The government is set to decide on how to replace the problem-plagued Phoenix pay system in the spring, with a new procurement process that could see the system purchase made by then, if need be, according to Canada’s chief information officer, who is tasked with coming up with it.
Alex Benay said no pay-system option is off the table. He wouldn’t go into specifics on timelines, but suggested his team plans to develop the new system, known as Next Gen, as fast as responsibly possible.
Asked in a Sept. 4 interview whether the government should outsource payroll, as many large private-sector companies do, Mr. Benay said it probably wouldn’t happen due to difficulties arising from the vast range of jobs within the public service.
“From purely a business-alignment perspective, I’m not sure that would be a better solution, frankly, but everything is going to get looked at,” he said. “[Walmart doesn’t] have a military, they don’t have a coast guard, they don’t have correctional officers, [and] they don’t have regular office workers.”
The Treasury Board Secretariat team trying to find the new system, headed by Mr. Benay, is analyzing options. It has already put out a request for information from suppliers but will release an official request for proposals later this month, with vendors providing working prototypes by December or January. Additionally, the team is talking to key groups with a stake in the pay process, such as employees, unions, and pay advisers.
The team is scheduled to bring forward recommended options to the Phoenix Working Group on Consultation, which includes members of the Professional Institute of the Public Service of Canada union, by the spring, heading into the planning and implementation phase shortly after.
Mr. Benay, who’s had minor Phoenix issues himself, said he’s been given all the tools to properly do the job. Some people run away from fires, he said, but “I enjoy these challenges.” His role was elevated to the deputy-minister level after a July cabinet shuffle that saw Treasury Board President Scott Brison (Kings-Hants, N.S.) take on the additional title of minister of digital government, making Mr. Benay his top public-servant adviser.
Nancy Chahwan was recently named as the government’s new chief human resources officer. She was formerly the deputy commissioner of Canada Revenue Agency, and knows the Phoenix file well, according to one former public service manager, who said the two appointments indicated the government is bringing in “the big guns” to get Phoenix fixed.
A new procurement process being used to find the new pay system has already been piloted at Treasury Board with successful results, said Mr. Benay. Another procurement using the process is ongoing at Transport Canada. A small contract last summer had 11 respondents, four finalists, and the government chose a winner within two months, he said, adding the government’s request to vendors will simply state its needs. The exact solutions are up to the vendors, said Mr. Benay, allowing smaller vendors to compete and mitigating the problem of technology advancing faster than the procurement process.
“There’s a lot of smart people out there,” he said. “Why would you prescribe a solution when you could go to the street with the problem and have 16 different solutions come to you, for example?”
The old procurement process could take so long that the thing being bought would be old by the time it was finally in use. This new system is meant to be quicker and less prescriptive from the outset.
It’s unclear if the new pay system will be centralized, like Phoenix, or will see clustered departments working through slightly different systems. There could be more than one vendor, added Mr. Benay, and all decisions will be “data driven” not “emotionally driven.” He’s also been given specific instructions that the work is to be open and transparent.
The Phoenix project happened in two parts: first, it took off-the-shelf software and had IBM configure it to the government’s 32 HR systems; and second, it centralized the pay advisers for more than 40 government departments into the Public Service Pay Centre in Miramichi, N.B. Other departments kept their advisers in-house, leading to fewer problems.
The project was supposed to save about $70-million annually, but a recent report from the government’s chief financial officer said it could cost $3.5-billion and five years to fix, though the minister in charge said she expects the cost to be lower.
One of the main issues with the Phoenix system is that it failed to understand how closely human resources and pay processes interact with each other. The new system is expected to fully integrate the two.
Instead of one large contract, the system will be procured in “mini procurement sprints” happening simultaneously, said Mr. Benay, allowing for speedy solutions. There are two lanes to the Next Gen development, business and technology, which will have both tight and non-linear timelines, said Mr. Benay.
As the team starts to figure out needs on the business end—for example, the service model and where the government wants to be in terms of pay within the next decade—it will add on components to the baseline technology requests to interested vendors in order to meet those needs.
“So we may end up starting with 12 vendors, but each sprint, the bar will get progressively harder and harder to achieve,” he said.
It will result in a “sandbox environment” with working prototypes by December or January to better understand the cost, he said. The options will be picked with users’ feedback in mind.
He’s also looking to ensure public servants’ needs are met. Vendors will have to develop training methods, added Mr. Benay, noting they’ll have to set up Ottawa-based training centres. All vendors will start with a clean slate and will be given the same problem set, mitigating the potential for favouritism, he said.
Holding vendors accountable is another key issue, and Mr. Benay said the process will work on a “pay-as-you-go” model of procurement. That’s meant to prevent parties from being locked into an unhappy contract, and boost assurance that the vendor will deliver a working system.
“If we’re unhappy, we will switch,” he said. “This makes it very much more of a client-customer relationship.”
The government released a notice of proposed procurement on Aug. 24 asking vendors for information related to both the stabilization of Phoenix, as well as the development of the new system. The tender notes the two projects are ongoing simultaneously, with the old system’s stabilization being handled by Public Services and Procurement Canada (PSPC). At the time of publication, there were nine interested suppliers, including Telus Employer Solutions, Avanti Software Inc., and Terradare Solutions.
The latest federal budget gave $16-million to Treasury Board over two years to explore replacement options for Phoenix. Nevertheless, getting Phoenix to work in a stable way is key to putting in place a healthy replacement system because the data in Phoenix needs to be clean to stop old problems from being transferred over, Mr. Benay said.
“We can’t really jump to a new system if stabilization isn’t working,” he said.
The government is looking for outside help to reduce the open pay-file backlog at the pay centre. As of July 25, there were 560,000 open cases awaiting processing, but the backlog has been steadily decreasing.
The government also won’t be using the “big bang” approach to deploying the new system, as was used with Phoenix, said Mr. Benay. Instead it will be deployed department by department, meaning the government won’t have to wait until Phoenix is completely stabilized to start transferring bureaucrats to the new system—for a time, both systems will likely run in parallel.
Jurisdiction for both the human resources and the technology aspects of the new system falls under the Treasury Board, said Mr. Benay, so “this is the right place for options and strategy and future plans,” though it may not be in charge of deployment.
Treasury Board is working with the PSPC stabilization team on a daily basis, he said, which is mostly ensuring the right kind of work is being done to permit Next Gen’s development.
Every system will always have some problems, but Mr. Benay said he’s hopeful Next Gen will be successful in alleviating the two-year-old headache.
“There is no perfect scenario for this type of situation, and so we’re just going to have to stickhandle that sort of step-by-step as we go through this process,” he said.
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