Phoenix pay system could cost as much as $2.6B

The troubled Phoenix pay system for Canadian public servants will need over a billion more dollars to fix once and for all, a process that could take another four years, a federal watchdog says.

Parliamentary Budget Officer Yves Giroux said in a report released Thursday that the final cost of the system, which has improperly paid tens of thousands of public servants since launching in 2016, could be as high as $2.6 billion.

The government has spent or plans to spend more than $1.5 billion so far, according to the latest federal budget.

Giroux said the new pay system should take $57 million to launch, which he estimated won’t happen until 2023 at the earliest because Phoenix has to be stabilized first.

“[If not, it] would be putting a bunch of garbage into a new system … [We need] sound, accurate data to feed into a new system,” he told reporters Thursday morning.

He said it should take about $105 million per year to run the new system, which needs to be able to handle the complex network of dozens of different federal collective agreements and their benefit, pension and salary quirks.

“It could require very expensive customization,” Giroux said.

“The solution can’t be off the shelf. There’s no system that can deal with that level of complexity … We don’t know how much because when we tried to get that information, [we were told] it’s all commercially sensitive.”

5 companies vying to replace system

The government budgeted $16 million starting last year to start replacing Phoenix, but has not yet awarded a contract.

Five firms are in the process to replace the system, but the government is moving through the process slowly to try to ensure the same mistakes aren’t repeated.

IBM, the company that built Phoenix, did not bid on creating the replacement

What began as a $5.7-million contract with IBM to replace the government’s previous pay system has now ballooned to more than $393 million.

The system still has a backlog of almost 250,000 cases above what would be considered normal as of the government’s last update on March 20.