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The Public Service Pay Centre in Miramichi, N.B. (Ron Ward/THE CANADIAN PRESS)
The Public Service Pay Centre in Miramichi, N.B. (Ron Ward/THE CANADIAN PRESS)

Cost to fix payroll system could hit $50-million, Ottawa reveals Add to ...

The federal government says the cost to fix its new Phoenix payroll system has nearly doubled in the past two weeks, and will now ring in at $45-million to $50-million.

Public Services and Procurement Canada deputy minister Marie Lemay revealed the new price Wednesday, a significant increase from the more than $25-million she estimated at the last biweekly update on the pay system. The problem-plagued system has affected the pay of more than 80,000 public servants, forcing some to max out credit cards or borrow money to pay their bills after missing paycheques for months.

“What this essentially means is that for this year, we will not see the full $70-million savings we anticipated to see on a yearly basis as a result of the pay transformation,” Ms. Lemay told reporters at a technical briefing in Ottawa. “I’m confident that we will see savings in the future years but for now our focus is on getting the pay system right and getting money flowing to employees.”

Phoenix was introduced as a part of the previous Conservative government’s modernization plan for the 40-year-old pay system in an effort to consolidate services; the Liberals were responsible for implementing it, starting in February. The government estimated that the transition to Phoenix would save $70-million annually.

While the government has blamed the Phoenix problems on insufficient training, the union representing public servants who operate the system says the IBM software has inherent glitches, such as an inability to process irregular pay. Now, the government is paying IBM more money in addition to its original contract to deal with some of those problems.

Out of the $45-million to $50-million that will be spent repairing Phoenix, $6-million will go to IBM to complete tasks outside of the original contract, according to Ms. Lemay. For instance, the government will pay to ensure that system maintenance takes place during evenings, overnights and weekends to improve capacity during the day. The additional $6-million brings the total Phoenix contract value to $141.8-million.

IBM said it does not comment on the specifics of its client agreements.

The remaining millions will go to five temporary satellite pay hubs, a call centre and “post-implementation” measures, such as 24/7 service to deal with internal Phoenix problems. Although Ms. Lemay said she does not expect the departmental price of fixing Phoenix to exceed $45-million to $50-million, she could not say what the cost of reimbursing public servants for out-of-pocket expenses would be.

The government has said it will compensate public servants for expenses incurred as as result of Phoenix problems, including late fees, if they can provide proof of payment. Ms. Lemay said the government is set to open a special office to deal with this claims process next week.

Officials also provided an update on the government’s repayment schedule, broken down by three priority levels.

Its immediate priority was to pay the public servants who missed entire paycheques by Aug. 10. Ms. Lemay said most of those who went unpaid have been compensated, but 59 new cases have emerged in the past two weeks.

The second priority was to pay public servants who have left the public service and have not received compensation, such as long-term disability or maternity-leave payments. The government said it will address those cases within four to six weeks of notification of the pay problem. As of Wednesday, Ms. Lemay said 335 new cases had been reported since Aug. 24 in this category.

Finally, the government committed to compensate the 82,000 public servants waiting on supplementary pay, such as overtime pay or pay increments, by the end of October. Ms. Lemay said that 14,500 of those cases have been resolved to date, leaving a backlog of 67,500 cases to be addressed in the next two months.

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