where we find ourselves today. In 2014 this consolidation resulted in the reduction of 700 compensation positions in 46 departments.

Phoenix was implemented in February 2016, and this committee knows all too well that we soon began seeing pay problems. Now more than a year out, many people have asked how this could have happened. Let me share some of the reasons.

First, we had a backlog of employee cases to deal with shortly after Phoenix was launched. We underestimated the learning curve associated with Phoenix. We now know that the change management and common human resources processes were not completed before the implementation.

But most importantly, we lacked capacity in terms of personnel. We did not have enough experienced, knowledgeable pay experts to help transition to the new system or to compensate for the low levels of productivity. These 700-plus compensation employees would have been a game changer had they been available to us.

Since last July we've taken a number of concrete actions to address and resolve the issues as soon as possible. In June Minister Foote announced the opening of satellite offices. We set up Gatineau, Montreal, Shawinigan, Winnipeg, Halifax, and Kingston with more than 200 compensation staff. We've opened a national call centre and created a feedback form for employees. We provided additional training and regularly updated employees and media through messages and briefing. We made a number of technical enhancements to facilitate and automate processing.

Finally, we worked closely with Revenue Canada to prepare the 2016 tax filing season and created a liaison unit to answer the questions related to taxes.

With these measures, we have made some progress toward stabilizing the pay system.

We have been able to reduce the original July 2016 backlog of 82,000 employee cases to approximately 5,500—4,200 of which are complex acting transactions that will be completed in the coming months.

As planned, we reached a steady state for parental leave transactions in March and for disability leave in April. Transactions received at the pay centre in both these categories are now processed within 20 days, 95% of the time.

In March, we introduced a new enhancement to automate calculations for acting payments.

Tax season was a major priority for the department. To date, we have processed approximately 49,000 amended tax slips for employees as we corrected their pay file and processed their overpayments. Employees who receive amended tax slips do not have to refile. Their taxes will be automatically adjusted.

There has been some progress but we know that we have so much more to do. Even though we regularly process pay every two weeks for 300,000 employees and we also pay about 50,000 payments in automated overtime, too many employees are still waiting too long for additional payments such as promotions and changes in their files, including transfers. We still hear stories of employees suffering through these delays.

To help we are receiving support from departments and agencies to improve our pay processing speed and accuracy. We just launched a boot camp with compensation advisory staff from departments. They will be able to process transactions within their department remotely to support the pay centre. Treasury Board is leading a review of the processes being used across the government to approve and submit pay requests. This change management work remains a key to having a well-functioning pay system.

Throughout government, there is a shared desire to serve and support employees, and we will keep taking steps to deliver the best possible pay service.

We are pleased to support and work with the recently struck ministerial working group as they take a whole-of-government approach to resolving this situation once and for all.

There is recognition that, to ensure employees are paid accurately and on time, and have the experience they deserve, a whole-of-government approach—end to end—is required. This additional oversight will ensure the effective implementation of the necessary measures to get us there.

In conclusion, allow me to spend just a moment on our main estimates to support the government in achieving its objectives.

We are estimating expenditures of $3.7 billion in 2017-18, a net increase of $824 million from the year before. This increase includes $365 million to repair and maintain federal buildings across Canada to ensure they are healthy and secure workplaces, $106 million for rehabilitation of the Parliament Buildings, $75 million to rehabilitate other major public infrastructure, and $68 million to install an environmentally friendly heating system for federal buildings in the national capital region, and other major greening projects.

It also includes $36 million for continuing the remediation of federal contaminated sites, and $22 million to provide federal organizations with the ability to accept electronic payments from Canadians. The remaining $150 million is primarily to address price and volume fluctuation on expenses associated with federal real property.

Our departmental plan reflects these main estimates and our efforts to deliver on the government's priorities.

Our employees are dedicated professionals who take their responsibilities seriously and continually strive to serve our clients better to the ultimate benefit of all Canadians.

Thank you, Madam Chair. We're happy to take the committee's questions.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Thank you very much for taking less than your time.

Mr. Ron Parker, you have 10 minutes, please.

[Ron Parker, President, Shared Services Canada]

Madam Chair, we are pleased to appear before your committee to discuss Shared Services Canada's 2017-2018 main estimates and departmental plan.

With me are John Glowacki, Chief Operating Officer, Alain Duplantie, Chief Financial Officer and Senior Assistant Deputy Minister for Corporate Services, and Sarah Paquet, Senior Assistant Deputy Minister of Strategy.

Shared Services is mandated to modernize the government's information technology infrastructure. Created in 2011, we deliver email, data centre, network, and workplace technology device services, as well as cyber and IT security services to the departments and agencies across the Government of Canada.

