John Ivison: Ottawa's latest major IT project, ballooning by billions, presages another Phoenix debacle

Sources suggest the new price estimate would be a 357-per-cent increase on the original estimate, if confirmed

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Much of the routine business of Parliament is the subordination of substance to an endless obsession with trivia.

This week’s examination by the government operations committee of the $54-million ArriveCan app is a case in point. The focus of the investigation is to find out who is to blame for awarding millions of dollars of business to a company called GC Strategies, a firm with two employees that subcontracted the actual work to other people.

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This is not to suggest that MPs shouldn’t be concerned about misuse of taxpayers’ money.

But at the same time as ArriveCan is in the news, the government is proceeding with the largest IT project it has ever undertaken — Benefits Delivery Modernization (BDM).

BDM will move old age security (OAS), employment insurance (EI) and the Canada Pension Plan (CPP) — programs that last year delivered $150 billion in benefits to 10 million Canadians — into the cloud.

The project was announced in 2017 with an estimated price tag of $1.75 billion and an end date of 2030. Last year, a review by consultants PwC said initial cost estimates for software and implementation were well below the industry average and timelines would be longer than first thought. The new price tag was estimated at $3.4 billion (or higher) and the completion date was forecast to be 2034. Since then, a program review by Employment and Social Development Canada (ESDC), which is responsible for delivering benefits through Service Canada, said it has decided to implement a higher-than-anticipated level of cloud security for the new platform, which is likely to add further delays and cost increases.

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Sources suggest ESDC is set to go back to the Treasury Board Secretariat, which controls the public purse on the project, with a new price estimate of almost $8 billion. That would be a 357-per-cent increase on the original estimate, if confirmed.

In the ArriveCan study, everyone can understand the concept of a firm skimming off commissions for doing very little work — hence the witch-hunt for the culprit inside the bureaucracy.

But BDM is a more complicated beast.

Few, including ministers and even the senior public servants responsible for complex projects, understand what is involved in digitizing systems that are decades old and on the verge of collapse.

One person with knowledge of the IT system said the senior bureaucrats are often policy wonks who don’t understand operations, while the IT professionals are typically junior employees (immortalized by the basement-dwellers in the sitcom The IT Crowd) who spend the day playing video games and occasionally advising hapless co-workers with computer problems to “try turning it off and on again.”

As a result, projects are outsourced to consultancies with no incentive to reduce costs. One person with knowledge says it’s like a taxi taking an out-of-towner the long way round. “No-one knows how long it’s going to take or how much it’s going to cost — they just milk it,” he said.

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The inertia in government means big decisions are put off as long as possible and improbable fixes are ordered by inexpert executives, “like asking for ABS brakes and air conditioning in a 1950 VW Beetle,” according to one person. “They try to fix things that are beyond fixable.”

The risks in the case of BDM are asymmetric. In the wake of the long-gun registry and Phoenix pay system debacles, parliamentarians should be taking a much closer look at it and other large IT projects.

Karen Hogan, Canada’s auditor general, said in a report last month that some of the biggest and most important computer systems are falling apart and might crash. She pointed out that it has been more than 24 years since the government was first advised that aging systems were a significant issue, yet there is still no overall strategy to drive modernization. Her report says two-thirds of departmental applications are in critical need of updating.

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The pandemic nearly cratered the 50-year-old employment insurance system, which was used to seeing 7,000 to 9,000 claims a day but rocketed suddenly to 70,000 a day. There were grave doubts about the system’s ability to cope until the department’s tech team engineered a temporary fix that allowed claimants to receive the Canada Emergency Response Benefit without their claims being vetted at the front end.

There is no question that the platforms that deliver OAS, EI and CPP need to be updated but governments clearly need to be better at this stuff.

The delays and cost increases already experienced by Benefits Delivery Modernization do not inspire confidence.

The migration of OAS data to the new platform was originally due to be finalized by next month. That timeline was extended to next December and the auditor general said it may end up being December 2025. “Our review indicated significant risks this will happen,” she said in her review.

Some lessons from past failures do appear to have been learned. ESDC has proposed to be flexible in its approach, migrating people piecemeal from the old system, not all at once, to ensure Canadians continue receiving benefits, rather than risking a repeat of the Phoenix experience. In that case, budgets and schedules persuaded the Liberal government to roll it out without being certain it would work (which it didn’t).

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Being more agile and doing work in smaller chunks is likely to result in better outcomes but there are cost and time implications.

While that lesson has been learned, others seem to have been forgotten. There is no real system for overseeing large projects, with Treasury Board executives telling the auditor general it is only overseeing 15 to 25 of 2,100 active IT projects.

Once again, the obsession with trivia led the government to throw out the baby with the bathwater. The furor over management consultant McKinsey and Co. erupted because the number and value of its government contracts soared under the Liberals. Opposition parties claimed that McKinsey’s former global managing director, Dominic Barton, subsequently Canada’s ambassador in China, had improperly used his influence with the Trudeau Liberals to win business. But there was no evidence of political interference, and in its haste to exclude McKinsey, the government also expunged its oversight role on BDM.

On the Phoenix project, U.S. tech research and consulting firm, Gartner, identified dozens of significant risks facing the impending roll-out, such as the lack of end-to-end testing and concerns over training and support. Gartner suggested running Phoenix in tandem with the old system as a contingency.

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That advice was ignored. But proceeding with BDM without an independent, third-party opinion from a firm that is familiar with international best practice would appear to be a recipe for disaster.

Ottawa needs more senior executives with technical expertise to oversee contractors but also requires real-time audit and independent assurance.

Oversight is a necessity to course correct the optimism bias that exists in all large IT projects, according to those who have lived through such transitions. One person with knowledge said that everyone involved tends to be optimistic about success until it’s too late. “The light is always green, green, green just before it goes red. The light never goes yellow because no-one wants to tell you the truth,” he said. “Benchmarking tries to strip out the optimism bias.”

The real problem is that the system is set up to fail because it is focused on processes — budgets and timelines — rather than outcomes.

Ministers don’t want complicated tech talk; they want something they can tell the House of Commons during question period.

That results in what is known in the industry as a tech debt, where development teams take actions to expedite the delivery of projects which later need to be fixed — the result of prioritizing speed and cost over effectiveness.

It may well be that it will cost $8 billion to modernize the delivery of OAS, EI and CPP. That need not constitute a scandal, if the government manages the project professionally and the solution actually works.

Unfortunately, the suspicion is that the professionals are all in the private sector, rubbing their hands at the prospect of taking the amateurs in Ottawa for a ride.

National Post

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