Appearance of the Deputy Minister - Standing Committee on Public Accounts (PACP)  - May 27, 2021

Opening

Mr. Chair,

Thank you for the invitation to appear before the committee today.

Employment and Social Development Canada welcomes the Report and accepts the recommendation pertaining to the Benefits Delivery Modernization (BDM) Programme.

At the time of the audit, the Benefits Delivery Modernization Program was still in its program development phase and the governance structure had not yet been finalized. While a governance structure has been in place throughout the project, it was finalized in February to take into consideration the creation of the Deputy Minister Core Services Committee. This addresses the Auditor General's recommendation for ESDC.

Again, thank you for the opportunity to appear before you today.

-30-

Report Ref. No

1.53

Issue

Are appropriate governance mechanisms in place to support complex IT procurements at Employment and Social Development Canada?

Key facts

• The Auditor General of Canada (AG) 2021 Report on Procuring Complex Information Technology Solutions is an independent assurance report focused on the procurement of complex information technology solutions for the federal government. It covers the period of April 1, 2018 to August 31, 2020.
• The AG Report examined 3 major IT initiatives (NextGen Pay, Benefits Delivery Modernization (BDM), and Workplace Communication Services), focusing on whether the federal organizations responsible for procuring these initiatives were on track to support the achievement of business outcomes and uphold the Government of Canada's commitment to fairness, openness, and transparency in procurement.
• Overall, the AG Report found that ESDC made good progress toward adopting agile procurement practices for large IT systems and that the BDM procurement team engaged private sector suppliers early in the procurement process to create clearer solicitation documents, as well as adopting innovative techniques for evaluating proposals.
• However, the AG Report found that governance mechanisms to engage senior representatives of the federal organizations in the 3 complex IT procurements could be strengthened.
• Specifically, the AG Report found that Employment and Social Development Canada (ESDC) had not established a clear governance structure for the BDM Programme, noting in 2019 that an independent review of the program reported unclear accountabilities and gaps in the Programme's formal processes for decision-making.
• The AG Report recommended that ESDC should ensure that governance mechanisms were in place to engage senior representatives of concerned departments and agencies for BDM.

Response

• ESDC agreed to the Recommendation (1.53) made in the AG Report. At the time of the audit, the governance structure was in development in parallel with the remainder of the BDM Programme, but was not yet finalized.
• As of February 2021, there was a finalized and approved governance structure in place with clear decision-making authorities to effectively lead and govern the Programme.
• The structure adopts a holistic approach that integrates stakeholders through decision-making bodies, decision-making individuals, and bodies with advisory and assurance roles. The engagement of stakeholders across multiple fora ensures that the initiatives have the support they need to move forward and that business outcomes are met.

There are 3 layers to the governance structure:

• enterprise level: focuses on policy intent, strategic risks, funding and the controlled release of funding:
  • Deputy Minister (DM) Core Services Committee: provides advice to the Sponsoring Group and the Senior Responsible Owner;
  • sponsoring group: focuses on the major Programme strategy, risks, benefits, funding, and costing elements of the Programme.
• programme level: focuses on the vision and outcomes of the Programme; clarity and achievement of key benefits; visibility of the Programme plan and Programme milestones; monitoring of overall funding for the Programme; and review and approval of each Tranche:
  • programme board: endorses key artifacts and provides advice in support of the Senior Responsible Owner (SRO);
  • the Task Authorization Review Board (TARB) provides advice to the SRO on the issuance of BDM Task Authorizations and the execution of ancillary procurements.
• project and Work Package Level: focuses on ensuring the projects' dossier aligns with the blueprint and business case; identifies and structures the work packages; and leads/drives change:
  • Work Stream Boards: Review and approve Project stages.

Background

The Government first announced the BDM Programme in Budget 2017. The BDM Programme is the enterprise platform for the delivery of ESDC's major statutory benefits – Employment Insurance, Canada Pension Plan, and Old Age Security.

BDM is a business-led, IT-enabled transformation that will deliver tangible benefits for clients and employers through a broad range of e-services that are easy to use. Canadians will be provided with an enhanced, consistent, and modern client experience. Wait times will be reduced, applications streamlined, and there will be efficient delivery with faster payment of benefits, proactive communication, and status updates to keep clients well-informed.

A long-term, multi-phase BDM Programme will establish a platform that will make the next generation of benefits processing capable of addressing dynamic client expectations, changing business, and the economic environment.

The BDM Programme is following an agile approach to implementation – iterative, incremental and progressive builds – with a strong focus on business change management and risk management. The modernized platform is being implemented incrementally in 4 phases, over the course of 10 years. OAS is currently planned to be the first benefits program to leverage the BDM Foundations platform.

Citations / Key quotes

N/A

Key contact

Name: Gerard Baetens

Title: Executive Workstream Lead

Phone number: 613-552-5516

Date

Date approved in COOO: May 21, 2021

Issue

1. Why does the Benefits Delivery Modernization (BDM) Programme require $2.2B?
2. How is the BDM Programme leveraging Lessons Learned from the Phoenix implementation?
3. Will BDM use the same IBM software as was used for Phoenix?

Key facts

• The Auditor General of Canada (AG) 2021 Report on Procuring Complex Information Technology Solutions is an independent assurance report focused on the procurement of complex information technology solutions for the federal government. It covers the period of April 1, 2018 to August 31, 2020.
• Employment and Social Development Canada's (ESDC) Benefits Delivery Modernization (BDM) Programme was included in the report, along with Shared Services Canada for Workplace Communication Services, the Treasury Board of Canada Secretariat (TBS) for Next Gen Pay and Public Services and Procurement Canada (PSPC), as the contracting authority for ESDC and TBS.
• The objective of the report was to determine whether procurements for complex IT solutions were planned and carried out in a way that supported the achievement of business outcomes and the Government's commitment to promote fairness, openness, and transparency.
• Overall, the report found that ESDC made good progress towards adopting agile procurement practices for large IT systems. Further, it found that the BDM procurement team engaged private sector suppliers early in the procurement process to create clearer solicitation documents, and adopted innovative techniques for evaluating proposals.

