PACC Committee Meeting

STANDING COMMITTEE ON PUBLIC ACCOUNTS

COMITÉ PERMANENT DES COMPTES PUBLICS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 28, 1997

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[English]

The Chairman (Mr. John Williams (St. Albert, Ref.)): Good afternoon, ladies and gentlemen. I'd like to call this meeting to order. Pursuant to Standing Order 108(3)(e), we will be considering chapter 12 of the April and October 1997 report of the Auditor General of Canada dealing with information technology and preparedness for the year 2000.

I would like to welcome our witnesses this afternoon. We have with us Mr. Desautels, the Auditor General of Canada. Assisting him are Mr. Doug Timmins, the Assistant Auditor General of Canada, and Ms. Nancy Cheng, the principal from the audit operations branch.

From the Treasury Board Secretariat we have with us Mr. Colin Potts, the deputy comptroller general, Mr. René Guindon, visiting assistant deputy minister for the year 2000 project office, and Mr. Paul Rummell, chief information officer.

In the interests of time, we have decided that opening statements will be limited to five minutes. If it's a long statement, a summary will be limited to five minutes and we can attach the entire statement to the minutes of the meeting.

We'll start with Mr. Desautels, if you would like to give us your opening statement or a summary thereof.

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Mr. L. Denis Desautels (Auditor General of Canada): Thank you, Mr. Chairman. I will give you my full opening statement. It will take less than five minutes.

Mr. Chairman, I would like to thank you for the opportunity to appear before this committee again to discuss at this time our October 1997 chapter on the federal government's preparedness for the year 2000.

As we all know, the year 2000 is a global phenomenon. It refers to the potential for systems errors and failures caused by the past computer practice of coding the year with two digits.

As we also know, nowadays we place significant reliance on information technology in various aspects of our lives. Businesses depend on systems for continuous operations and, more importantly, for competitive advantage. Governments rely on information systems to deliver programs and services to the public and to support operations. The year 2000 issue threatens those systems on which we've all come to rely.

Worldwide, the costs of dealing with the year 2000 have been estimated as high as $600 billion U.S. In Canada, total costs are estimated to range from $30 billion to $50 billion, and the Treasury Board Secretariat has estimated that the cost for the federal government will be about $1 billion.

[Translation]

Mr. Chairman, our audit concerned the risks and exposures that government programs and operations face as a result of the year 2000 threat. We reviewed the progress and state of preparation in a certain number of departments, and initiatives undertaken by the Chief Information Officer Branch of the Treasury Board Secretariat to advance government efforts concerning year 2000.

We supplemented our audit with a general survey of departments and agencies. We concluded, as of the end of April 1997, that the rate of progress has generally been slow and that the residual risks for system errors and failure from year 2000 remain high. In addition, significant exposures such as other competing priorities and insufficient technical resources could, if they materialize, jeopardize year 2000 efforts.

The Treasury Board Secretariat, under the leadership of the Chief Information Officer, has helped raise awareness in government and is working with departments and agencies to find common solutions. However, we are concerned that continuous delivery of major government programs and essential services into the 21st century remains at risk. The potential consequences for the government could be manifested as health and safety concerns, financial implications, disruption to essential services for the public or legal ramifications.

[English]

In our view, urgent and aggressive action is needed. We have recommended that year 2000 projects, including the development of contingency plans, be ranked as a top priority in departments and agencies and that high priority be assigned to identify and oversee the successful implementation of the most critical systems for the government as a whole.

We have emphasized the need for sustained commitment and support from senior management and for continued engagement of ministers, as appropriate, to address exposures and roadblocks that can derail year 2000 projects. And we have also recommended that the secretariat accelerate its work plan that addresses common issues for departments and agencies.

Mr. Chairman, this concludes my opening remarks. My colleagues and I would be pleased to answer questions that members of the committee may have.

The Chairman: Thank you, Mr. Desautels.

We also have a report from Mr. René Guindon. I understand that we didn't quite have enough copies to circulate. We have some more just arriving, so we'll distribute these as you are giving your five-minute overview or report, Mr. Guindon.

