Canada's Original Think Tank

Phoenix Pay System

Phoenix Pay System

Phoenix Pay System

Hon. Terry M. Mercer (Deputy Leader of the Senate Liberals): 

Minister, thank you for being here, number one.

I have asked a number of questions about the Phoenix pay system in the past and I want to continue that line of questioning.

IBM has now stated that it knew the problems would arise. They say they told the government under Stephen Harper, who apparently ignored them.

It seems to me that governments should do due diligence when they’re making major purchases and changes in how they administer the Government of Canada.

In 2010, Queensland in Australia had similar problems. Well, when you’re making a major change, one would hope that the government does its due diligence, goes and checks with other customers, asks customers if the product works, if it can adjust to the government’s way of doing things. I’m sure that the government of Queensland in Australia is not that different from the Government of Canada.

Then the government changed to the one you are now part of, and it appears the government continued to ignore the warnings that IBM insists they posed. Could you explain why they were ignored and the government did not slow down the roll-out?

Secondly, I have asked several times here in the Senate about when the government will sue IBM for compensation because of this. They say it is not their fault. It has cost the taxpayers of this country almost $1 billion. That’s $1 billion in tax dollars that could go to providing well-deserved services to Canadians from coast to coast to coast; $1 billion that now sits in the coffers of IBM because we didn’t do due diligence or they didn’t deliver a good product. When are we going to sue them?

If it turns out that they are indeed culpable, even though they have denied the blame, is the government prepared to take every action necessary to recover monies spent by the federal government to fix this problem?

Hon. Carla Qualtrough, P.C., M.P., Minister of Public Services and Procurement: I thank the honourable senator for his question.

Sir, the relationship with IBM is indeed complex and dates back many years before we took government, as you referred to.

An open and transparent procurement process was undertaken under which IBM was determined the successful bidder for the right to develop a pay system for the Government of Canada.

During the process of negotiations and in the early stages of their delivery of this software, the government at the time significantly descoped the work that IBM was going to do. I can tell you different functionalities that were put off the contract and I can tell you that at different times the relationship with IBM was strained with the former government.

What I can assure you is that our government is holding IBM to the letter of the contract that ultimately resulted for the delivery of the Phoenix pay system.


This was a massive, enterprise-wise, business transformation that was treated as a cost-cutting measure. It’s very difficult to see how it could have been seen simply as the purchase of a piece of software when in fact there should have been massive change management, business transformation, policy change, process review, governance structure change. But fundamentally, at its core, with what IBM was asked to deliver under its contract, they are being held to those deliverables.

The challenging part for us is that only holding them to those deliverables has not resulted in a functioning HR-to-pay system that we need in the Government of Canada to pay everyone accurately and on time every two weeks.