It was one of the biggest IT boondoggles in Canadian government history, and it’s still going. The Phoenix payroll system was part of a federal government investment in consolidating and modernizing government processes. Following a failed implementation, tens of thousands of government employees were left out of work, and the Liberal and Conservative governments were pointing the finger at each other.
It’s been a long, hard journey for Public Services and Procurement (PSPC), which set up the system with IBM Corp. and has been facing criticism ever since. Here’s how it all went down.
The Conservative government creates a plan to update existing 40-year-old payroll system. Part of the plan involves moving all payroll-related work to a new centre in Miramichi.
The government awards the contract to update the service to IBM, which has proposed a PeopleSoft-based replacement payroll system.
The Government takes over responsibility for Phoenix training design and execution from IBM, allegedly because it wanted to adopt a ‘train the trainer’ approach rather than follow IBM’s recommended system.
Stephan Harper awards the contract for the construction of the Public Service Pay Centre in Miramichi, promising 500 jobs. It must serve the entire government’s payroll transactions by December.
IBM recommends delaying the planned rollout of the Phoenix system, which was due to start at the end of that year due to critical problems with the system.
Payroll staff at Miramichi, working in two temporary locations while they await construction of the new facility, say that they cannot keep up with complaints from people not getting paid.
They are handling 72,000 payroll files at this time and will have to handle 184,000 by October. “It’s just a matter of them learning their job and taking the time to process it,” says local MP Tilly O’Neil Gordon.
Documents later obtained by the CBC show that senior officials knew in January about a flaw in Phoenix that allowed widespread access to employees’ personnel records. Up to 70,000 public servants had access to the personal details of 300,000 employees. Information about the flaw was purged from a Privacy Impact Assessment document, although the flaw persisted until at least April, the CBC said.
The Canadian government lays off approximately 2,700 payroll clerks as it takes the Phoenix payroll system live across 34 government departments, serving 120,000 people. This is the first in a two-part rollout.
March 9 is the first payday under the new system.
The Public Service Alliance of Canada (PSAC) reports that thousands of its members are not getting paid under the new system. Government workers report of having to dip into their RRSPs to meet the gap. Spokespeople for PSPC say that they have received 300 formal complaints so far.
The government rolls out the second stage of the system, across 67 departments serving 170,000 employees, despite protests from public service unions. PSAC asks the government to switch back to the old system until it fixes the problems.
240,000 employees are scheduled to be paid via Phoenix on May 4. Complaints emerge across the country of workers not being paid. Public Services and Procurement Canada blames other departments for not inputting paperwork properly.
PSPC Minister Judy Foote calls the situation ‘unacceptable’ and says the department is hiring 100 employees at a temporary pay centre in Gatineau to help solve the problem.
PSAC argues that the government is breaking the law by not paying workers, and then promptly takes it to court.
80,000 public sector workers have been affected by payment problems, and PSPC deputy minister Marie says that the backlog could cost $20m to fix, adding that they will not all be resolved before October. Reports emerge of some former public sector workers who cannot stop the government paying them under the new system. Prime Minister Trudeau calls the problem ‘unacceptable’ but says that it is inherited.
The government hires more workers in Miramichi, and its operations and estimates committee holds an emergency meeting to address reports of more people not being paid.
Lemay informs workers of two separate privacy breaches that occurred under the Phoenix system, one in 2015, and one in 2016.
Foote revises a previous estimate of the cost to fix Phoenix, now pegging it at $25 million, but reaffirms a deadline of October 31 to address all technical issues.
Marie Lemay again revises the cost of fixing the system, now estimating up to $50m. $6m of that will go to IBM for extra work on the project. There is still a backlog of 67,500 people with payment problems in the Canadian payroll system., but she promises to resolve them all by Oct 31.
IBM puts the blame for Phoenix at the Conservatives’ door, arguing that it took over responsibility for training and execution in March 2014.
The government misses its self-imposed deadline for resolving its backlog of all outstanding payroll-related issues by Oct 31. 22,000 of the original 82,000 are unresolved.
November 1 was the original date for military and RCMP to switch over to Phoenix (now postponed).
Unions suspend court action against the government over Phoenix in exchange for a consent order that promises more information about the problems plaguing the system and information about steps to resolve employee pay issues.
As part of the deal, the two parties will reform the Union Management Consultations Committee, originally created in 2011 during the design stage for Phoenix. This will be a platform for the government and unions to work together on solving the problem.
Foote goes on leave for family-related reasons. Natural resources minister Jim Carr steps in to oversee Phoenix-related issues. He will also be part of a cabinet committee to fix the payments process.
The government admits it will have to forego $140 million in savings originally anticipated over the next two years from the system. It already had to forego $70 million in 2016. It also announced that it would allow departments to rehire laid-off payroll clerks to help fix the Phoenix problem.
In the meantime, April is tax filing time, when T4 slips are due. The federal government says that employees can seek up to $200 in reimbursements for tax advisory services relating to their 2016 or 2017 income taxes.
It could take up to two years to fix Phoenix, the government added.
Liberals commit $142m in extra funding to help solve the outstanding Phoenix systems, effectively redirecting the money that it had previously allocated to payroll savings back into the system. The money will be used to solve capacity problems, including hiring new staff to fix the issue. This is an addition to the $50m spent in 2016. With three years of unrealized savings, this means $402 in additional costs for the project.
Foot resigns to be replaced by Carla Qualtrough, amid worries that the payroll department’s capacity problems are still ongoing. The Public Service Pay Centre expects to conduct 80,000 payroll transactions a month. Its target is to handle no more than that. As of August, it was processing 237,000 transactions beyond its normal workload, which was an increase over July’s 228,000 figure. This was largely due to settling several collective bargaining arrangements, it says.
The government’s target is to process 95 per cent of its payroll transactions within service standards. As of August 23, it processed 49 per cent of transactions within those standards.