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 and the pilot with the Department of Canadian Heritage 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 McKinsey contract amendment award for Accelerator Services:

• McKinsey & Company was awarded a contract to provide Accelerator Services to the Public Service Pay Centre in February 2020. Earlier this year the contract was amended to November 2021
• The work to date has resulted in substantial increases in the productivity and accuracy of work across the pilot teams at the Pay Centre
• Our Government takes ethical business practices seriously. We apply the standards of the Government of Canada’s Integrity Regime in all procurement activities
• McKinsey & Company was awarded this contract through an open, fair and transparent procurement process

If pressed on the IBM contract award for Robotic Process Automation (RPA):

• Robotic Process Automation services are used to process manual transactions in the Phoenix pay system, allowing compensation employees at the Public Service Pay Centre to focus on complex cases and address more transactions in the backlog
• A request for proposal was issued in October 2020 for a new contract that will build on the work completed to date
• Following a thorough evaluation of the bids submitted by qualified suppliers, only IBM met the mandatory requirements, and was awarded the contract on January 19, 2021

If pressed on the re-procurement of the pay system in-service support / Application Managed Services Contract:

• In June 2019, 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
• We will need to rely on Phoenix until we are ready to transition to a new pay system
• An independent fairness monitor has been observing the procurement process and will report on its integrity

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 is expected to go live in late spring 2021, and will not affect or require upgrades to the 30+ human resources systems that feed into Phoenix

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 is 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 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 June 2019, 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 independent fairness monitor has been observing 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.

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. It 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 was successfully 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 expected completion in late-spring 2021.

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 – Request for Proposal

Robotic Process Automation 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.

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. On January 19, 2021, following a thorough evaluation of the bids submitted, the contract was awarded to IBM.

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 will have 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, and its work to date has resulted in substantial increases in the productivity and accuracy of work across the pilot teams at the Pay Centre.

As such, on May 31st, 2021, PSPC amended the current contract with McKinsey & Company 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 will provide 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 will also implement 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 will receive training on the new ways of working that are being introduced through the Accelerator Services Contract.

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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