[Translation]

Mr. René Guindon (Visiting Assistant Deputy Minister, Year 2000 Project Office, Treasury Board Secretariat): Thank you. Mr. Chairman, Mr. Desautels and members of the committee,

[English]

I would like to begin my remarks by acknowledging the work of the Auditor General, especially in terms of raising the awareness of the seriousness of the year 2000 challenge. We agree it is essential that this issue take predominance quickly and we appreciate the momentum the Auditor General has given to the ongoing work of the government.

[Translation]

We share their concern and also appreciate the interest of the committee members.

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The Treasury Board has accorded the year 2000 compliance issue a high priority and an aggressive action plan of government-wide initiatives has been approved.

I believe that we have taken appropriate action to deal with the year 2000 day-to-day challenge.

The year 2000 compliance issue is not just a Canadian problem, but a global phenomenon that touches every country and every economic and business sector. It has the potential to seriously disrupt 90 per cent of all computer systems throughout the world. It touches every key sector of the Canadian economy.

[English]

How is the work progressing within government? In 1988 Treasury Board issued a four-digit date standard. Some departments at that time also began year 2000 repair work. In May 1986 a year 2000 project office was set up reporting directly to the chief information officer of Canada.

The project office is working closely with departments and agencies on common horizontal issues pertaining to the year 2000 compliance. A work plan has been implemented to address issues such as vendor compliance, human resources, procurement and legal accountability. Each department is responsible for ensuring the prompt conversion of its system and has established its own year 2000 project office to guide its conversion strategies.

[Translation]

A year 2000 Procurement Office has been established within Public Works and Government Services Canada and we are working with them to streamline the process.

A special high-key recruitment office has been set up within the Public Service Commission.

We have also set up with Government Telecommunications and Informatic Services of PWGSC, a repository of the compliance status of over 2,000 software packages and plan to have 3,000 completed by the spring of 1998.

[English]

A year 2000 intergovernmental working group has been established to ensure full co-operation on key issues. Year 2000 initiatives are standing agenda items, with heads of IT in government and the committee of deputy ministers involved with information management and technology within government.

An interdepartmental communications steering group is currently being set up to assist departments with their communications requirements. We are also in the process of monitoring and assessing departments to determine the systems that have direct impact on the safety, security and economic well-being of all Canadians. These government-wide, mission-critical systems are the government's first priority.

[Translation]

In addition, contingency plans will be developed in case any of these systems are not functional at this date.

The Project Office is sharing best practices and methodologies with departments to ensure maximum benefit from the work underway.

[English]

We are also working with our colleagues at Industry Canada and the industry partners we interface with to ensure that all are year 2000 compliant.

In summary, a great deal of progress has been made within and across departments, but we also recognize that a lot more work needs to be done. We are currently updating our assessment of the state of readiness of all departments to determine what, if any, exceptional measures may be necessary.

In July the Treasury Board ministers approved the processes now in place and we will be returning to them in the early December timeframe. Our objective now is to accelerate the pace and with the collaboration of many, including the Auditor General and the members of Parliament, we are confident we can meet this challenge.

Merci, monsieur le président.

The Chairman: Thank you, Mr. Guindon.

Now we'll open the floor to questions. You'll have eight minutes for the first round and four minutes for subsequent rounds.

Mr. Mayfield.

Mr. Philip Mayfield (Cariboo—Chilcotin, Ref.): Thank you very much, Mr. Chairman and good afternoon. I'm very pleased to be here with you to enter into this discussion. I'll try to keep my questions brief and maybe we'll cover as much ground with brief answers as well.

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In the Auditor General's report at, I believe, paragraph 12.76, it's written:

With less than three years to go, we are concerned that if progress continues at the existing rate it will likely be too slow to counter the Year 2000 threat effectively.

Would you be in agreement with that statement?

Mr. René Guindon: That we're too late to solve the problem?

Mr. Philip Mayfield: That there is a threat to this program, that it may not be effectively completed in time.

Mr. René Guindon: Our objective at this time is to ensure that all of the services we provide to the Canadian people will be met.

