Question Period Note: Phoenix IBM and systems upgrades

This note focuses on vendor support on the Phoenix file (IBM / Innovation Challenge) as well as the Phoenix pay system software upgrade (PeopleSoft 9.2).

Note: All questions related to Next Generation Human Resources and Pay solution should be directed to the Minister of Digital Government.

• The Government of Canada is committed to supporting employees and resolving public service pay issues as quickly as possible
  • Public Services and Procurement Canada (PSPC) has put in place over 2,500 systems enhancements and fixes which have helped move the pay system to a much steadier environment
  • As a result, we have increased the overall system stability and performance in payroll processing
  • We continue to reach out to experts, federal public sector unions and the private sector for innovative solutions to help further stabilize the pay system

If pressed on the Invitation to Qualify for pay system in-service support / Application Managed Services Contract:

• On May 8, 2020, PSPC issued an Invitation to Qualify 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 option is exercised)
• An independent fairness monitor was engaged to observe and report on the procurement process to ensure its integrity
• We will continue to ensure employees are supported and that we are well prepared to transition to a new pay system when the time comes

If pressed on the upgrade to the Phoenix system:

• As part of its continued efforts to stabilize the pay system, the Department is proceeding with a Phoenix pay system software upgrade from PeopleSoft 9.1 to 9.2
• The upgrade is needed to ensure ongoing vendor support and updates which are required to calculate pay accurately and on time
• We have an extensive implementation plan in place, based on the lessons learned from the Phoenix rollout, so that employees are not affected by this upgrade
• This upgrade, expected to go live in spring 2021, will not affect or require upgrades to the 30+ human resources (HR) systems that feed into Phoenix

Successful pay processing cycles

Since the Phoenix Pay System was launched in 2016, PSPC has put in place a number of improvements which have helped move the pay system from “crisis mode” to a much steadier environment. Such improvements include implementing over 2,500 systems enhancements and fixes. As a result, we have significantly improved the accuracy of the system’s regular pay processing.

Since March, PSPC has seen an increase in overall system stability and performance in payroll processing. This means that no major pay issues related to system errors have occurred in that period. However, public servants may still have had pay issues related to data accuracy and timeliness of HR transactions.

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.

In service support – Re-procurement

The current Application Managed Service Contract with IBM Canada Ltd. will end on March 31, 2021. It has an option year until March 31, 2022, which provides the Government of Canada a transition period towards a future state.

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.

On May 8, 2020, PSPC issued an Invitation to Qualify (ITQ) on BuyandSell.gc.ca to qualify suppliers interested in providing the Application Managed Services for 24/7 operational (functional and technical) support for pay, once the current contract with IBM Canada Limited ends. An independent fairness monitor has been engaged to observe and report on the procurement process to ensure its integrity.

We will need to rely on Phoenix until we are ready to transition to a new pay system. The backlog of existing pay issues must also be addressed to allow for a smooth transition to any 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.

Phoenix system upgrade - PeopleSoft 9.2

The upgrade to PeopleSoft 9.2 will ensure that PSPC continues to receive software patches, fixes, and tax rate updates that Phoenix requires to generate payroll accurately.

The PeopleSoft 9.2 upgrade consists of implementing a new version of the PeopleSoft application with limited impact and disruption to operations and users. The scope of the project is limited to the pay system (Phoenix) and does not include upgrading the departmental HR systems. Extensive testing is currently being performed with departments and agencies to ensure that employees’ pay is not impacted when the upgrade is launched.

PSPC estimates that the overall upgrade is expected to take approximately 24 months (including the planning phase) with a target go live in spring 2021.

Innovation Challenge – Pay Stabilization Procurement Initiatives

PSPC launched a procurement process in August 2018 to engage the private sector in innovative solutions to help stabilize the pay system. Industry has been consulted in several areas identified as key to reaching stabilization. These are:

• Robotic Process Automation: A contract extension was awarded on November 5, 2020
• Lowering the queue: 2 contracts were awarded in May 2019
• Improving user experience
• Enhanced user access management
• Training
• Accelerator services: A contract was awarded in February 2020

Robotic process automation

Robotic process automation (RPA) is one of several ongoing initiatives that PSPC is taking to help reduce the backlog and stabilize the pay system. PSPC intends to use RPA services to process manual transactions in the Phoenix pay system. The objective is to allow compensation employees at the Public Service Pay Centre to focus on complex cases and address more transactions in the backlog. PSPC has 2 procurement initiatives underway:

• KPMG contract extension for RPA

On November 5, 2020, PSPC awarded a contract extension to KPMG LLP for RPA. Under this contract, KPMG LLP is required to build and deploy RPA services at the Public Service Pay Centre, with target implementation in late November 2020.

Due to delays resulting from the ongoing COVID-19 pandemic, the KPMG LLP contract, which expired on November 16, 2020, was extended until January 31, 2021. This extension was required to ensure successful project completion and post implementation support.

• RPA – Request for Proposal

On October 13, 2020, PSPC issued a new Request for Proposal (RFP) on BuyandSell.gc.ca under the Robotic Process Automation (RPA) stream of the Pay Stabilization Procurement Initiative.

The RFP was sent to the 10 suppliers that had qualified for the RPA stream through an Invitation to Qualify launched in October 30, 2019 and closed on November 19, 2020, proposals are under review and the contract award is anticipated in January 2021.

This new RFP will allow PSPC to build on the work completed under the RPA stream to date, and to accelerate the automation of pay processing. With this new RFP, PSPC is seeking additional resources with expertise in RPA to support all ongoing RPA activities, including knowledge transfer to public servants.

NextGen pilot with the Department of Canadian Heritage

On October 14, 2020 the Minister of Digital Government announced the selection of the Department of Canadian Heritage for the first exploratory phase of the Next Generation HR and Pay project. The Government will work with the selected vendor (SAP) and the Department of Canadian Heritage to develop a business case, privacy impact assessment, change management and other planning considerations to learn how a future HR and pay solution can integrate information from multiple compensation-related HR systems.

This phase will take place in a test environment and will not affect employee’s current pay. Employees will continue to be paid through the Phoenix pay system while testing is completed. The planning phase began in October 2020 and future phases will be informed by the results of the planning phase.

Public servants, as well as bargaining agents, have been involved throughout the process and the government is committed to continuing to work with them in the next stages of the project. Long-term work to stabilize the Phoenix Pay System will continue.

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