Response

1. Why does the Benefits Delivery Modernization (BDM) Programme require $2.2B?

• ESDC is the largest federal service delivery organization in Canada, providing $136 billion in direct benefits to Canadians in 2019 to 2020 through key programs, including Employment Insurance (EI), Canada Pension Plan (CPP), Old Age Security (OAS) and other statutory transfer payment programs. The BDM Programme is the Government of Canada's strategy and enterprise platform for the delivery of these major statutory benefits.
• This magnitude of benefits and interactions with Canadians highlights the importance of a strong service delivery model to provide clients with timely access to their benefits.
• BDM represents an investment in a modern service delivery model that will standardize technology, processes and operational models. It will address ESDC's legacy IT systems that are outdated and nearing the end of their lifecycle. [This sentence has been redacted].
• The BDM Programme leverages industry advice, best practices, and existing commercial off-the-shelf technology to provide a new digital interface that is technologically sound and sustainable.

2. How is the BDM Programme leveraging the lessons learned from the Phoenix implementation?

• The implementation of the Phoenix pay system has yielded valuable experience relating to large-scale IT transformations. Goss Gilroy, an independent, third-party firm, conducted Lessons Learned from the Transformation of Pay Administration Initiative on behalf of both TBS and PSPC. ESDC has incorporated those lessons into the development of the BDM Programme to risk manage large-scale system transitions by:
  • maintaining the existing systems in parallel during the entire transformation;
  • avoiding a “Big Bang” approach in favour of a phased strategy that gradually introduces new systems and processes using a solid change management strategy;
  • minimizing the impact of potential issues by transferring smaller groups of clients into the new systems at a time;
  • ensuring that senior management and departmental experts are briefed at all times throughout the different stages of the transformation, and;
  • providing senior executives with independent information about the status of the Programme.

3. Will BDM use the same IBM software as was used for Phoenix?

No. Phoenix used IBM Oracle PeopleSoft Software. BDM will be using a different IBM application –IBM Social Program Management. It is a business and technology solution that delivers prebuilt social program components, business processes, tool sets and interfaces that can be configured to meet ESDC's requirements.

As of 2019, this solution has been successfully implemented in 972 government social programs in 19 countries, including 4 provincial jurisdictions. Approximately 64 million citizens are currently receiving benefits through IBM SPM and 250,000 caseworkers are using it to provide human-centered case management.

Background

The Government first announced the BDM Programme in Budget 2017. The BDM Programme is the enterprise platform for the delivery of ESDC's major statutory benefits – EI, CPP, and OAS.

BDM is a business-led, IT-enabled transformation that will deliver tangible benefits for clients and employers through a broad range of e-services that are easy to use. Canadians will be provided with an enhanced, consistent, and modern client experience. Wait times will be reduced, applications streamlined, and there will be efficient delivery with faster payment of benefits, proactive communication and status updates to keep clients well-informed.

A long-term, multi-phase BDM Programme will establish a platform that will make the next generation of benefits processing capable of addressing dynamic client expectations, changing business and economic environment.

The BDM Programme is following an agile approach to implementation – iterative, incremental and progressive builds – with a strong focus on business change management and risk management. The modernized platform is being implemented incrementally in 4 phases, over the course of 10 years. OAS is currently planned to be the first benefits program to leverage the BDM Foundations platform.

Key contact

Name: Dee Green

Title: Director, Strategic Planning and Integration

Phone number: 613-314-9564

Date

Date approved in COOO: May 20, 2021

Training/Transfer to PTs

Employment Insurance

Non-EI Eligible

Temporary Foreign Workers

Students

Youth

Early Learning and Child Care

Federally Regulated Workplaces

Other

Issue

What is Government of Canada doing to improve the way it delivers benefits to Canadians, including efforts to improve and modernize its benefits delivery platform?

Key facts

• Employment and Social Development Canada (ESDC) is the largest federal service delivery organization in Canada, providing $136 billion in direct benefits to Canadians in 2019 to 2020 through key programs including Employment Insurance (EI), Canada Pension Plan (CPP), Old Age Security (OAS), Canada Emergency Response Benefits (CERB), and other statutory transfer payment programs.
• Canada's social programs and benefits are governed by complex legislation, regulations, and policies that have evolved over the decades. Interpreting these complexities in computer code has led to equally complex, less robust, and rigid benefits delivery systems over time. The Government of Canada's current information technology (IT) legacy systems are aging and in need of modernization – [This sentence has been redacted]
• There are considerable costs and risks in continuing to extend the life of our systems. Challenges include: costly maintenance and upgrades; coding complexities that can slow down policy implementation; security issues; potential errors and mispayments; and extended wait times for clients.
• ESDC is investing in the Benefits Delivery Modernization (BDM) Programme to address the risk of system failures from aging IT and to provide improved service delivery to Canadians. BDM will streamline the structure, process, performance, and client experience of benefits delivery.

Response

• The Government of Canada is committed to delivering easy to use, seamless, digitally-enabled services that put the needs and expectations of Canadians first.
• Many of Employment and Social Development Canada's (ESDC) legacy IT systems are nearing the end of their lifecycle and are becoming increasingly fragile, impeding the Department's ability to quickly implement policy, program, and business process changes.
• The Government of Canada is investing in the BDM Programme, a business-led, IT-enabled transformation that will provide Canadians and employers with a modern client experience, reduced wait times, streamlined applications, and faster payment of benefits.
• BDM's technology component will focus on replacing a suite of aging IT systems and tools with a modern, integrated technology solution that will respond quickly to policy and other business changes, as well as support the expanding service delivery expectations of the future. In the meantime, legacy mission critical systems will remain operational and run in parallel with and interdependently of BDM.
• Since March 2020, ESDC has been at the forefront of the Government of Canada's response to the COVID-19 pandemic. An early version of the technology that will be used for the BDM Programme was leveraged to deliver the one-time payment to persons with disabilities and the Fish Harvester Grant and Benefit. The 2 new benefit payments were delivered to Canadians in just 15 weeks, from decision to implementation.

Background

The Government of Canada first announced the BDM Programme in Budget 2017. The BDM Programme is the enterprise platform for the delivery of ESDC's major statutory benefits – Employment Insurance, Canada Pension Plan, and Old Age Security.

BDM is a business-led, IT-enabled transformation that will deliver tangible benefits for clients and employers through a broad range of e-services that are easy to use. Canadians will be provided with an enhanced, consistent, and modern client experience. Wait times will be reduced, applications streamlined, and delivery of benefits made more efficient with faster payment of benefits, proactive communication, and status updates to keep clients well-informed.