Since the summer we've identified a series of what we call “mission-critical systems” that are crucial in terms of the delivery of programs. We are confident, with some of the programs we've put in place, with some of the actions we've put in place, that we can meet this challenge. It's not an easy challenge, as I said before, but with the leadership we're providing and with the participation of departments, we are confident we can meet that challenge.

Mr. Philip Mayfield: Thank you very much.

I believe it's also included in the Auditor General's report that the pace of government activities is accelerating and will continue to accelerate to meet this unique challenge. I believe that's in your response.

I would ask you if you would table progress reports that include the work plan and the results of your accelerated efforts on a semi-annual basis to this committee and also on a quarterly basis to the Auditor General. I'm asking you, can you and will you do this?

Mr. René Guindon: I would be very happy to do so if it's really required. We are presently in the process of finalizing a second assessment. We did a first one in the early April timeframe. In the next few weeks and by early December I basically will have a much better appreciation of the whole state of readiness of the government.

At that particular point in time I would be very happy to be able to share some of that information, yes.

Mr. Philip Mayfield: I thank you very much for that.

In page 12-23 of this report, exhibit 12.5, there are some recommendations to you from the Auditor General's department. I'm wondering, can you fulfil the Auditor General's recommendations as they're listed here?

Mr. René Guindon: We are working very aggressively to be able to fulfil specifically all of the recommendations put forward by the Auditor General, because we feel they're appropriate. The whole management process we're putting in place deals with the issues of accountability within departments. It deals with central and regional accountabilities in terms of the relationship between our departments and the regional offices. It deals with the HR issues and the issues of staffing in terms of human resources. It deals with the issues of funding. One of the key areas is senior management awareness. It deals with embedded systems in terms of many of the systems we have today. It deals with external dependency, which is the vendor compliance issue. I think it addresses pretty much all of the issues raised with the Auditor General.

We're now addressing additional points that were not necessarily identified, dealing with the whole issue of risk management. Associated with risk, of course, the whole issue of contingency planning, procurement, shared systems and the legal issue comes into play. At the end of the day we have to make sure all of these systems will be able to work. We're doing with the whole issue of testing.

So we're working very aggressively to be in a position not only to respond but also to put in place the appropriate measures to resolve those issues.

Mr. Philip Mayfield: I think we're all in agreement with that.

One of the things I'm not sure about is that the departments are responsible for meeting this challenge individually, and you are there to guide and assist. The metaphor I have heard is that you are there to have your nose in but your hands off.

This really is a management problem. I'm wondering how aggressive you can be in directing the management of this project in each of the departments. Who really is in charge of this management problem?

Mr. René Guindon: I'm quite pleased that you raised how accountability lies with the departments, because that's exactly where the accountability lies.

Our role at Treasury Board is basically to provide what I call the leadership, as I mentioned before, and the advice to support the guidelines. Basically, at the end of the day, the department needs to put in place their measures and the appropriate processes to be able to resolve the problems of the year 2000.

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We do however recognize, based on this survey, that—and I stated this in my opening remarks—if additional measures are required, then we'd be quite prepared to go to ministers and basically recommend a series of actions that will basically help us deal, through a one on one, with those particular issues that may require special attention. So our role is, again, to provide the leadership, to provide the guidance, but if required, we would then seek additional directions in order to be able to intervene in a much more appropriate way.

Mr. Philip Mayfield: The Auditor General has said that the target implementation date of April 1 will not be attainable for most departments and agencies when the testing program is scheduled to begin. I'm wondering, in light of this, what your assessment is. Would you agree with him, first of all? Then I'm wondering what contingencies you would have to meet these shortfalls. Are you responsible for providing contingency plans or is each department responsible for this? How are those contingencies followed through to assure they are met?

Mr. René Guindon: As I said before, our objective is to put in place all of the proper measures so that departments can resolve those issues. Associated with this, of course, is a risk assessment of whether a department will make it on April 1, 1998. I'm not in a position today to be able to confirm or discount that particular suggestion. What we do know and what we're learning as we assess this problem much more carefully is that the whole issue of testing is a very crucial phase in the whole process. But if we do it front-end in a much more effective way, the issue of testing becomes less dramatic than we had first anticipated in the sense that there is a risk associated with testing, and if I were able to draw a curve, there is an exponential drop that basically says the risk drops as we do the front end in a much more effective way.