Our work supports the digital delivery of programs and services such as employment insurance, pension benefits, and emergency responses. As outlined in our departmental plan, improving the delivery of IT infrastructure services is our top priority. As a recent example, SSC played a leading role earlier this year in managing the cyber-vulnerability related to a software called Apache Struts 2, which became a worldwide problem for government and private sector systems around the beginning of March.

Canada was well positioned to respond to this threat thanks to SSC's enterprise-wide security approach. This approach provides a better view of government networks and infrastructure, and therefore the ability to take quick and coordinated action for all departments and agencies that are part or our security perimeter.

Ultimately, all systems and services for Canadians remain secure as SSC coordinated with the Treasury Board Secretariat and the Communications Security Establishment to quickly isolate vulnerable systems and ensure the protection of government and citizen data.

This fiscal year is an important one for us. With our planned 2017-18 budget of $1.7 billion, we will continue to strengthen cybersecurity and refresh legacy mission-critical IT infrastructure. We will also build on our progress towards achieving our target state. Our goal, for example, is the consolidation of what's now estimated at approximately 700 legacy data centres to seven or fewer enterprise data centres. To date, we have closed more than 90 legacy data centres and opened two enterprise data centres. Construction is under way for a third enterprise centre in Borden, Ontario.

SSC's main estimates represent an increase of almost $176 million over last year. This is mostly due to the multi-year funding provided in budget 2016, which we're investing in a number of projects to maintain and replace legacy mission-critical infrastructure, critical IT equipment, and some security investments.

SSC is using these funds to replace more than 40,000 out-of-date components, such as older servers, networks and telecommunication systems.

This includes upgrades to a number of telephone systems, including six RCMP operational control centres in British Columbia for 911 capability.

We have also replaced 3,000 BlackBerry devices for Global Affairs Canada to ensure secure and reliable mobile communications at missions abroad.

Today many of the government's infrastructure components are reaching the end of their life cycles, and some are no longer supported by vendors. Our work in maintaining legacy equipment is therefore vital to keeping the operations of the government running smoothly to ensure continuity of services to Canadians.

Shared Services Canada also secures the integrity of the network systems and information. As I discussed earlier, the security we provide is a clear advantage for the Government of Canada. It did not exist before SSC.

Our cybersecurity efforts were supported by Budget 2016 funding of $77 million over five years. Our department collaborates closely with other agencies, such as the Communications Security Establishment, in putting in place security controls.

This work includes maintaining the integrity of the IT supply chain. To date, Shared Services Canada has performed more than 17,000 supply chain assessments and will continue to incorporate security controls for all of our procurements.

On procurement, I would like to mention that budget 2017 included proposed legislative amendments to make the delivery of IT goods and services simpler, easier, and faster. The proposed changes would amend the Shared Services Canada Act and were part of the budget implementation act.

This would allow the minister responsible for Shared Services Canada to delegate the purchase of certain items, such as workplace technology devices, directly from vendors through SSC's contracting vehicles. SSC will continue to set up IT contracts and ensure economies of scale. As well, we will continue to perform the supply chain integrity assessments to ensure only trusted equipment, software, or services are used in the delivery of services.

We welcome these changes as they will provide better service to our customers while ensuring value for money in enterprise security using our procurement tools.

This coming year, we will update the Government of Canada IT infrastructure plan to modernize IT infrastructure and government-wide cyber and Internet security.

The updated IT plan will reflect lessons learned from SSC's early experience as well as the broad-based consultations we held last year with SSC employees and other federal public servants, Canadians, and industry. Overall, we received more than 2,500 submissions from stakeholders. The updated plan will also reflect the views of parliamentarians, the Auditor General, and the independent panel of experts commissioned by the Treasury Board Secretariat.

Once the plan is considered by ministers, it will be our road map for the subsequent three years. It will include timelines for moving to a simpler, smarter, and more secure government-wide platform.

We have already taken action on some of the recommendations.

For example, we have developed a service management strategy to deliver service excellence and improve the planning, costing and delivery of our services to customers and Canadians.

As part of this, we survey chief information officers every month, asking them questions on five key areas: timeliness, ease of access, positive outcome, process aspects, and engagement experience. This past March, we scored 3.2 out of 5, up from 2.71 in July 2016, and the highest we've scored to date. This is an important achievement, reflecting the heroic efforts of our employees. We must continue, because there is still a lot to do.

We are also in the process of renewing all business arrangements with our customers. These arrangements clearly identify the IT services and support we provide, as well as our service performance standards. They are a key part of our commitment to quality service delivery.

