Question Period Note: Phoenix IBM and Pay Stabilization Procurement Initiatives

This note focuses on vendor support on the Phoenix file (IBM / Innovation Challenge) as well as other pay stabilization procurement initiatives.

• All questions related to Next Generation Human Resources and Pay solution will be in a separate question period card developed by Shared Services Canada

• The Government of Canada is committed to supporting employees and resolving public service pay issues as quickly as possible
  • Public Services and Procurement Canada 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 improved 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 re-procurement of the pay system in-service support / Application Managed Services Contract:

• Public Services and Procurement Canada launched a competitive procurement process seeking qualified 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
• We will need to rely on Phoenix until we are ready to transition to a new pay system
• An independent fairness monitor observed the procurement process and will report on its integrity
• Based on the results of the competitive process, Public Services and Procurement Canada anticipates that a new Application Managed Services contract will be established and implemented starting in April 2022

IBM contract and amendments

In June 2011, IBM was awarded the contract for the new pay system through an open and transparent bidding process with a fairness monitor. Since then, there have been 49 amendments to the original contract, for a total contract value of $545M (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 December 2020 and was required to exercise the option year to extend the current contract end date from April 2021 to March 2022. Exercising the option period was required to ensure ongoing Application Managed Services for 24/7 operational (functional and technical) support for pay. This includes software maintenance and support services essential for pay stabilization, including the recent upgrade of the Phoenix PeopleSoft software to version 9.2.

In-service support – Re-procurement

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.

In May 2019, Public Services and Procurement Canada (PSPC) launched a competitive procurement process seeking qualified 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 invitation to qualify was issued in May 2020 on BuyandSell.gc.ca. Based on the results of this process, the department anticipates it will establish and implement a new Application Managed Services contract starting in April 2022.

This contract aims to provide support for functional, technical and payroll processing functions via an Application Managed Services model for the Phoenix Pay System.

An independent fairness monitor observed the procurement process and will report on 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.

Innovation Challenge – Pay Stabilization Procurement Initiatives

As part of its efforts to accelerate pay stabilization, PSPC has engaged the private sector in innovative solutions to help stabilize the pay system. This iterative approach includes Robotic Process Automation (RPA) and Accelerator Services.

Robotic Process Automation (RPA) – Request for Proposal

Robotic Process Automation is one of several ongoing initiatives that PSPC is undertaking to help reduce the backlog and stabilize the pay system. PSPC is using 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.

Following a competitive process, a contract was awarded to IBM on January 19, 2021, which will allow PSPC to build on the RPA work completed to date and accelerate the automation of pay processing. PSPC is now leveraging additional resources with expertise in RPA to support all ongoing RPA activities, including knowledge transfer to public servants.

Accelerator Services contract amendment

The objective of the Accelerator Services project is to streamline processes and standardize work at the Public Service Pay Centre to increase efficiency and reduce processing times for pay transactions. McKinsey & Company was awarded a contract for Accelerator Services in February 2020 as a result of a competitive procurement process. On May 31, 2021, PSPC amended this contract to the end of November 2021, bringing the total contract period to 18 months to continue providing Accelerator Services to the Pay Centre. One 6-month option period remains.

Under this contract, McKinsey & Company is providing consulting services to transform ways of working, including management practices and tools, to improve both productivity and the experience of our clients and client organizations. They are also implementing strategies to increase efficiency and reduce errors, which will lead to decreased wait time for employees’ pay issues to be processed.

As a result of McKinsey and Company’s work, approximately 1,300 Pay Centre employees are receiving training on the new ways of working that are being introduced through the Accelerator Services Contract.

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