So I think what we're concentrating on right now is to make sure we do a proper assessment and we do a proper code change, and that we are fixing our problem and then be in a better position to be able to test it. The surveys we're conducting right now will give us more information, and at that time I think I'll be in a better position to say how crucial it is and whether we can make all of those dates.

In terms of the contingency plans, it's very clear that they will have to be developed in close collaboration with departments. The departments will have to put in place, based on the risk assessment, a contingency plan to ensure that the services we provide to the Canadian people are not affected.

Mr. Philip Mayfield: I'd like to make a short request. It's not a question, Mr. Chairman.

I request that you include the contingency plans and also the updated cost estimates in the information I've asked for. Would you do that also, please?

Mr. René Guindon: I'll provide you with the information I have available today. I may not have all of the details. I do not have, at this point in time, all of the details of the costing because I'm right in the middle of getting the surveys back and we're doing the assessment. So I will have all of that information available in the early December timeframe. So at that time I'd be very happy—

Mr. Philip Mayfield: If you could provide that on an ongoing basis, I'd appreciate it.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Mayfield.

Do we have any questions from the Bloc?

[Translation]

Mr. René Laurin (Joliette, BQ): Mr. Guindon, in the report it says that Treasury Board Secretariat undertook its own enquiries and interviews in March and April to see what the situation was in the departments. You say that based on the answers received, 75 per cent of the units thus questioned had the situation well in hand or had adequate plans. On the other hand, the Auditor General, after his audit, stated that most of the departments concerned had not progressed beyond the planning stage.

How do you reconcile those two statements? One of you seems to be saying that you're 75% ready, while the Auditor General says that they're only at the planning stage. Can you reassure me about these two statements?

Mr. René Guindon: The first evaluation that was implemented in April and to which the Auditor General's report refers was, in principle, a very preliminary evaluation to examine the whole situation government-wide.

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We concentrated on some six criteria concerning the following questions. Had the departments taken the necessary steps in terms of their management structure? We're they conscious of the magnitude of the problem? Had they allocated the necessary resources? So those were basically the results that flowed from all that.

I can assure you that since that time—and it was very preliminary at that stage—there has been marked progress in the departments and those who were particularly affected by the first evaluation reacted very positively.

In light of the results stemming from the second evaluation within the departments, we'll be able to provide you with more details. That first evaluation was really quite preliminary and, as I was mentioning before, there has been marked progress in most of the departments.

Mr. René Laurin: Are all the departments affected progressing at the same speed? Has everyone reached the same point?

Mr. René Guindon: All the departments are forging ahead at different speeds. Some departments started work way earlier than others; others started doing this work around 1988 or 1989. Clearly, those departments have evolved far more quickly than some of the others who only started this in 1991 or in 1992. There is some variation and different departments have attained different stages. The results of the evaluation will give us a better appreciation of the total impact vis-à-vis the objective which is to have concluded all these projects by the year 2000.

Mr. René Laurin: In your action plan, which departments have priority? What level have they attained?

Mr. René Guindon: During the summer, we identified some 40 systems that are essential to the mission. Those 40 systems are concentrated in 23 or 24 departments. Of course, those are the big departments. We're evaluating the results of the evaluation which, within a few weeks, by December, will allow us to gain a far more detailed appreciation of the situation.

I can say that there has been marked progress. When we compare our situation to that of many other countries, I think that we've made very important progress. I'm convinced that all the necessary measures are being taken by those departments to ensure that services will not be affected.

Mr. René Laurin: Mr. Guindon, on page 31 of chapter 12 of the Auditor General's Report, the Auditor General says that as of the date of the termination of his audit, there were only 20 months left to complete this enormous task. That was at the end of April. If there were 20 months left at the end of April, six months later there are only 14 left, taking into account the whole testing period for the systems. Could you tell us today that you're on target and sure to reach those objectives?