A long-term, multi-phase BDM Programme will establish a platform that will make the next generation of benefits processing capable of addressing dynamic client expectations, changing business, and economic environment.

The BDM Programme is following an agile approach to implementation – iterative, incremental, and progressive builds – with a strong focus on business change management and risk management. The modernized platform is being implemented incrementally in 4 phases, over the course of 10 years. OAS is currently set to be the first benefits program to be delivered on the BDM Foundations platform.

Key quotes

N/A

Key contact

Name: Ree Schwartz

Title: Manager, BDM Strategic Communications

Phone number: (613 )406-8763

Approved by

Name: Susan Ingram

Title: DG, Enterprise Major Projects Execution

Phone number: (819)654-6163

Date

Date approved in COOO: May 20, 2021

Issue

What is the progress made to date on the Benefits Delivery Modernization (BDM) Programme?

Key facts

• The Government of Canada is investing in the Benefits Delivery Modernization (BDM) Programme, a business-led, IT-enabled transformation that will provide Canadians and employers with a modern client experience, reduced wait times, streamlined applications, and faster payment of benefits.
• Significant ground work has been put in place, with funding received in 2017, 2019, and 2020 that includes:
  • the Core Technology upon which benefits delivery will be based
  • a qualified supplier working group that will help to de-risk the overall delivery of the Programme
  • the BDM Blueprint, which offers a high-level outline of the target state operating model that will be achieved by the end of the Programme, as well as the capabilities and outcomes necessary to provide the experience Canadians expect
  • defined architecture and projects needed to deliver BDM capabilities required in the first implementation phase (running from 2021 to 2024)

Response

• The Government of Canada is committed to delivering easy to use, seamless, digitally enabled services that put the needs and expectations of Canadians first.
• The Government of Canada is investing in the BDM Programme, a business-led, IT-enabled transformation that will provide Canadians and employers with a modern client experience, reduced wait times, streamlined applications, and faster payment of benefits.
• BDM's technology component will focus on replacing a suite of aging systems and tools with a modern, integrated technology solution that will quickly respond to policy and other business changes, as well as support expanding service delivery expectations into the future. In the meantime, legacy mission critical systems will remain operational and run in parallel with and interdependently of BDM.
• Since March 2020, ESDC has been at the forefront of the Government of Canada's response to the COVID-19 pandemic. An early version of the technology that will be used for the BDM Programme was leveraged to deliver the one-time payment to persons with disabilities and the Fish Harvester Grant and Benefit.
• Additional foundation work includes:
  • engaging with industry and stakeholders to develop a comprehensive implementation plan
  • engaging with citizens and ESDC employees to design the modernized service delivery model
  • Completing a collaborative procurement process, resulting in the onboarding of 7 qualified suppliers of IT systems and business solutions, and
  • Conducting 7 prototypes (Cloud; Deployment Approach; Data Model and Governance; Workforce and Workload Management; User Experience; and Solution Architecture) to de-risk the Programme and inform design decisions
• The BDM Programme has recently entered the implemementation phase that will create a new, scalable digital platform to make applying for benefits easier and faster. This first phase will focus on building the core platform and developing foundational capabilities that will enable the Programme to onboard benefits.

Background

The Government of Canada first announced the BDM Programme in Budget 2017. The BDM Programme is the enterprise platform for the delivery of ESDC's major statutory benefits – Employment Insurance (EI), Canada Pension Plan (CPP), and Old Age Security (OAS).

BDM is a business-led, IT-enabled transformation that will deliver tangible benefits for clients and employers through a broad range of e-services that are easy to use. Canadians will be provided with an enhanced, consistent, and modern client experience. Wait times will be reduced, applications streamlined, and there will be efficient delivery with faster payment of benefits, proactive communication and status updates to keep clients well-informed.

A long-term, multi-phase BDM Programme will establish a platform that will make the next generation of benefits processing capable of addressing dynamic client expectations, including changing business and economic environments.

The BDM Programme is following an agile approach to implementation – iterative, incremental and progressive builds – with a strong focus on business change management and risk management. The modernized platform is being implemented incrementally in 4 phases, over the course of 10 years. OAS is currently planned to be the first benefits program to be delivered on the BDM Foundations platform.

Key quotes

N/A

Key contact

Name: Ree Schwartz

Title: Manager, BDM Strategic Communications

Phone number: (613)406-8763

Approved by

Name: Susan Ingram

Title: DG, Enterprise Major Projects Execution

Phone number: (819) 654-6163

Date

Date approved in COOO: May 20, 2021

Issue

What is the evolution and what mechanisms were put in place for the governance of the Benefits Delivery Modernization (BDM) Programme?

Key facts

• BDM is a Programme that spans activities from design, procurement, governance, and oversight through to prototyping, testing, and implementation.
• The Programme has a multi-level governance structure and an agile assurance function that supports Treasury Board to ensure proper oversight. The governance structure was finalized and approved as of February 2021.
• The BDM Governance structure documents and clearly communicates roles and responsibilities for all stakeholders, allowing them to participate directly in decision-making and advisory roles.
• A dedicated BDM internal audit team provides targeted insights on Programme planning; progress and reporting; and ensures that concerns are addressed in a timely fashion.

Response

The BDM governance structure adopts a holistic approach that integrates stakeholders through decision-making bodies, decision-making individuals, and bodies with advisory and assurance roles.

There are 3 layers to the governance structure:

• enterprise level: focuses on policy intent, strategic risks, funding, and the controlled release of funding:
  • Deputy Minister (DM) Core Services Committee: provides advice to the Sponsoring Group and the Senior Responsible Owner
  • sponsoring group: focuses on the major Programme strategy, risks, benefits, funding, and costing elements of the Programme
• programme level: focuses on the vision and outcomes of the Programme; clarity and achievement of key benefits; visibility of the Programme plan and Programme milestones; monitoring of overall funding for the Programme; and review and approval of each Tranche:
  • programme board: endorses key artifacts and provides advice in support of the Senior Responsible Owner (SRO)
  • the Task Authorization Review Board (TARB): provides advice to the SRO on the issuance of BDM Task Authorizations and the execution of ancillary procurements
• project and work package level: focuses on ensuring the projects dossier aligns with the blueprint and business case; identifies and structures work packages; and leads/drives change:
  • Work Stream Boards: review and approve project stages

BDM ensures oversight from the Treasury Board Secretariat (TBS), Shared Services Canada (SSC), Finance Canada (FC), and Public Services and Procurement Canada (PSPC) by including key, ADM-level stakeholders from these departments in Enterprise and Programme level committees and advisory bodies. These fora ensure transformation initiatives have the support they need to move forward and that business outcomes are met.

