The Public Service Pay Centre in Miramichi, N.B., the home of the Pay Pod people. THE CANADIAN PRESS/Ron Ward

The federal government will have to conduct a review of all employees’ pay records to ensure they are accurate once the troubled Phoenix pay system is finally fixed, say federal officials.

Senior bureaucrats at Public Services and Procurement Canada told MPs at the Commons government operations committee Tuesday that some kind of a review will be needed to restore confidence and assure employees they are being paid properly.

“We are aware that over time, once we get to the point of stability in the system, we will need to offer some file review for employees so they can understand their pay stubs and they are getting what they are entitled to and, if there are any anomalies, we are able to address them,” said Les Linklater, the associate deputy minister who is overseeing the fixing of Phoenix.

It’s been two years since the calamitous rollout of the Phoenix pay system, built by IBM using PeopleSoft software. Today, half of Canada’s public service faces some kind of pay problem, eroding confidence in the system.

NDP MP Daniel Blaikie, who questioned whether an audit of files was needed, asked what process the government had in place to determine who owed union dues.

Phoenix has failed to collect union dues properly and no one knows how much is owed. The government has advanced the unions $14 million to cover outstanding dues over two years.

Public Services Minister Carla Qualtrough said some of these issues should be resolved by a pilot project at the Miriamichi pay centre in which compensation advisers are working in ‘pods’ dedicated to specific departments.

She said these teams are shifting from processing transaction by transaction to resolving all of an employee’s outstanding pay issues “to make them whole.” She said this provides the “big picture of an individual” and better understanding of what an employee owes the government and visa versa

But unpaid union dues are just the latest frustration public servants have faced over the past two years. The fickle Phoenix, which has overpaid them, underpaid them, not paid them at all or fouled up their tax slips, has left many wondering if they are even getting the correct pay every two weeks.

It’s unclear when a review would be conducted, but Qualtrough has said that Phoenix won’t be ‘stabilized’ before the end of 2018.

Many argue a review has to be done before the government launches a new pay system to ensure clean and accurate files are moved to the new system. Phoenix was dogged from the start by a large backlog of uncompleted files with data and records that had not been properly cleansed before they were moved to the new pay system.

The federal budget has given Treasury Board $16 million to begin the search for a Phoenix replacement.

Linklater said Treasury Board will appoint a senior bureaucrat to lead the process, co-ordinating input from key players, such as the chief information officer; chief human resources officer and comptroller general. Unions, the industry, and compensation staff who are processing pay transactions will also be consulted.

The budget also gave the PSPC more than $431 million towards stabilizing Phoenix.

That money will spent on hiring more compensation staff; improving or adding new technology and supporting employees. These expenditures will support new training, a revamped call centre and the claims office responsible for any out-of-pocket expenses employees faced because of Phoenix pay foul-ups.

Phoenix has cost the government more than $1 billion, including $645 million dealing with the pay crisis. The government now has 14 offices, including the main pay centre in Miramichi. N.B. and several satellite pay centres. The 550 compensation advisers who were supposed to process all pay transactions now number 1,500.

The Office of the Comptroller-General, the government’s chief financial officer, is also leading a major spending review to get a full picture of Phoenix costs. It will drill down into the millions that departments have spent — on top of normal pay costs — to manage Phoenix problems. That is expected to be completed by May.

The government is also expected to issue a $2-million contract next month with Oracle, which developed the PeopleSoft software that Phoenix and many departments’ human resource system are built on.

Linklater said Oracle will bring a “fresh eye” to the customization of its software to handle federal payroll and whether “it could be undone or revamped” to improve efficiency.

IBM was hired by the government to customize PeopleSoft and adapt it for the government, which has one of the most complex pay regimes in the country. The government has so far agreed to pay IBM more than $225 million.

That contract, however, has been amended with IBM now working on a “managed service arrangement” which Linklater said shifts more of the risk and responsibility to IBM because it must come up with a solution for problems when they arise. Under the previous “task authorization” arrangement, the government specified the work to be done.

The existing contract expires in 2019.

“They are taking on more risk, more of the routine running of pay; the 365 24-hours a day, which frees up our crown resources to focus more on the higher value, technical and functional fixes that will bridge some of the inefficiencies that we have” said Linklater.

IBM has come under fire for several high-profile system failures. Queensland Health in Australia unsuccessfully sued IBM over a botched pay system that will cost more than $1 billion to fix. Last year, Pennsylvania launched a lawsuit against IBM over a failed upgrade to its unemployment compensation system.

IBM has gotten off much easier with Phoenix and, so far hasn’t had to publicly answer for its role in how Phoenix was planned, tested or the problems that cropped up. PSPC officials have maintained that IBM did nothing wrong and delivered what was asked of it under the contract.

The Senate, which is holding hearings on Phoenix, has asked IBM officials to testify at hearings next week.

BY THE NUMBERS:

PSPC recapped for MPs the costs for Phoenix so far.

$309 million: cost to develop Phoenix, which was part of the Transformation of Pay Administration Initiative

$210 million- foregone savings over three years that departments used to to deal with Phoenix problems.

$14 million – advances to unions for union dues they are owed over two years.

$50 million – the amount of the first funding injection in 2016 to help hire more staff and fix Phoenix

$142 million – amount of the next funding instalment in 2017; most going to PSPC to hire more people, improve technology and support employees

$431 million – amount given to PSCP in 2018 budget to stabilize Phoenix

$16 million – amount the budget gave Treasury Board to start looking for a Phoenix replacement

$5.5 million – amount to Canada Revenue Agency to handle processing of tax re-assessments needed because of pay issues.