We're also increasing the agility of government IT. This includes completing a collaborative procurement process to establish standard and secure access to commercially available cloud services for unclassified data for all of our customers. Among their many benefits, cloud services will permit easier and faster access to compute and storage services. They will also allow government workers to be more innovative in how they offer services to Canadians.

Much remains to be done to modernize government IT, but we are making steady and important progress. We are also proud of the partnerships we have established with our customers and what we've achieved together.

Madam Chair, this concludes my remarks. We would be pleased to take the committee's questions.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Thank you very much.

As a reminder to the committee, as indicated on your notice, we'll have 10 minutes for committee business after, so we'll have to schedule those 10 minutes.

We'll start off with the first round of questions.

Mr. Peterson, you have seven minutes.

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

Thank you, Madam Chair.

Good morning to our witnesses. Thank you for your presentations.

I have a few questions. I will start with Ms. Lemay.

It's probably not a shock, but I have some questions about the pay problems that you've discussed. As members of the committee and members of Parliament, we've all heard from our constituents and from federal employees who are having some issues with getting pay or receiving the benefits they're entitled to. I know it comes as no surprise to you, Madam Lemay.

I know I speak for all the Liberals, and I probably speak for all members, that as members of Parliament we obviously find it unacceptable, and we know we have to work towards solutions.

I want to step back. You mentioned some information that was new to me. I'm relatively new to this committee, so I wasn't around last summer and last spring when you also made some presentations. I want to focus on some of the staffing and HR issues that you brought up.

In your comments, Madam Lemay, I think you indicated that 700 personnel were terminated prior to the implementation of the new system. Is that correct?

[Marie Lemay]

If you'll allow me, I can give you a bit of background on this.

The project was actually two projects that were happening at the same time. Phoenix is the technology—the modernization. All departments have access to Phoenix, and the pay is paid through Phoenix.

There was a concurrent project called “consolidation of pay”. The idea was to be able to service, through compensation advisers, a number of departments together. In this project, 46 departments were originally targeted to have all their compensation advisers in one pay centre under PSPC at Miramichi. For those 46 departments there is actually a diminution of the equivalent of 700 compensation staff, from about 1,250 to 550.

The 55 other departments that are not serviced by the pay centre, but are using Phoenix, kept their compensation advisers. The consolidation was a further phase that did not take place, so they still have the same number of compensation advisers. That's important because, as you know and we know, it's a major transformation. What you're hearing from your constituents, we're hearing, and it is unacceptable.

It is a unique—and probably the most complex—transformation. There were expectations that with technology like that you would have some things that would happen in getting used to it, and you would need some transition time. The problem is that we had absolutely no resiliency in the system to be able to manage or compensate for some of these things as we were doing the transition, so if we had had those 700 people and kept them maybe another year, for example, I'm convinced that you wouldn't be hearing what you're hearing today. We would be able to service the employees, and we'd be able to process more transactions.

We would still be working through some issues as we implement the system. That would happen, and I'm not saying that all the issues the employees are facing are due to the capacity, but I think the reason you're hearing about the majority of these issues is that we're not able to process fast enough what I'll call the change orders.

Every two weeks we run the pay for 300,000 people, but on any day an employee in the public service has either an acting or a termination, they're going on leave, or they're hired. All of these change orders need a compensation adviser to work on them. That's the capacity we don't have right now. It's taking so long and it's creating a ripple effect, which is absolutely unacceptable.

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

Who made the decision to pull these full-time equivalents out of the system? I just can't understand it. You see a brand new system being implemented that is going to be massive. It's going to require a lot of training, and it's going to require skilled personnel, and just on the eve of implementation, a decision is made to get rid of 700 people. I don't understand the logic behind that decision.

[Marie Lemay]

I joined the department on April 11, so just after the first wave of implementation.

Hindsight is always 20/20, for one.

The other thing is that we will have answers to your questions, because there are a number of studies happening right now. There is one that's being done on the lessons learned. I'm not sure that originally—a few years back when it was planned—all the stars were going to align this way, but at the end of the day we might see that the two projects were working in parallel. The compensation advisers were actually notified. It was almost a 22-month process to tell people that their job was going to be affected. This was already enclenché, so there was pressure at the end to roll out, because people had already been told to look for something else or had already moved to other jobs.

There were a number of factors, but they will be part of the lessons learned, absolutely.

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

Thank you.

Also in your presentation this morning, you said that your department underestimated the learning curve. Is this an independent problem from the lack of personnel, or is it also that the personnel who were there weren't properly trained to implement the program?

[Marie Lemay]

To be fair, I think that when we look back at the proper lessons learned, there will be multiple points of failure on this. There is not one thing. You will see a number of things add up, and it's going to be that accumulation.