Mr. René Guindon: I'd like to be able to guarantee that we will attain all our objectives. I see this project as one of the biggest EDP projects ever undertaken by the federal government. If I go by past experiences, I cannot assure you today that all objectives will be attained. However, I can assure you that we're doing everything in our power to set up the necessary measures and procedures to solve the problems, whether it's in the area of human resources, purchases or exchange of information.

We're working together with the departments and especially those who need extra help to ensure that the help is given to them so that they can attain the objectives set out. As I was mentioning, the results of the poll are starting to come in. We've included a series of questions in our evaluation and as soon as we have the results in hand I'll be able to give you a better idea. I'll be very happy to come back before your committee at that point.

We're starting to get the results in. Towards December, the results of the evaluations should be in. At that point, I'll have a better overall view of the situation.

Mr. René Laurin: Mr. Guindon, it is said that to complete this operation, we'll need the services of some 2000 specialists; 2000 specialists, that's a lot of people to hire. What's your recruitment plan? Have you started that operation yet? What's your strategy?

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Mr. René Guindon: Let's not forget that the government, today, already has some 8400 people in the area of EDP, the people classified as CS. Our objective is to keep the people we have, keep them with us and set up an action plan that will allow us to train them and attain the objectives so that the services to the population are not affected.

You've probably read in this morning's papers that we've come to an agreement in principle with the CS group within the context of negotiating the collective agreement. I think that the results of the negotiations will be of help to us. We contributed a lot to the process to help the negotiating team understand the importance of those people for the federal government.

We're working very closely with the public service to ensure that it will maintain an office dedicated to resources in that area. At the same time, we shouldn't forget that the Canadian government isn't the only one looking for people, especially people working in EDP, as you know very well. It's a worldwide problem. At this specific point, the private sector in all countries of the world are fighting over those people.

I am conscious that the collective agreement we have just signed doesn't settle all the problems, but it does get us closer to the private sector in terms of salary and working conditions which will allow us to keep all those people.

At the same time, within the framework of our work with the other departments, we have made other suggestions as to what could be done in the areas of training and exchanges between departments to get those people to stay with us.

This figure of 2000 isn't specifically linked to the year 2000 project. It represents the number of people we need to work in EDP to make sure that all our systems are maintained and can answer the needs of the population.

[English]

The Chairman: Mr. Pagtakhan.

Mr. Rey D. Pagtakhan (Winnipeg North—St. Paul, Lib.): Thank you, Mr. Chair.

Mr. Auditor General, having heard the presentation of the secretariat, and having heard the assurances today, how do you respond to your assessment of the issue as a crisis?

Mr. Denis Desautels: I fundamentally believe the assessment we made last April is still largely representative of the challenges ahead. It's difficult to be absolutely certain about any of this, one way or the other. I think it's difficult to say everything will be fine. It would be dangerous to say that. It's also not responsible to say it's going to be a disaster. I think we need to exercise caution in our assessments, but in exercising that caution I would say we can't give ourselves any, I wouldn't call it false sense of comfort but exaggerated sense of comfort, vis-à-vis this, or any complacency. I think the challenges ahead at this point remain very large, very serious. The people at the chief information officer's office will need a lot of support in order to be able to pull this off successfully.

Our concerns are largely the same. There has been a bit of time since we reported and certainly very positive things have happened since then, but I don't think it is to the extent that we would conclude that now we can relax.

Mr. Rey D. Pagtakhan: You are always concerned with expenditure, and rightly so. The estimate has been given of $1 billion for the Government of Canada to address the issue. I ask the Treasury Board secretariat, is this estimate still realistic at this time...knowing what you have accomplished with the initial amount?

A witness: I would have to say that at this particular time the estimate is still an accurate estimate. I think it's still in the ballpark we've assessed it to be in. It's still a large challenge. I totally agree with Mr. Desautels that we can't just sit back and expect that this problem will go away. Right now, I don't foresee a silver bullet hitting us and solving this problem. There's still a lot of work ahead of us. We've made some important progress, but the battle hasn't been won yet. We're working to make sure, however, that we're doing everything possible to resolve this problem.

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Mr. Rey D. Pagtakhan: Mr. Auditor General, do you agree with the assessment of $1 billion as an estimate of an expenditure as a realistic amount?