Background

The Government of Canada first announced the BDM Programme in Budget 2017. The BDM Programme is the enterprise platform for the delivery of ESDC's major statutory benefits – Employment Insurance, Canada Pension Plan, and Old Age Security.

BDM is a business-led, IT-enabled transformation that will deliver tangible benefits for clients and employers through a broad range of e-services that are easy to use. Canadians will be provided with an enhanced, consistent, and modern client experience. Wait times will be reduced; applications streamlined; and there will be efficient delivery of benefits, with faster payment, proactive communication, and status updates to keep clients well-informed.

A long-term, multi-phase BDM Programme will establish a platform that will make the next generation of benefits processing capable of addressing dynamic client expectations, within changing business and economic environments.

The BDM Programme is following an agile approach to implementation – iterative, incremental and progressive builds – with a strong focus on business change and risk management. The modernized platform is being implemented incrementally in 4 phases referred to as tranches over the course of 10 years. OAS is currently planned to be the first benefits program to leverage the BDM Foundations platform.

Citations / Key quotes

N/A

Key contact

Name: Gerard Baetens

Title: Executive Workstream Lead

Phone number: 613 552-5516

Date

Date approved in COOO: May 20, 2021

Issue

What is Employment and Social Development Canada (ESDC) doing to ensure stability of the IT in support program delivery and why is it requesting $51.0 million in funding for Stabilization of IT in Support of Program Delivery for fiscal year ending March 31, 2022?

Key facts

• ESDC provides more than $122 billion in direct benefits to millions of Canadians every year.
• ESDC information technology (IT) systems that enable the Department's service delivery are at risk of failure due to years of underinvestment.
• Recognizing the short term need to stabilize and remediate ESDC's IT systems, in May 2020 the Government of Canada approved $469 million over 6 years (2020 to 2021 and 2025 to 2026) to mitigate the risk.
• In Budget 2021, the government announced another $51 million over 2 years to address stabilizing systems related to the COVID response and security measures.

Response

• ESDC is the largest federal service delivery organization in Canada. However, chronic underinvestment in information technology (IT) has put ESDC in an unprecedented situation where the systems could fail and affect the ongoing delivery of critical programs and services to Canadians.
• [Part of this sentence has been redacted] such as improving disaster response for Employment Insurance IT services and improving coast to coast network performance.
• The additional $51 million is to maintain systems introduced as part of the Government's COVID response as well as additional security measures to support multi-factor authentication and ensuring Canadians information is secure.

Background

ESDC's IT systems that support the 3 major statutory programs (Employment Insurance, Canada Pension Plan and Old Age Security) [Part of this sentence has been redacted]. Notably, the Department identified its aging IT systems as the top risk in its 2020 to 2021 Departmental Plan that was tabled in Parliament on March 10, 2020.

[This paragraph has been redacted].

In November 2020, an initial investment of $149 million was allocated from the total approved funding of $469 million over 6 years to initiate the first phase of work needed to improve network performance, establish disaster recovery systems, and stabilize aging IT systems.

Citations / Key quotes

Nil

Prepared by

Name: Susan Donovan-Brown

Title: Director General, Business Operations Sustainability, Innovation, Information and Technology Branch

Phone number: 902-877-2801

Key contact

Name: Peter Littlefield

Title: Chief Information Officer

Phone number: 819-654-1400

Approved by

Name: Peter Littlefield

Title: Chief Information Officer

Phone number: 819-654-1400

Date

Date approved in ADMO: May 19, 2021

Issue

Why is Employment and Social Development Canada (ESDC) investing $68.1 million over 4 years for the Safeguarding Canadians' Personal Information, and how does the information technology involved align with the Department's Benefits Delivery Modernization initiatives?

Key Facts

It is critical that the Government of Canada continue to invest in measures to protect the personal information of Canadians.

Response

• The Government of Canada is committed to the timely, efficient, and accurate delivery of its programs, benefits and services and to protecting the integrity and privacy of the personal and sensitive information entrusted to it by Canadians.
• ESDC is the federal government's lead organization responsible for developing, managing and delivering a range of social programs and services. This mandated work inherently involves the collection of personal information from almost all Canadians at various points throughout their lives.
• Accurately providing the right programs, benefits and services starts with acquiring and maintaining the right information from Canadians, and ensuring that this data is effectively safeguarded.
• As the Department stabilizes its existing Information Technology infrastructure and modernizes its benefits delivery systems (instead of Benefits Delivery Modernization), investments to strengthen safeguards and enable digital services are fundamental to protect Canadians' personal information against internal and external exploits, attacks and data leakages.

Background

The Department of Employment and Social Development Canada (ESDC) collects personal information from almost all Canadians to facilitate timely, efficient, and accurate delivery of its programs and services.

As part of its core responsibilities, ESDC is committed to protecting the integrity and privacy of the personal data that it collects and retains through strong, well-established policies and procedures, which are continuously reviewed, updated and improved.

A recent risk and vulnerability assessment conducted by ESDC illustrates that while there are a number of security measures and controls in place, the Department needs to keep pace in an increasingly digital environment and do more to protect itself - and the information disclosed to it by Canadians - from proliferating and increasingly sophisticated threats.

Recognizing the importance of safeguarding Canadians' personal information from both internal and external threats, the Department of Finance provided funding of $68.1 million over 4 years to finance 3 key integrity initiatives:

• detecting Insider Threats ($47.8 million over 4 years)
• authentication and Login Credential Tools ($9.4 million over 3 years), and
• Digital Death Registration and Notification ($10.9 million over 3 years)

These investments will help to improve the integrity activities across ESDC programs, contributing to the Department's continuing efforts to reduce, prevent, identify and address error, abuse, fraud and potential identity theft.

It will also ensure that ESDC is better equipped to respond appropriately and effectively to existing and emerging threats of insider malfeasance, data hacks or leakages and privacy breaches.

Alignment with Benefits Delivery Modernization

The Department recognizes the importance of layered and interrelated controls and tools to protect and safeguard personal information.