The reason I'm focusing on the capacity is that extra capacity would have mitigated some of this as we were going through the transition, but I believe we did not plan for the impact it would have on the change in even how you do HR in departments. It's change management. Even in common HR processes, the implication of what you enter into HR is directly related to pay now. It's much more than Phoenix and the pay centre. It's Government of Canada end-to-end in each department, and how you handle the different issues and managers having to approve.

It's a question of change management in how we deal with HR, and we truly underestimated that.

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

Thank you.

[The Vice-Chair, Liberal, Yasmin Ratansi]

Thank you.

We now go to Mr. McCauley for seven minutes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Welcome back, everyone. It's great to see everyone again.

Ms. Lemay, I have a question for you, but before that I want to point out a couple of things. We've accessed lots and lots of internal documents through access to information. One of the more interesting ones we found was a report that stated that before you would go live, the backlog had to be cleared by December 15. I can't recall but I think the report came out a couple of months before that. It clearly said to clear the entire backlog by December 15, but in your comments—unless I misheard—you stated that you were almost surprised by the backlog or that there was a backlog. Could you comment on that?

Clearly Public Works was told to clear the backlog, and now you're saying the backlog came afterwards.

[Marie Lemay]

Again, and I believe you would know this, a number of studies were done and a number of issues were raised. I think part of another element that influences where we are is that a lot of the risks that were addressed—

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm sorry. Could we just get back to the report? It said clear the backlog, and you just said the backlog seemed to come out of nowhere. Were you not aware there was a backlog?

[Marie Lemay]

The different reports identified a number of issues. All of these issues were looked at, and we felt that they were mitigated. A lot of the transactions arrived just at the end. Some even happened after we transitioned. Once we transitioned to Phoenix, we got the equivalent, I believe, of transactions for 20,000 employees. These were surprises to us.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay.

The S.i. Systems report stated that Public Works executives, when interviewed, clearly said that staffing was not an issue. Another internal document we found—a briefing note, I think, that went to the minister—said Miramichi was fully staffed and it had plenty of added resources and excess people there to handle it. But now you're saying that's not the truth, and that the lack of these 700 people...even though your own department told S.i. Systems otherwise, which was one of the factors that led you to get the green light to act.

Other internal reports that we have found stated very clearly that you had enough staff, and that staffing was not an issue. Why is there a difference in opinion?

[Marie Lemay]

Again, as you know, I wasn't there prior to it and I don't know what the assumptions were at that time. One thing I know very clearly and there is no doubt in my mind about now is that capacity would have made a difference. It would have made a difference for the transition.

[Kelly McCauley, Conservative, Edmonton West, AB]

Why did Public Works executives tell S.i. Systems that staffing was fine? Why do other internal documents state very clearly that Miramichi was fully staffed, fully trained, ready to go, with added resources?

[Marie Lemay]

I think the issue with this file is that when we look at everything individually, it becomes very difficult to have a holistic and comprehensive view of things. I hope the different studies we're doing will help us to do that, because it could be correct if everything else is also happening with a green light, right?

[Kelly McCauley, Conservative, Edmonton West, AB]

You'll have to excuse me for being cynical. It looks like the government is just switching from one excuse to another and trying to find someone else to blame. This is the most recent one.

I want to get back to the current steady state. I got a survey from the Association of Canadian Financial Officers. It did a survey with 1,000 respondents showing that there's a 10% increase in the number of pay issues from last fall—when we said we'd actually have Phoenix fixed—to now, so the problems are getting worse. Of course, PIPSC has just filed a policy grievance on behalf of 60,000 workers. The quote from it is that it does not believe the government's numbers.

The unions are saying it's getting worse. Surveys are saying it's getting worse, but you told us about a month ago, I think, that you were turning a corner. Where are we?

You have to understand why there's such a lack of faith in Public Works and with the whole Phoenix issue. We've been promised so many times: “By October 31, we'll clear this. We'll do this. This was a problem.” Every time it's been disproved and we find new goalposts being set. Why should we have faith in your department or faith in what you're saying today?

[Marie Lemay]

I totally understand the frustration of the unions and how the employees feel. We are not working on this in isolation. We are working on this with all the departments and with the unions at the table too.

Just to go back, with regard to the commitment we made back in the fall about the original backlog, you're correct that in October we had only 75% of that backlog done. Then we had committed and, working with the unions, had identified two categories to prioritize, which were parental leave and disability, because the unions felt those were important categories for their members.

[Kelly McCauley, Conservative, Edmonton West, AB]

Do you accept the premise that the two unions have mentioned that things are getting worse?

[Marie Lemay]

I've actually met with the FI union. I don't know the date of that survey, but they are doing them on a regular basis. We just process their—