Mr. Denis Desautels: On the whole, Mr. Chairman, I think I would have to qualify that as a soft estimate. It may be the best estimate that we can come up with—either ourselves or Treasury Board Secretariat. At this point in time nobody has a better estimate, but we've all called that a relatively soft estimate from the very beginning.

Mr. Rey D. Pagtakhan: Mr. Guindon, how much of that $1 billion have you spent to date?

Mr. René Guindon: To be very honest, I don't have an accurate number. The sorts of preliminary results that I've seen coming in seem to confirm that this is a very close number, but I must say I'm not in a position today to either confirm or disagree with that number. I would expect that coming out of the survey, that number can be adjusted. We'll see what the result shows, but at that particular time it was a good estimate. It was based on the industry standards in the same way that the ITAC is given a range in Canada of $30 billion to $50 billion—and that's quite a range.

We said $1 billion, because it was based on basically our $4 billion in expenditures on a yearly basis. The real problem is anywhere between $400 billion and $600 billion, and if you read the documents today, they're now even quoting a trillion dollars. Is it a soft figure? I'm not in a position today to be able to say that it is or isn't, but I would expect that the survey and further work that we're doing will help us to better understand what the actual number is.

Mr. Rey D. Pagtakhan: The reason I posed the question is that in your summary, you indicated that a great deal of progress has been made and that it's very reassuring. In the same statement, you indicated that a lot more work has to be done. So I do not know where we are now. Are we mid-way to completion? Where are we? Can you give us a sense of completion?

Mr. René Guindon: Again, the survey will give us more detail, but my first assessment is that we're comparing quite well if I base it on the industry sorts of standards. There is a very important group in the U.S. that does consulting. It is called the Gartner Group, and it has laid out some very general guidelines on how to assess the status of readiness. Those are the sorts of guidelines that we're using.

This is a brand-new problem. It's never been faced before, so we're breaking new ground. With the information we have, we're doing what needs to be done to try to get a better handle on this. But I cannot reassure you with more than what I've just stated already.

We've made a lot of progress since the audit was done in April, but as I indicated also, the battle hasn't been won yet. We still have a lot of work ahead of us. We still need to continue in providing the leadership, in providing the support, and in basically providing the tools to departments to be able to resolve this issue, this problem.

Mr. Rey D. Pagtakhan: And one of the approaches you have taken is to focus on the mission-critical systems that you alluded to. In a nutshell, can you sort of define what they are, and what percent of the total system are the mission-critical systems?

Mr. René Guindon: I would be very happy to.

The mission-critical systems that we've identified were based on the criteria that we laid out—the health, safety, security and economic well-being of Canadians. I mentioned that we've identified about forty of what we call government-wide mission-critical systems. Within departments, the sort of assessment that I've used is the study that was conducted in 1991 by the board in terms of the systems that would require a disaster recovery sort of process.

It hasn't varied that much since 1991-92, in my understanding, but at that point those were approximately 300-and-something systems. We then have a series of about a thousand or so that are non-mission critical. Those are the systems that really are not critical to safety, health and security. So that's the sort of range that we're talking about.

Mr. Rey D. Pagtakhan: Thank you.

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The Chairman: Mr. Bachand.

[Translation]

Mr. André Bachand (Richmond-Arthabaska, PC): Mr. Guindon, I'd like to know why you were invited to come here today. If things don't work, will you be the one responsible?

Mr. René Guindon: The first responsibility, as I was mentioning before, is the departments'. They are responsible for their programs and their human resources. As I was mentioning in answer to a previous question, I didn't hear anything to the effect that somebody would be walking into the departments tomorrow morning.

The responsibility is that of the departments and we're working very closely with them to make sure that the necessary resources do exist, that the budgets are allocated and that people give this problem the proper priority. The departments are the first ones responsible.

I also mentioned that if, after the evaluation that's underway at this time, certain major problems emerge, then we'll be presenting a series of options to the ministers. At that point, we'll be able to make the decisions and take the steps necessary to ensure that the services offered to the population are not affected.

