Current status of the pay system: Standing Committee on Government Operations and Estimates—July 23, 2020

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Key messages

Specific measures in place for COVID-19

2020 Supplementary Estimates

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 May 27 to June 24, 2020, the backlog of transactions with financial implication has decreased by 12,000. Since its peak in January 2018, the backlog has decreased by 67%, from 384,000 to 125,000 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 CCC, introducing the pay pod 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 67% (from 384,000 to 125,000).

PSPC has also met service standards 70% of the time on average so far this year, compared to a 57% average over 2018 to 2019.

In 2020 to date, parental and disability leaves have been processed within service standards 98% of the time on average (as of June, 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:

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.

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