Budget watchdog to study cost of replacing Phoenix pay system


Canada’s parliamentary budget watchdog is wading into the ever-rising price tag for the Phoenix pay crisis with a new study of the cost to replace it.

Parliamentary Budget Officer (PBO) Yves Giroux agreed to undertake the study at the request of Conservative MP Kelly McCauley as part of the work the office has underway this year.

Treasury Board President Scott Brison has said public servants could be testing new pay system prototypes before the end of the year.
Treasury Board President Scott Brison has said public servants could be testing new pay system prototypes before the end of the year.  (Sean Kilpatrick / THE CANADIAN PRESS FILE PHOTO)

In a letter to McCauley, Giroux said the search for a Phoenix replacement, launched in August, is still in the consultation phase. He said his office will start by closely monitoring any development of the project, and will seek information from departments to “help prepare a timely cost estimate as concrete information becomes available.”

It’s unclear whether Giroux will be doing a detailed costing of the new system — including its planning, design, implementation and the migration of data from the error-prone Phoenix system to the new one — or whether he will make an estimate based on what a similar “HR-to-pay” system costs in the private or public sectors.

In the letter, Giroux said his office would work with the MP on the terms of reference for the analysis as more details about the implementation of the new pay system emerge.

Giroux made his first appearance at a parliamentary committee on Tuesday since taking over the post from previous PBO, Jean-Denis Fréchette. Giroux testified about the office’s expanded mandate, but no questions were asked about the costing study of Phoenix’s replacement.

MPs can ask the PBO for studies into areas affecting the nation’s finances that are not related to a bill or motion before Parliament.

McCauley, who sits on the Government Operations Committee and has been a constant critic of the Liberals’ management of the Phoenix pay disaster, formally asked for the study on Sept. 25. Conservative Leader Andrew Scheer named Rob Nicholson shadow minister of public services and procurement.

News of Giroux’s study comes as the federal government opened the first “gate” in the competition to select suppliers to build the pay system that will replace the calamitous Phoenix pay system.

Treasury Board Secretariat, which is leading the search, released an Invitation to Qualify (ITO) on Tuesday, which lays out the sweeping technical requirements it expects from would-be suppliers.

It’s the first in a four-phase procurement process to select a vendor who can build a new system that will integrate the government’s patchwork of human-resources systems with a pay system. The closing of this first gate is Nov. 13 and the shortlist of qualified bidders go on to the next “gate” to start duking it out with prototypes for a new system.

Treasury Board was given $16 million in the last federal budget, to be spent over two years, to explore replacements for Phoenix, which is still dogged by errors and a large backlog of outstanding pay transactions.

The government kicked off its search for a new pay system last month, calling an “industry day,” which attracted more than 120 industry representatives. About 15 firms have expressed interest in the project.

The search for the new pay system also kicks off a new “agile” procurement strategy that Treasury Board President Scott Brison — who is also the minister of digital government — wants used for large technology projects.

Brison has been unable to say how much a new system would cost, nor when it would replace the old one, but he has said public servants could be testing new prototypes before the end of the year.

The project is being led by Chief Information Officer Alex Benay, and his team is tackling more than a pay system in this go-around. It’s building an HR-to-pay system, which means a major overhaul of how human resources are managed in the public service.

The new system is being planned, designed and built with a new “agile procurement process” that will allow vendors to build prototypes that will show the government what they can do — what Brison calls “less tell and more show.” In fact, the ITQ specifically asks would-be vendors to send videos showing what they and their systems can do.

The next system will be built to meet the needs of employees and managers; it could include a mobile-app pay system they could access 24/7, whether from home or work.

While the system is being built, Public Services and Procurement Canada is still chugging along to fix and stabilize Phoenix so it can reliably pay people correctly and on time.

The last major costing of Phoenix was done by the federal comptroller-general. That report focused on three categories of costs: historical costs to implement the system; projected costs to stabilize Phoenix; and ongoing operating costs. It estimated Phoenix could take five years to fix and cost more than $3.5 billion.

That costing did not include: the millions of dollars expected to build a new system; pension administration costs because of pay errors; employee claims because of Phoenix; or the cost of damages that are being negotiated, or could be awarded, by the court.

Kathryn May is an Ottawa-based reporter for iPolitics. Follow her on Twitter: @kathryn_may


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