Mr. André Bachand: But in this year's budget, the sums earmarked for this matter have essentially been allocated to Treasury Board and it's not an enormous amount of money. According to the Estimates tabled, the budget for the year 2000 project is not enormous. In the very little time remaining, approximately 1 billion dollars of the 1998-99 Estimates will be dedicated to that transformation. This year, there's almost nothing... The reason this committee exists is to look at those Estimates and examine the problem and see how much it's going to cost, exactly. This year, possibly three million dollars have been added within the framework of Supplementary Estimates, but what will you use if it costs one billion dollars? Are you going to spend the whole thing in one year?

Mr. René Guindon: The first budget you referred to pertains exclusively to the Year 2000 Office within Treasury Board that was set up to coordinate activities. As for the billion dollars, we must not forget that today the departments have an annual budget that varies from $3 to 4 billion. Consequently, most of the money they are talking about comes from existing budgets. What I'm trying to do right now with this assessment is to have a better understanding of costs over and above this billion dollars or of the money, within existing budgets, that we will have to allocate in order to resolve this problem.

Mr. André Bachand: So you're giving some good news to the committee: namely, that the billion dollars was already provided for in the budget and that therefore there will be no impact on the budget. Consequently, we don't have to get all worked up about the monetary issue. At any rate, there is money everywhere.

Mr. René Guindon: That is not quite what I said. I said that most of this budget is already included in the existing departmental budget. What I'm doing right now is assessing whether or not additional money will be required to resolve the problem. This is what we are assessing now and I will be in a better position to give details in early December.

Personally, I think that additional money will be required. The question is, how much? Unfortunately, I can't tell you because I don't have the detailed results of the assessment carried out in the departments. We completed the assessment a few days ago and the consultants are now in the process of compiling results. As soon as these results are compiled, I will be able to answer your question, but I do not want to mislead you today.

First of all, I don't want to say that there will be additional costs involved, because I do not know if this will be the case. At the same time, the current budget of $1 billion will not necessarily be enough to resolve the problem completely.

Mr. André Bachand: No, but this is good news for the Public Accounts Committee. We can expect that the costs will run over the billion dollar mark. This is important, since our committee studies the public accounts and not the government's computer systems, thank God. You are telling us that, as far as the budget is concerned, neither we nor Canadian taxpayers should have any real cause for concern, but this will depend on the results of the assessment that you will be tabling. The Office of the Auditor General will surely have a copy of your report in December.

That being said, the main problem relates to time, and not to money or means. It's a question of time, is that really what the problem is all about?

Mr. René Guindon: There are three problems. There is the issue of time, because the deadline is absolute. We have 112 or 113 weeks until we reach this date. There is the question of the budget which, I believe, is an issue that has not yet been resolved. I would like to be able to tell you that there will not be any additional requirements, but I don't know this yet. Personally, I do believe that there will be some requirements, but what will the magnitude of these requirements be? I cannot answer this question. Thirdly, there is still the issue of human resources, and this is why we have, in co-operation with the private sector and the departments, embarked on several initiatives to help us resolve the problem, through our partnership or a strategic alliance with the private sector.

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This is why we are also working very closely with Public Works on the procurement issue.

Mr. André Bachand: One final question, Mr. Chairman. Mr. Guindon, obviously everyone shares this responsibility, but you are the one who is sitting at the table today as a witness representing Treasury Board. What is your experience in this field? I'm not asking you to brag about yourself; I would perhaps like some reassurance. Have you ever been able to resolve a problem so quickly? If people don't get their cheque on January 1st in the year 2000, that is really going to cause problems. They're probably going to telephone you. What is your experience in this field? You have not been with the Year 2000 Project for very long.

Mr. René Guindon: You are quite right. I have been with this project since April.

Briefly, I have at least 27 to 29 years of experience in the communications and computer fields. I began my career in research and development. I worked at the international level, where I was involved in co-operation agreements with the International Telecommunication Union. I was then responsible for frequency band negotiations between Canada and the United States. I was the chief negotiator and the one responsible for the agreement that enabled Canada to have access to about 100 new AM stations. After this position, I was, for three years, in charge of the Quebec region program where I was involved in negotiating partnership agreements and co-operation agreements pertaining to technology. At that time we introduced cellular telephones. I also ran a research centre called the CRIT, the Centre de recherche sur l'informatisation du travail, which dealt with high technology, computer centres, information transfers and databases.