As the core technology for Benefits Delivery Modernization (BDM) is implemented in its phased approach, the existing access monitoring solution will be configured to monitor the audit logs and employee activity within the BDM solution. While BDM is recognized as a future technology that will need to be on-boarded to the access monitoring solution, it is currently outside of the scope of the funding being provided for the Detecting Insider Threats initiative, which is to address the immediate need to monitor legacy applications.

As for the 2 other initiatives, the Department remains committed to working collaboratively with the Treasury Board of Canada Secretariat (TBS) in pursuing and enhancing enterprise-wide services, in the digital identity management domain, to better support client and Canadians. Although the scope of the initiatives are similar, Sign-in Canada is a longer-term project that cannot meet the Department's immediate obligations requirements. As such, a private sector solution is required to bridge the gap until a broader digital identity management solution is implemented by TBS.

Citations / Key Quotes

“Privacy is one of the single biggest issues of our time and our government is working hard to protect the privacy of Canadians in this digital age.”

“Our government is committed to making sure that Canadians' personal information is protected and secure.”

Prepared by

Name: Patrick Dessureault

Title: Director

Key Contact

Name: Jeremy Sales

Title: Director General

Phone Number: 873-353-5024

Approved by

Name: Élise Boisjoly

Title: Assistant Deputy Minister

Phone Number: 819-654-4826

and

Name: N/A

Title: Chief Financial Officer, CFOB

Phone number: 819-654-6634

Date

Date approved in COOO: May 20, 2021

1. Background

On February 25, 2021, the Auditor General (AG) of Canada, Karen Hogan, tabled 5 performance audit reports before the House of Commons. Report 1—Procuring Complex Information Technology (IT) Solutions will be the focus of the Public Accounts Committee (PACP) meeting of May 27, 2021.

The meeting will provide Committee Members with the opportunity to query you, as Accounting Officer, on the conclusions and recommendations found in the audit. Your colleagues from Public Services and Procurement Canada (PSPC), Shared Services Canada (SSC), and Treasury Board of Canada Secretariat (TBS) will also appear on May 27.  The AG will also be present.

Of note, the AG appeared before PACP on March 11, 2021, to discuss the 5 performance audits. The audit on Report 1 concluded that Employment and Social Development Canada (ESDC), TBS, PSPC, and SSC made progress in modernizing their respective procurement approaches. During her appearance, the AG spoke positively about the new « agile » procurement practices that included breaking down megaprojects into smaller projects; the engagement of end-users and private sector suppliers to define business needs, as well as the design solutions that took place throughout the process. Despite the positive findings, the AG found that there was room for improvement in some areas, such as guidance and training for procurement officers and better mechanisms for monitoring fairness, openness, and transparency.

The audit examined 3 major IT initiatives: Next Generation Human Resources and Pay, Benefits Delivery Modernization (BDM), and the Workplace Communication Services. The AG recommended that ESDC, TBS and SSC ensure that governance mechanisms are in place to engage senior representatives of concerned departments and agencies for each of the complex IT procurements. The AG also stated that this would be particularly important to support agile procurements of complex IT initiatives and their successful achievement of business outcomes.

There are 2 additional recommendations appended to Report 1:

• that TBS, PSPC, and SSC develop more comprehensive guidance and training for employees to improve understanding of agile procurement and how to apply collaborative methods, and
• that TBS, with input from PSPC and SSC, also assess what skills, competencies, and experience procurement officers need to support agile approaches to complex IT procurements

2. Committee Proceedings

On May 27, 2021, the AG will be provided with 5 minutes for an opening statement. The AG will share her remarks with witnesses in advance of the meeting.

You and your counterparts will each have 5 minutes for remarks. Furthermore, ESDC is required to provide a detailed action plan, in both official languages, to the Committee and the Office of the Auditor General of Canada 48 hours in advance of the meeting, which will also be posted on the Committee website.

The Chair is Ms. Kelly Block, a member of the Conservative Party of Canada (CPC). The 2 Vice-Chairs are Liberal MP Lloyd Longfield and Bloc Québécois (BQ) MP Maxime Blanchette-Joncas.

Other members include:

• Luc Berthold (CPC)
• Kody Blois (Liberal)
• Greg Fergus (Liberal)
• Matthew Green New Democratic Party (NDP)
• Philip Lawrence (CPC)
• Francesco Sorbara (Liberal)
• Len Webber (CPC)
• Jean Yip (Liberal)

PACP has agreed that questioning of witnesses would be allocated as follows:

Round 1: 6 minutes for the first questioner of each party as follows

• Conservative Party
• Liberal Party
• Bloc Québécois
• New Democratic Party;

For the second and subsequent rounds, the order and time for questioning is as follows:

• Conservative Party, 5 minutes
• Liberal Party, 5 minutes
• Bloc Québécois, 2 and a half minutes
• New Democratic Party, 2 and a half minutes
• Conservative Party, 5 minutes
• Liberal Party, 5 minutes.

3. Parliamentary and Media Analysis

Following the tabling of the February 25 audits, there were no questions on Report 1 in the House of Commons. In general, Report 1 received positive comments from the AG. However, the issue of aging technology and procurement has been raised in the past by previous AGs and studied at Committees. Most recently, media reported that the complexity in replacing the EI Legacy System would impact the modernization of the EI program itself. These topics are anticipated to be raised on May 27.

Improved Governance and the Benefits Delivery Modernization Project

During the PACP meeting of March 11th, the Bloc Quebecois (BQ) raised a number of questions regarding Report 1—Procuring Complex IT Solutions. More specifically, interventions focussed on the topic of governance in procurement projects and the effectiveness of the agile procurement process. Using Phoenix as an example, the BQ asked the AG if the Government has learned from past mistakes. In response, the AG found that the Government took the time to work with its suppliers to establish clear requirements before awarding the contract and engaged end users in the process, which was not always the case in the past. She stressed the importance of officials having demonstrated a willingness to collaborate and listen to user needs. The AG also noted areas for improvement in the area of governance. For example, for the Benefits Delivery Modernization project, it was determined that ESDC's governance structure lacked clear accountabilities and delays in formalizing an approved governance framework.

