Minister of Public Services and Procurement Carla Qualtrough says her department underestimated the scope of the Phoenix project. iPolitics/Matthew Usherwood

An independent senator says the federal government is taking too much responsibility for the calamitous failure of the Phoenix pay system and wants to know why it isn’t suing the high-tech giant that built it.

Senator Douglas Black has asked Public Services Minister Carla Qualtrough to provide the Senate national finance committee with a copy of the IBM contract and any legal advice it received from Justice Canada lawyers on why the government shouldn’t sue IBM.

The committee is holding hearings into the Phoenix fiasco, which has cost the government more than $1 billion, including $645 million in fixes. Qualtrough and her officials testified late Tuesday.

“You’ve hired one of the world’s great service firms to implement this project, so I’m not sure why you’re tying yourselves in knots over this,” said Black. “Could we please see a copy of the opinion from the department of Justice dealing with their view on why we have not sued IBM for, starting with, $647 million.

The legal opinions received by departments are typically protected by solicitor-client privilege.

The government hired IBM in 2011 to implement Phoenix, which it built using PeopleSoft, an off-the-shelf software developed by Oracle. The government has so far agreed to pay IBM more than $225 million.

IBM has come under fire for other failed pay projects, mostly notably the one it built for Queensland Health – a smaller project than Phoenix — whose costs have exceeded $1 billion.

But IBM has managed to largely dodge spotlight for its role in Phoenix — other than the reputational blow of being associated with such a large IT failure. PSPC officials have deflected much criticism against IBM, arguing the company delivered what was asked of it under the contract.

The committee has asked officials from Queensland Health and IBM to testify next week.

But Black, who is a lawyer, said he believes that IBM, as a contractor, was a partner in Phoenix and bears some responsibility in making sure it works.

“You’re assuming too much responsibility upon yourself. Yes, somebody somewhere screwed up. We take that to the bank. That is patently obvious but I have to think you had a partner in this and I’m just not so sure that the partner doesn’t bear some responsibility. Maybe I’m wrong, but why do you not undertake to table the agreements with IBM and we can look at it?

But Qualtrough said the contract didn’t include many of the features and functions that proved disastrous for Phoenix.

As project manager, she said PSPC massively underestimated the complexity and scope of the project. That was compounded by weak governance and loose accountability and last-minute decisions to scrap training and change management to save money.

She noted the previous Conservative government also decided to abandon retroactive calculations which proved calamitous when Phoenix was swamped with dozens of collective agreements and other transactions that required retroactive payments.

Rather, the project was managed as an IT project and not a major transformation of the way pay and human resources are managed in Canada’s public service.

“It (the contract) was of a scope that did not include training; that did not include business transformation; that did not include integrating HR and pay systems. So what we bought was an off-the- shelf piece of software that had to be massively customized to address 80,000 business process rules related to collective agreements and other specifics to the government,” said Qualtrough.

But Black suggested IBM should have been warning the government about some of these pitfalls and risks.

“Why wouldn’t your independent contractor say minister, this is not the appropriate tool for the task at hand? That’s why I get so confused. Why didn’t somebody say this dog can’t hunt?”

“If IBM is able to skate by this, they are going to be able to say we were only doing what we were told. If they can get away with saying that that we are only doing what we were told, then there is another series of questions.

Qualtrough said she has met and developed a “strong relationship” with IBM’s senior brass and they consider themselves “partners.” She said the original contract has been renegotiated with IBM now assuming more risk and responsibility.

Under the previous “task authorization” arrangement, the government specified the work to be done. That meant PSPC would tell IBM what it wanted and prescribe how it would be done.

With its new “managed service” approach, PSPC tells IBM what outcomes or results it wants and leaves it up to IBM to decide how to do it.

Les Linklater, PSPC’s associate deputy minister who is overseeing the Phoenix fix, said the new arrangement will cost more because IBM is assuming more risk and responsibility but it frees up government resources for the “strategic technical fixes.”

“They go away and do it, but that means they take on more risk in doing that because it’s not prescribed. That’s reflected in the costing numbers; the cost for technological support is going up, he said.

Linklater said the Phoenix post-mortem report by consultants Goss Gilroy found governance was weak and the views of key players, including IBM, were not being tapped like they should have during Phoenix’s design and rollout.

He said PSPC “could have done more to invite the views of IBM.”

“I don’t think we did enough consultation and engagement to deal with some of the unique challenges we are seeing now,” said Linklater.

Many people who were involved in the project have said PSPC’s project managers had lots of warnings of problems – from departments, IBM and other consultants – but the concerns were watered down as they made their way up the bureaucratic chain of command.

PSPC received $431 million in the budget and most will be spent in the upcoming fiscal year. About $144 million has been earmarked for IBM for system improvements and $158 million on rebuilding PSPC’s “human resource capacity.”

Linklater said IBM is under contract for “in-service support” until June 2019. He said the department went to the market in late 2016 to see who may interested in a future contract but were “few takers” who expressed an interest.