Phoenix: Standing Committee on Government Operations and Estimates—June 16, 2020

Current status of the pay system

Context

Due to the ongoing and evolving COVID-19 outbreak, Public Services and Procurement Canada’s (PSPC) services may be delayed. This may result in concerns regarding the continuity of pay services for public servants.

Supplementary estimates (A) 2020 to 2021 include an investment of $203.5 million for the pay system. This may result in concerns regarding the increasing cost for the stabilization of the Phoenix Pay System.

Key messages

• Pay services are provided without interruption and supporting employees remains a top priority
• Services related to pay are considered essential and measures are in place to ensure that operational requirements are met
• PSPC monitors the situation daily and is ready to respond should any issues arise
• We are working closely with all our partners, including employees, unions, members of Parliament offices, departments and their representatives from human resources (HR) and pay, to provide support during this challenging time
• Thanks to the hard work of our compensation employees, we continue to see a steady decline in the backlog
• From April 29 to May 27, 2020, the backlog of transactions with financial implications that are beyond normal workload has decreased by 12,000. Since its peak in January 2018, the backlog has decreased by 64%, from 384,000 to 137,000 transactions
• Normal workload represents incoming transactions that are processed within service standards by the Pay Centre. Service standards can vary depending on transaction type
• In addition, more than $2.4 billion in collective agreement retroactive payments have been paid to employees
• The Client Contact Centre (CCC) remains available to assist any current or former public servant experiencing pay issues

Specific measures in place for COVID-19

• PSPC has introduced interim administrative measures to support pay service delivery. For example, we implemented secure measures to simplify and speed up the approval process of a range of pay-related transactions
• Employees who cannot access the government network can request to have their pay stubs through mail or epost Connect, by contacting the CCC
• The Pay Centre has suspended all new recoveries of overpayments that are eligible for flexible repayment measures:
  • the Pay Centre will continue to issue letters informing employees of their overpayment situations, however, recoveries will not be initiated until further notice
  • should an employee choose to proceed with a lump sum repayment, they will be entitled to do so
  • existing recovery plans will remain in place, however, employees facing financial hardship can request to have their recovery plans modified, by contacting the CCC
• Employees with pay issues continue to have access to emergency salary advance or a priority payment when necessary

2020 Supplementary Estimates

• To continue progress on pay stabilization, PSPC sought additional funding to continue efforts to eliminate the backlog of pay issues for public servants, maintain measures to deliver pay and support employees, and stabilize pay for the Government of Canada
• The investment announced in the Supplementary Estimates (A) 2020 to 2021 represents $203.5 million
• This new funding will primarily help to eliminate the backlog and to stabilize the pay system, to do so, we will:
  • sustain employee capacity
  • increase our processing rate
  • increase the automation of as many transactions as possible through system enhancements
• We have a series of changes planned to further adapt the pay system to the complex needs of the public service
• We continue to regularly share information on progress with employees and Canadians through various platforms and tools

Background

Following the recommendation of the Public Health Agency of Canada, PSPC asked all its employees, including those at the Public Service Pay Centre and the CCC, to work from home if possible, while ensuring the delivery of essential services.

The Pay Centre continues to deliver all of its pay services, which include regular pay, new hires, return from leave, maternity and parental leave, as well as disability insurance.

The CCC remains the first point of contact for current and former federal public servants looking for information or help with compensation and benefits. Clients may, however, experience increased wait times when calling the CCC.

Supporting employees and resolving pay issues are top priorities and we continue to see progress.

From April 29 to May 27, 2020, the backlog of transactions with financial implication has decreased by 12,000. Since its peak in January 2018, the backlog has decreased by 64%, from 384,000 to137,000 transactions.

2020 Supplementary Estimates

The investment for the pay system announced in the Supplementary Estimates (A) 2020 to 2021 represents $203.5 million.

PSPC sought this additional funding to continue efforts to eliminate the backlog of pay issues for public servants, maintain measures to deliver pay and support employees, and stabilize pay for the Government of Canada.

To do so, we will sustain employee capacity, increase our processing rate; and increase the automation of as many transactions as possible through system enhancements.

Since the launch of Phoenix, PSPC implemented a series of measures focused on stabilizing the pay system.

These include increasing the compensation workforce, providing employees with greater support through our Client Contact Centre, introducing the pay pods model, implementing a backlog reduction strategy through our Strategic Engagement Sector, and implementing technical fixes that have improved payroll processing, such as increased automation of transactions.

As a result, since its peak in January 2018, the Pay Centre's backlog of transactions with financial implications has been reduced by 64% (from 384K to 137K).

PSPC has met service standards 65 to 75% of the time over the last year, compared to a 57% average over 2018 to 2019.

On average, in 2020 to date, parental and disability leaves have been processed within service standards 98% of the time (as of April, 2020).

We have a series of changes planned to adapt the pay system to the complex needs of the Public Service.

In addition to efforts underway, we are working closely with all stakeholders, including experts, federal public sector unions and the private sector for innovative solutions to accelerate pay stabilization.

We continue to regularly share information on progress with employees and Canadians through various platforms and tools.

IBM contract and amendments

In June 2011, IBM was awarded the contract for the new pay system through an open and transparent bidding process. Since then, there have been 48 amendments to the original contract, for a total contract value of $447 million (taxes included). Amendments are a regular part of the contract management process and were anticipated at the time of contract award.

The most recent amendment was issued in March 2020, and was required to exercise options for software maintenance and to continue support services essential for pay stabilization and PeopleSoft version 9.2.

Since the original contract was issued, the Crown has moved toward an application managed service model which is an industry standard designed around outcomes-based contracts. This means that the work under the contract is considered complete when certain outcomes have been achieved, regardless of how much work is required to achieve that outcome.

This change in contracting model means that IBM is taking on an enhanced role in delivering more of the day-to-day operations and responsibility for risks associated with pay administration. This allows the department to focus the vendor’s efforts on daily transactions and free up public servant subject-matter experts to focus on strategic improvements and processes.

Accomplishments to-date

• Documentation of all operating procedures providing the foundation for developing a statement of work required for initiating a new competitive process
• Increased the number of resources to strengthen payroll operations
• System improvements introduced with the implementation of automation, increased performance of database processing and pay processing
• In collaboration with government staff, IBM designed, built, and deployed a significant number of code fixes and enhancements to the system which have improved overall pay outcomes
• IBM continues to play a significant role in the production of basic pay and delivery of collective agreement payments

Invitation to qualify for pay system in-service support / application managed services contract

On May 8, 2020, PSPC issued an invitation to qualify (ITQ) for operational support for the pay system.

This procurement process is required to ensure Phoenix is supported after the current contract with IBM ends in March 2022 (if the option is exercised).

An independent fairness monitor has been engaged to observe and report on the procurement process to ensure its integrity. Results of the ITQ are expected in July 2020.

Application managed services is an outcomes-based agreement where the contractor is responsible for delivering services based on our requirements, and ensuring the Government of Canada receives what it needs for a fixed price.

We will need to rely on Phoenix until we are ready to transition to a new pay system.

This is the main reason why the Government of Canada is still investing in Phoenix—so that employees continue to be supported and to ensure that we are well prepared to transition to a new pay system when the time comes.