Procurement blamed over Canadian pay system failures

30 May 2018

Canada’s auditor general has slammed the federal government’s ill-fated Phoenix pay system, which it says was bungled from the very beginning.

In a damning report, the auditor general described the system as an “incomprehensible failure of project management and oversight” and said it had been less efficient and more costly than the 40-year-old system it replaced.

When the system was first mooted in 2009, the former Conservative government claimed it would save taxpayers about $70m annually by requiring fewer employees to process public sector pay.

It is estimated however that the system could cost $1.2bn by the time its faults are corrected – a process that is estimated could take several years.

Meanwhile more than half of the federal government’s 290,000 employees say they have been affected by system malfunctions since it was introduced two years ago. 

The auditor general criticised Public Services and Procurement Canada, which it said failed to manage the project properly. 

Among criticisms were that the Phoenix system was implemented without critical pay processing functions and without having been fully tested.

The system also contained significant security weaknesses which meant it failed to protect civil servants’ private information.

There was no contingency plan in place in case the system had serious systemic problems after implementation.

It was also developed without any plans to upgrade the underlying software once it became obsolete.

“We found that Public Services and Procurement Canada did not fully consult other departments and agencies during the development of Phoenix to determine what they needed Phoenix to do,” said the report.

Civil servants cancelled a pilot project which would have assessed whether the system was ready to be used across the government.

As a result of mismanagement the system failed to pay tens of thousands of federal employees on time and cost government departments significant time and money.

“Phoenix executives prioritised certain aspects, such as schedule and budget, over other critical ones, such as functionality and security,” the auditor general said.

“In our opinion, the decision by Phoenix executives to implement Phoenix was unreasonable according to the information available at the time.”

Because of the management failure ministers did not receive independent information showing that the system was not ready to be implemented.

Main contractor IBM Corp had initially told Public Services and Procurement Canada that Phoenix would cost $274m to build and implement. 

But Public Services and Procurement Canada worked with IBM to find ways to minimise the scope of the project to fit the approved budget of $155m, which led to the cutting of corners.

IBM Canada executives explained that senior officials within the federal government were warned about the pay system’s unrealistic rollout schedule. 

IBM also claimed it had voiced its concerns to the Liberal as well as Conservative government. 

The company claims it was poor management and a lack of training around the technology, rather than bad software, that led to the problems.

The report says that as of June 30, 2017, there was more than $520m in pay outstanding due to errors.

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