Legacy Systems: Impact on the Future of EI

PACP may ask questions on the investments proposed in Budget 2021 of $648 million to ESDC and the Treasury Board Secretariat over the next 7 years, starting in 2021 to 2022, to continue implementing the Benefits Delivery Modernization project, invest in Service Canada's IT systems and related activities, and support service delivery to Canadians going forward. Although the federal Budget includes a significant investment in IT, it also could suggest that anticipated improvements to the EI Program will take time to be completed. The modernization of EI is an issue of high interest to the NDP and the BQ and questions related to the possible delay in implementing changes to the EI program because of IT challenges could arise at PAPC. Of note, the 2020 Speech from the Throne included the commitment to modernize the EI system to deliver employment benefits to those who did not qualify for EI before the pandemic, including for the self-employed and those in the gig economy.

Aging IT Systems – Previous Audits and Committee Studies

The Office of the Auditor General published a Report in 2010: Chapter 1—Aging Information Technology Systems, which identified a risk measure associated with the delivery of Old Age Security and EI to Canadians by ESDC under an aging IT system. At the time, there were considerable costs and risks in continuing to extend the life and add on to the systems. In June 2010, at PACP, the AG told the Committee that several systems were at risk of breaking down. 10 years later, in February 2020, briefing notes prepared for the Prime Minister, released under the Access to Information Act, described the state of federal computer systems, which deliver billions in benefits, as being at "the precipice of collapse". Taking into consideration previous warnings from the AG regarding the risks and consequences associated with the aging IT systems, and the lengthy period of time it takes on average to update IT systems, the Committee could ask for specific timelines and whether the systems can sustain the demand until they are replaced.

Mandate of the committee

When the Speaker tables a report by the Auditor General in the House of Commons, it is automatically referred to the Public Accounts Committee. The Committee selects the chapters of the report it wants to study and calls the Auditor General and senior public servants from the audited organizations to appear before it to respond to the Office of the Auditor General's findings. The Committee also reviews the federal government's consolidated financial statements – the Public Accounts of Canada – and examines financial and/or accounting shortcomings raised by the Auditor General. At the conclusion of a study, the Committee may present a report to the House of Commons that includes recommendations to the government for improvements in administrative and financial practices and controls of federal departments and agencies.

Government policy, and the extent to which policy objectives are achieved, are generally not examined by the Public Accounts Committee. Instead, the Committee focuses on government administration – the economy and efficiency of program delivery as well as the adherence to government policies, directives and standards. The Committee seeks to hold the government to account for effective public administration and due regard for public funds.

Pursuant to Standing Order 108(3) of the House of Commons, the mandate of the Standing Committee on Public Accounts is to review and report on:

• the Public Accounts of Canada
• all reports of the Auditor General of Canada
• the Office of the Auditor General's Departmental Plan and Departmental Results Report, and
• any other matter that the House of Commons shall, from time to time, refer to the Committee

The Committee also reviews:

• the federal government's consolidated financial statements
• the Public Accounts of Canada
• makes recommendations to the government for improvements in spending practices, and
• the Estimates of the Office of the Auditor General

Other Responsibilities:

• the economy, efficiency and effectiveness of government administration
• the quality of administrative practices in the delivery of federal programs, and
• government's accountability to Parliament with regard to federal spending

Committee Members

Kelly Block (Saskatchewan - Carlton Trail—Eagle Creek) - Conservative  - Chair

Elected as the Member of Parliament in 2015 for Carlton Trail—

Eagle Creek, previously for Saskatoon—Rosetown—Biggar from 2008 to 2015.

Served as vice-chair on the Standing Committee on Transport, Infrastructure and Communities in the 42nd Parliament.

Member of the Liaison Standing Committee.

Previous member of the Standing Committee of Government Operations and Estimates in the 43rd and 41st Parliament, the Standing Committee of Finance in the 40th Parliament.

Served as the Opposition critic for Public Services and Procurement Canada (appointed by Andrew Scheer).

Prior to her election, Mrs. Block served 2 terms as the first female mayor of Waldheim, Saskatchewan, as chairperson of the Gabriel Springs Health District, and was awarded the Maclean's Parliamentarian of the Year – Rising Star – Award in June 2010.

Lloyd Longfield (Ontario—Guelph) – Liberal - First Vice-Chair

Elected as the Member of Parliament for the riding of Guelph in 2015.

Former member of the Public Accounts Committee (PACP) in the 43rd Parliament and is a standing Member of the Environment and Sustainable Development Committee (ENVI).

Former Executive Director of the Guelph Chamber of Commerce, and former business executive.

Maxime Blanchette-Joncas (Québec—Rimouski-Neigette – Témiscouata – Les Basques) - Bloc Québécois - Second vice-chair

Elected as the Member of Parliament for Rimouski-Neigette—Témiscouata—Les Basques in the 2019 federal election.

BQ Critic for Public Accounts.

Preceded in his riding by Guy Caron who served as the leader of the NDP from 2017 to 2019.

Business Administration graduate from the University of Quebec in Rimouski and former administrative officer at the Business Development Bank of Canada.

Was regional president of the Youth Forum of the Bloc Québécois.

Luc Berthold (Mégantic—L'Érable) – Conservative – Member

Elected as the Member of Parliament for Mégantic—L'Érable in 2015.

Critic for Treasury Board

Previously the Vice-Chair of the Standing Committee on Transport, Infrastructure and Communities, and the Standing Committee on Agriculture and Agri-Food.

Prior to his election, Mr. Berthold was Nathalie Normandeau's  Political Assistant, and communications advisor for the Leader of the Official Opposition in 1999, the Interim Director of communications for Quebec's Liberal Party in 2006, and worked as a speaker, coach and gave leadership training sessions.

Philip Lawrence (Northumberland—Peterborough South) – Conservative – Member

Elected as the Member of Parliament for the riding of Northumberland—Peterborough South in the 2019 federal election.

Shadow Minister of National Revenue.

Former member of Standing Committee of Justice and Human Rights.

Prior to his election, Mr. Lawrence received his BA from Brock University in Political Science, he attended Osgoode Hall Law School and the Schulich School of business to obtain his law degree and MBA and volunteered at the Financial Planning Standards Council.

Len Webber (Calgary Confederation) – Conservative – Member

Elected as the Member of Parliament for the riding of Calgary Confederation in 2015.

Former Vice-Chair of the Standing Committee on Health in the 42nd Parliament.

