Phoenix pay system
The Phoenix pay system is a payroll processing system for Canadian federal government employees, run by Public Services and Procurement Canada. After coming online in early 2016, Phoenix has been mired in problems with underpayments, over-payments, and non-payments.
Phoenix was originally planned in 2009 by Public Works to replace the federal government's 40-year old pay system. At the same time, the government hoped to centralize payroll employees in one place, as opposed to having them scattered throughout individual departments. The hope was that a new, more centralized and automated system would lower labour requirements and reduce costs. The set-up costs of the system at that time were estimated at $310 million, with the system coming online in 2015. The system was expected to save $78 million a year. In August 2010, the Prime Minister of the time, Stephen Harper, announced that the new pay system would be located in Miramichi, New Brunswick, as compensation for the closing of the long-gun registry centre in that city. In June 2011, IBM won the sole-source contract to set up the system, using PeopleSoft software; the original contract was for $5.7 million, but IBM was eventually paid $185 million. In March 2014, in an attempt to save money, the government took over responsibility for Phoenix training design and execution from IBM, adopting a ‘train the trainer’ approach rather than follow IBM’s recommended system.
In May 2015, IBM made the recommendation that government delay it's planned rollout of Phoenix due to critical problems. In June 2015, before Phoenix was launched, some federal employees complained about not being paid, and there were reports that the Miramachi pay centre employees were overwhelmed. The Auditor General's report found that in June 2015, Public Services and Procurement Canada cancelled a pilot to test Phoenix in a single department to assess whether Phoenix was ready for government wide use.
Two reports from independent contractors were ordered to assess the viability before government-wide rollout - neither calling for implementation to be stopped, but offering suggestions to mitigate risks. The January 2016 report by S.i. Systems concluded that Phoenix should move forward, as "the benefits of doing so appear to outweigh the risks. The next phase will be challenging, but it is likely that the problems and difficulties that will be encountered will be manageable." The February 2016 report by Gartner Inc. casts a different picture, specifically predicting there was a moderate possibility that "expectations for accuracy and timeliness of pay may not be met as a result of lack of true end-to-end testing." Judy Foote, the Minister of Public Services and Procurement Canada was never briefed on the Gartner report.
In February 2016, the Phoenix pay system was launched to over 34 government departments, affecting 120,000 employees. In April 2016, there were initial complaints about underpayments, and PSAC, a federal employee union, called for the Liberal government to delay the second phase of the Phoenix roll out. Despite this request, the federal government rolled out Phoenix to the remaining 67 departments on April 21, 2016, and decommissioned the old system.
After the roll out, there were continued complaints about underpayments, over-payments, and non-payments. In June 2016, the government launched a satellite pay center in Gatineau in a response to the problems, with about 100 employees. On June 28th, federal unions launched a lawsuit against the government trying to force on-time payments. On July 28, MPs held an emergency meeting to discuss what went wrong with Phoenix. At that time, it was estimated that the problems would be fixed by the end of October, for an additional cost of $20 million. However, there were still 20,000 outstanding cases by the end of October, and the government delayed its target for fixing the backlog to the end of the year, a deadline that was also not met.
By May 2017, after several government announcements, the total cost of fixing the system had increased to $400 million. In November 2017, the total estimated cost to fix the system had increased to $540 million, an amount which the federal auditor general thought was inadequate. A federal union called for the Phoenix system to be scrapped, a call which the government has rejected. By 2018, the anticipated cost of fixing the program climbed to $2.2 billion over a projected five years.
The issues have been concentrated among those with changes in position or status, and those with supplementary payments, such as overtime. Students, new hires, seasonal, temporary and terminated employees have thus been particularly affected, as have those taking or coming back from leave which includes maternity and medical. There have also been issues with health and dental benefits, disability claims, and insurance benefits.
There have been several causes put forward for Phoenix's problems. Government managers have blamed the lack of training for employees, particularly those in the new Miramichi pay centre. Federal unions have blamed IBM, drawing comparisons with the 2010 Queensland Health payroll problems, which also involved IBM, and eventually cost $1.2 billion. The former Conservative government has been blamed for cutting employees too quickly and under-spending on training. The Liberal government has been blamed for rolling out the system too quickly and ignoring warning signs.
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- Government of Canada, Office of the Auditor General of Canada (2018-05-29). "Report 1—Building and Implementing the Phoenix Pay System". www.oag-bvg.gc.ca. Retrieved 2019-03-07.
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