March 28, 2018 7:45 pm
Updated: March 28, 2018 10:55 pm

Bureaucrats working under Harper and Trudeau rejected IBM’s advice to delay Phoenix

WATCH ABOVE: For the first time since the Phoenix payroll debacle began, IBM is speaking about the software at the centre of the project that it was hired to install. As David Akin reports, IBM says it advised bureaucrats working for the Harper and Trudeau governments to delay the Phoenix project, but the advice went unheeded.


IBM Canada advised federal bureaucrats working for both the Harper government and the Trudeau government to delay the start date for the troubled federal payroll project known as Phoenix, advice bureaucrats working for both administrations could not accept, Global News has learned.

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IBM was one of the key contractors on Phoenix and was speaking Wednesday in detail for the first time about its role with Phoenix.

IBM officials were set to testify Wednesday night in front of a Senate committee probing the Phoenix problems, and hours before that testimony, told Global News that the federal bureaucrats leading the project were advised as early as July 2015 that the original target dates to turn the system on in October and December 2015 were too ambitious and that the government should move the start back by about eight months.

READ MORE: Government misses deadline on Phoenix pay system backlog

WATCH: IBM testifies that they had concerns over Phoenix implementation 

“We started offering this advice in July of 2015,” said IBM Canada vice-president Regan Watts. “We continued to give that advice to the government, through July, August, September, December and the early part of 2016, that, in our judgment, the project was not ready to go live.”

But bureaucrats told IBM that payroll specialists had already been given notice that their jobs were being moved and centralized at a processing centre in Miramichi, N.B. That, IBM says, was one of the reasons that bureaucrats said they needed the system to be up and running no later than April 2016.

IBM told the government it would not be able to implement some of the customizations of the software that the government had wanted, a condition which the government found acceptable in order for the government to activate the system in April 2016.

“Ultimately, we’re in the advice business,” said Watts. “We offered our advice to the client and the client made a decision and we supported their decision by making adjustments that were required to support a ‘go live’ on their timeline.”

WATCH: Government took back responsibility in Phoenix pay system contract

But almost from the moment the system was turned on, it started causing headaches for the federal government’s 290,000 employees. Some were getting paid too much, some not enough, and some not at all.

Eighteen months after its launch, more than 150,000 employees still had an outstanding problem with their pay, according to an auditor general’s report tabled last November.

Senator Doug Black of Alberta, one of those expected to grill IBM at Wednesday’s Senate committee hearing, has already indicated he believes that the federal government should have sued IBM.

Meanwhile, as the Phoenix problems mushroomed over the last year or so, so did the political acrimony. Conservative politicians argued the current Liberal government could have delayed starting Phoenix while the latest federal budget from the Liberals blamed the Harper government for “a flawed business plan” that was “under-resourced and suffered from poor planning and implementation.”

But the revelation from IBM suggests there may be enough political blame to go around, that there were opportunities for ministers for both Harper and Trudeau to take some different decisions.

But now there may be a new focus on the small group of senior bureaucrats, common to both the Harper and Trudeau eras, who may be responsible for being too aggressive in pushing ahead with Phoenix.

In July of 2015, when IBM first raised a red flag about the Phoenix project, the ministers in charge of the file would have been Tony Clement and Diane Finley, both of whom are still in the House of Commons as Conservative MPs in Andrew Scheer’s caucus.

But a month after that, in August 2015, there were no more ministers as the country was in the midst of a general election campaign. Phoenix development would have been left to those bureaucrats.

WATCH: Phoenix payroll problems for federal public servants deepen

READ MORE: Phoenix employees to face a new hurdle — tax season

When the Trudeau Liberals won, a new cabinet was not sworn until November 2015. Clement and Finley were succeeded by Scott Brison and Judy Foote respectively, and presumably were briefed by the bureaucrats running the Phoenix project. (Foote has since been succeeded by Carla Qualtrough.)

WATCH: Tab to fix Phoenix pay system surges to $540M+

IBM makes no claims as to what the bureaucrats were telling their political masters but they are being clear on one point: The company was solely responsible for the technology, taking a software product manufacturing by another vendor, Oracle’s PeopleSoft unit, and installing it and adapting it for use by the Government of Canada, which remained, at all times, the project manager for Phoenix.

So far, neither the auditor-general of Canada nor any government officials have suggested that anything IBM did or didn’t do contributed to the Phoenix debacle.

Indeed, IBM revealed for the first time Wednesday that no one from the auditor-general’s office has asked IBM for any information on the Phoenix project. Watts said IBM Canada would comply with any request for information made of it by the auditor-general.

WATCH: Liberals blame Conservatives for Phoenix pay problems

And yet, though he did not speak to IBM, auditor-general Michael Ferguson, in his November 2017 report on Phoenix, compared another IBM payroll project, one done in Australia, with the Canadian Phoenix project.

IBM on Wednesday was set to testify at the Senate that this was not an apples-to-apples comparison. The health department in the Australian state of Queensland, IBM said, made an emergency purchase of a software application made by SAP and asked IBM for an interim, stop-gap system with minimal functionality that could be built as quickly as possible. Canada, by contract, purchased a PeopleSoft software application after several years of study and asked IBM to install it as part of a multi-year transformation of one of its key business process.

IBM also notes that an Australian government inquiry held IBM blameless as did a report on Phoenix prepared on behalf of the Canadian government by consultancy Goss Gilroy Inc.

WATCH: Prime Minister Trudeau told the House of Commons Wednesday that while the ongoing controversy surrounding the Phoenix Pay system was the fault of the Harper government, Budget 2018 is committed to finding an alternative pay system for civil servants in the next six years.

While Black has been pressing against IBM in the Senate, New Democrat David Christopherson has been pressing against IBM in the House of Commons, asking a senior bureaucrat last fall why they government had not singled out IBM for some blame.

“Throughout the project, IBM has done what we have asked them to do,” Marie Lemay, the current deputy minister for Public Works and Government Services, told Christopherson at the House of Commons Standing Committee on Public Accounts last November. “We were the project managers. They were not. They were the integrator, which is different from certain other projects.”

“So you’re saying that IBM is not to be held in a major way to account?” Christopherson asked. “That that resides with government. Is that correct?”

“Yes, that’s what I’m saying,” Lemay replied.

Lemay became deputy minister of PWGS on April 11, 2016, just as Phoenix went live.

One of her main tasks now is to fix Phoenix and keep it stable until the government can replace it with something else in a few years’ time.

In the 2018 budget, the government set aside $431 million over the next six years to fix Phoenix even as it spends an additional $16 million in the next two years to find a new platform to replace Phoenix.

“We believe Phoenix can be fixed,” Watts said. “We share the government’s sense of urgency in getting this project fixed.”

WATCH: Feds reward executives behind failed Phoenix pay system with $4.8M in bonuses

© 2018 Global News, a division of Corus Entertainment Inc.

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