Previously a member on the Standing Committee on Health, the Subcommittee on Sports-Related Concussions in Canada of the Standing Committee on Health and the Subcommittee on Agenda and Procedure of the Standing Committee on Health.

Prior to his election, Mr. Webber was a Member of the Legislative Assembly of Alberta, representing the constituency of Calgary-Foothills from 2004 to 2014, work as an apprentice electrician and managed his own contracting company for 10 years, and served as vice president and director of the Webber Academy, a private, non-profit school in southwest Calgary for children from junior kindergarten to grade 12 founded by his father.

Matthew Green (Ontario—Hamilton Centre) – NDP – Member

Elected as the Member of Parliament foe Hamilton Centre in the 2019 federal election in the riding formerly held by NDP MP David Christopherson.

NDP Critic for National Revenue/CRA, Public Services and Procurement.

Former Councilor for the City of Hamilton (2014 to 2018).

Member of the House of Commons Standing Committee on Public Accounts (PACP), the Standing Committee on Government Operations and Estimates (OGGO), and the Subcommittee on Agenda and Procedure of the Standing Committee on Government Operations and Estimates.

Member of the Canada-Africa Parliamentary Association (CAAF) and the Canadian Section of ParlAmericas (CPAM).

Kody Blois (Kings—Hants) – Liberal – Member

Elected as the Member of Parliament for the riding of Kings—Hants in the 2019 federal election, in the riding formerly held by former TBS President Scott Brison.

Current member of the Standing Committee for Agriculture and Agri-Food, and the Subcommittee on Agenda and Procedure of the Standing Committee on Agriculture and Agri-Food.

Former member of the Standing Committee for Agriculture and Agri-Food, and the Standing Committee on Public Accounts.

Blois completed degrees in commerce, law, and public administration - which sparked his interest in serving his community.

Greg Fergus (Hull—Alymer) – Liberal – Member - Parliamentary Secretary to the President of the Treasury Board and Minister of Digital Government

Elected as the Member of Parliament for the riding of Hull—Aylmer in 2015.

Member of the Standing Committee on Access to Information, Privacy and Ethics.

Former member of the Standing Committee on Finance, and the Standing Committee on Public Accounts.

Current and Former Parliamentary Secretary to the President of the Treasury Board and Minister of Digital Government. Former Parliamentary Secretary to the Minister of Innovation, Science and Economic Development.

Former National Director of the Liberal Party of Canada and former political staffer in various Ministerial offices.

Francesco Sorbara (Vaughn—Woodbridge) – Liberal - Member

Elected as the Member of Parliament for the riding of Vaughan—Woodbridge in 2015.

Member of the Standing Committee on Access to Information, Privacy and Ethics.

Former member of the Standing Committee on Finance, as well as the Subcommittee on Agenda and Procedure of the Standing Committee on Finance, and the Standing Committee on Public Accounts.

Parliamentary Secretary to the Minister of National Revenue.

Sorbara is a chartered financial analyst and worked in the global financial markets for nearly 20 years in both Canada and the United States for Scotiabank, JPMorgan Chase, and global credit rating agency DBRS.

Jean Yip (Scarborough—Agincourt) – Liberal - Member

First elected in a by-election on December 11, 2017 as the Member of Parliament for the riding of Scarborough—Agincourt. Elected in 2019 as the Member of Parliament for the riding of Scarborough—Agincourt.

Current member of the Special Committee on Canada-China Relations.

Former member of the Public Accounts committee, and the Government Operations and Estimates Committee.

Witnesses

Office of the Auditor General

• Karen Hogan, Auditor General of Canada
• Dawn Campbell, Principal
• Dušan Duvnjak, Principal
• Philippe Le Goff, Principal
• Carol McCalla, Principal
• Nicholas Swales, Principal
• Glenn Wheeler, Principal

Highlights

In her opening remarks, the Auditor General noted that many of the government's IT systems are aging and need to the replaced. She said the OAG found that TBS, PSPC, ESDC and SSC made good progress in modernizing their procurement approaches, such as by breaking down megaprojects into smaller ones, and consulting with end users and sector suppliers to define needs and design solutions. She did note opportunities for improvement, such as guidance and training for procurement officers, and better mechanisms for monitoring fairness, openness and transparency.

The BQ asked questions regarding the Auditor General's findings on IT procurement, specifically whether the government had learned lessons on improving communication between departments and senior officials, issues which were identified during the development of the Phoenix Pay System. The Auditor General noted that while the government had improved engagement with respect to the development of the Next-Gen pay system, there were still some communication issues with respect to the other IT projects examined.

Committee members also expressed concerns over the Auditor General's findings on the government's efforts to date to improve access to safe drinking water in Indigenous communities, as well as with the National Shipbuilding Strategy, and rail safety.

Next Steps

The Committee continued with the OAG to consider the Main Estimates 2021 to 2022: Vote 1 under Office of the Auditor General, and the Report on Plans and Priorities 2021 to 2022 of the Office of the Auditor General of Canada. According to its regular schedule, the next meeting with take place on Tuesday, March 23.

Meeting Summary

In her opening remarks, the Auditor General noted that many of the government's IT systems are aging and need to the replaced. She said the OAG found that TBS, PSPC, ESDC and SSC made good progress in modernizing their procurement approaches, such as by breaking down megaprojects into smaller ones, and consulting with end users and sector suppliers to define needs and design solutions. She did note opportunities for improvement, such as guidance and training for procurement officers, and better mechanisms for monitoring fairness, openness and transparency.

Ms. Hogan also said the National Shipbuilding Strategy was slow to deliver procured ships, which presented the risk of existing ships being retired before replacements become operational. She also summarized the report's findings on the Canada Child Benefit, access to safe drinking water in First Nations communities, the Canadian Race Relations Foundation, and the follow-up audit on rail safety.

