Building and Implementing the Phoenix Pay System

Opening Statement to the Standing Committee on Public Accounts

Building and Implementing the Phoenix Pay System

(Report 1—2018 Spring Reports of the Auditor General of Canada)

14 June 2018

Michael Ferguson, Chartered Professional AccountantCPA, Chartered AccountantCA
Fellow Chartered Professional AccountantFCPA, Fellow Chartered AccountantFCA (New Brunswick)
Auditor General of Canada

Mr. Chair, thank you for this opportunity to present the results of our second audit of the Phoenix pay system, in which we looked at building and implementing the system. Joining me at the table is Jean Goulet, the Principal who was responsible for the two audits of Phoenix.

In 2009, Public Services and Procurement Canada started its Transformation of Pay Administration Initiative to transform the way it processed pay for its 290,000 employees. There were two projects: one to centralize pay services for 46 departments and agencies that employed 70% of all federal employees, and the other to replace the 40-year-old pay system used by 101 departments and agencies.

In this audit, we reviewed Public Services and Procurement Canada’s development and implementation of the Phoenix pay system. We examined whether the decision to launch the new pay system included considerations of whether the system was fully tested, functional, and secure, and whether it would protect employees’ personal information.

We concluded that the Phoenix project was an incomprehensible failure of project management and project oversight, which led to the decision to implement a system that was not ready.

In order to meet budgets and timelines, Public Services and Procurement Canada decided to remove critical pay functions, curtail system tests, and forego a pilot implementation of the system.

Phoenix executives ignored obvious signs that the Miramichi Pay Centre was not ready to handle the volume of pay transactions, that departments and agencies were not ready to migrate to the new system, and that Phoenix itself was not ready to correctly pay federal government employees.

When the Phoenix executives informed the Deputy Minister of Public Services and Procurement that Phoenix would launch, they did not mention significant problems that they knew about. Finally, the decision to launch Phoenix was not documented.

In our view, based on the information available at the time, the decision to launch Phoenix was wrong. Phoenix does not do what it was supposed to do, it has cost hundreds of millions of dollars more than planned, and it has affected tens of thousands of federal government employees and their families.

In my opinion, when I look back at our first audit of Phoenix pay problems, there were three issues that were common to both the Phoenix implementation project and the Department’s response to the post-implementation problems. Those were a lack of oversight or governance to guide management activities, a lack of engagement with affected departments, and an underappreciation of the seriousness of the problems.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the Committee may have. Thank you.