Questions from CPC members focused on:

• how many Indigenous communities still lack safe drinking water? What are the issues in addressing the remaining advisories? – Mr. Len Webber:
  • A (Ms. Hogan): As of November 2020, there were 100 advisories that were lifted, and 60 remained. The funding formula has not been revisited in 30 years and isn't meeting needs of communities.
• what are the causes of the staff retention issue at water treatment facilities? – Mr. Len Webber:
  • A (Ms. Hogan): It's about salaries, lack of suitable places to live, and integration into the community.
• my constituents in Lac Megantic are very concerned about rail safety. What can we do to ensure there are improvements? – Mr. Luc Berthold:
  • A (Ms. Hogan): The issue is that Transport Canada is taking measures, but hasn't been able to demonstrate whether they are effective.
• who at Transport Canada is responsible for this lack of follow up on the recommendations? – Mr. Luc Berthold:
  • A (Ms. Hogan): That's an odd question. I would say the DM of any department is responsible for the actions of the department. I don't know the sectors or individuals responsible.
• do you intend to follow up with another report on rail safety, and how quickly? – Mr. Luc Berthold:
  • A (Ms. Hogan): We'll do a follow up on a number of reports in the future, and intend to include this one.

Questions from LPC members focused on:

• how many drinking water advisories were in place at the beginning of the government's term, and have any been added since? – Mr. Greg Fergus:
  • A (Ms. Hogan): We noted that 100 had been removed, with 60 left at the end of the audit period. There's a graph in the report that shows the variation over time.
• I understand that 101 advisories had been lifted, but others had been added. What would it take to update the funding formula? – Mr. Greg Fergus:
  • A (Ms. Hogan): Our audit looked at long-term advisories (over 365 days), but there were shorter term advisories, including some over 300 days. Funding is an issue, but there also need to be long-term solutions, and an overall comprehensive plan. – Mr. Greg Fergus
• is the best solution one that is created with the communities themselves? – Mr. Greg Fergus:
  • A (Ms. Hogan): Yes, but each community is different, so engagement is needed.
• are regulations all we need, or do we need customized initiatives for each community? – Mr. Greg Fergus:
  • A (Ms. Hogan): Both. Regulations protect the communities, and they can also identify the solutions they need.
• on the National Shipbuilding Strategy, are the delays because we needed to build capacity over time? – Mr. Kody Blois:
  • A (Ms. Hogan): The departments did not do a good job of ensuring shipyards met their target states according to deadlines.
• how are shipbuilding time frame benchmarks established? – Mr. Kody Blois:
  • A (Mr. Swales): There were not benchmarks established for the initial ships, and the schedules were established by the shipyards to meet their commitments. For future projects, there has been more benchmarking, so we expect to see improvement.
• did maintenance issues delay the timelines? – Mr. Kody Blois:
  • A (Mr. Swales): We didn't speak to that, but rather the need for life extension, given ships aren't being produced on continuous time frames.
• on boil water advisories, it seems personnel training and maintenance capacity is an issue, in addition to funding. – Mr. Kody Blois:
  • A (Ms. Hogan): I agree. Having expertise in those communities is needed.

Questions from the BQ focused on:

• you seem optimistic with the current management of the IT changes to the public service, but a few things stood out. Is communication between officials up to par to ensure that problems like those with Phoenix never happen again? – Mr. Maxime Blanchette-Joncas:
  • A (Ms. Hogan): I'm encouraged the government is trying to do things differently. The procurement process has been agile. The government has learned lessons from Phoenix, and took time to engage with suppliers before laying out their needs and awarding a contract. It wasn't always efficient, but we noted they also consulted with end users. I'm encouraged, but we can't let our guard down.
• your 2018 report indicated a lack of communication between senior officials regarding Phoenix, and the 2020 report noted the same thing. Communication between officials on IT procurement seems to be a continuing issue. Things may be improving, but there are still problems. – Mr. Maxime Blanchette-Joncas:
  • A (Ms. Hogan): For the Next-Gen Pay System, Treasury Board got involved with managers, and departmental task forces were put together to involve others. We didn't see that with the Workplace Communication Services. You can have good policies, but also need willingness among individuals. This is a change in approach and mindset. An IT procurement is very complicated, so engagement is important. We've sometimes seen that problem, but it is a step forward.
• so you are saying you hope there will be more communication between departments and senior officials. – Mr. Maxime Blanchette-Joncas:
  • A (Ms. Hogan): Not for all 3 projects, we saw improvements with NextGen, but for the others, we did see problems with oversight, governance, roles and responsibilities, so this requires focus by senior officials.
• do you have any solutions to force your recommended improvements rail safety? – Mr. Maxime Blanchette-Joncas:
  • A (Ms. Hogan): I'm concerned about the time that has passed since 2013. This requires engagement between our office and the committee to ensure follow up.
• the government has put plans in place, but there's been a 40 % increase in railway accidents over the last 10 years. – Mr. Maxime Blanchette-Joncas:
  • yes, Transport Canada has increased the number of inspections and corrective measures. But note, regarding the increase in accidents, there has also been an increase in traffic.
• on the National Shipbuilding Strategy, could a greater diversity of projects among multiple companies have helped save money? – Mr. Maxime Blanchette-Joncas:
  • A (Ms. Hogan): The government decided to add a third shipyard, Davie. Only time will tell if this helps.
• did Davie help with savings and improve the timing? – Mr. Maxime Blanchette-Joncas:
  • A (Ms. Hogan): We didn't look at that, but Davie did qualify as an eligible supplier through an open process.
• on health transfers to provinces, could you do a new analysis, as the last time one was done in 2008? – Mr. Maxime Blanchette-Joncas:
  • A (Ms. Hogan): It's possible. We're looking at a number of options.

Questions from the NDP focused on:

• on safe drinking water, you noted the funding formulas were outdated. In your audit, did you come up with a figure of how much it would cost to solve it? – Mr. Matthew Green:
  • A (Ms. Hogan): We didn't focus on that side of it, but we questioned whether the additional funding was sufficient to fix the issue. The 30-year old funding formula may not meet needs of technology and new salary expectations.
• is there a dollar amount? – Mr. Matthew Green:
  • A (Mr. Wheeler): There's no overall assessment of the total cost needed, but the government has provided additional funding.
• I'm concerned about the focus on process, not outcomes, and that there isn't a total cost identified to solve this, and no regulatory regime to ensure access to safe drinking water. How do we address these shortfalls?  – Mr. Matthew Green:
  • A (Ms. Hogan): There was an act put in place, but not underlying regulations.
• on rail safety, is it fair to say there's no way to ensure safety management systems are resulting in improved safety? How can Transport Canada address this? – Mr. Matthew Green:
  • A (Mr. Wheeler): Transport Canada increased the number of audits on railway safety management systems, but couldn't demonstrate that this helped improved safety. They're missing that outcome step.