Then, for three years, I was the chairman, and the first chairman, of one of the first special operating agencies, the SOAs, which were set up in 1981. I was chairman of the Government Telecommunications Agency, which at that time was probably the largest private company that provided telecommunications services to the federal government.

Following that, I was chief of the Public Works and Government Services Informatics and Telecommunications Branch where we have the two largest computer centres in Canada. There again, we provide all telecommunications services and have a budget exceeding $350 million.

I was then put in charge of negotiating the privatization of the Canada Communications Group, where we succeeded in reaching the objective set by the government. I'm now with the Year 2000 Project. I think that I have the training which will enable me to reach the objectives. I have a bachelor's degree and a master's degree in engineering, as well as management courses.

Mr. André Bachand: Would you be willing to bet $2 that you can meet this challenge?

Mr. René Guindon: I stopped betting a long time ago.

[English]

The Chairman: We're now down to the four-minute round, so it's four minutes, Mr. Grewal.

Mr. Gurmant Grewal (Surrey Central, Ref.): Thank you, Mr. Chairman.

The year 2000 compliance has the potential to seriously disrupt 90% of the computer systems in the country, and it touches every key sector and industry. We are also aware that continuous delivery of government programs and essential services in the 21st century remain at risk. The Auditor General is quoted in the newspaper as saying that just one-third of the federal departments have finished laying out strategies for dealing with the year 2000 problems, so we know it's a serious problem.

Can the ADM table a contingency plan to the committee and update it quarterly?

Mr. René Guindon: If it's required by the committee, I'd be very happy to come back when the information is available and provide you with much more detail.

You've raised an interesting question with respect to the private sector. As I said in my opening remarks, the year 2000 touches every sector of the Canadian economy. It touches our telecommunications infrastructures, our water supply, our oil and gas distribution and the banking environment. We rely heavily on all of those systems. There is interoperability so we need to work with them very closely.

Mr. Gurmant Grewal: In Canada it will cost about $30 billion to $50 billion and probably more than $1 billion to the Treasury Board. Is it possible that the war on the deficit could interfere with the progress on this project?

Mr. René Guindon: I don't know how to answer that question. My objective is to ensure we put in place the proper measures and present the minister with the options available to solve the year 2000 problem. I'm confident the right decision will be made to solve this particular problem.

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Mr. Gurmant Grewal: What I mean is that on one hand, we are fighting to balance the budget and we are doing everything we can where the government is cutting at this time. On the other hand, if the funds are not available on time, then the project would be delayed. So where is the balance, and has the government taken this particular cost into consideration in the subsequent budgeting?

Mr. René Guindon: The only answer I can probably give you is that the option available to not solve this problem is very disastrous, and so we have to weigh this against everything else—unless, Colin, you want to provide additional comments on this.

Mr. Colin Potts (Deputy Comptroller General, Treasury Board Secretariat): Mr. Chairman, if I may, based on the budget, specifically, as a part of the process we're going through now on the year 2000 in preparing this plan for submission to Treasury Board ministers, which Mr. Guindon indicated would be presented probably in early December, obviously that has to address the question of costs.

It is seen as a major project that has to be solved, and we'll be looking at it in terms of priorities with other priorities, and therefore the Treasury Board will have to make some decisions. At this stage I believe the thinking is that this is a high-priority issue that has to be solved, and it will therefore be given to exploration.

The Chairman: You have one quick question.

Mr. Gurmant Grewal: Okay.

We are dealing with technology here. It may work; it may not work. Are there any testing dates set aside, an appropriate timeframe set aside for testing the conversion?

Also, is there the potential of class lawsuits? Is the government aware of the problem and have any corrective measures been taken, or is there anything worked out to avoid that problem in case it occurs? Are we prepared to deal with the problem of class-action lawsuits?

Mr. René Guindon: We've put in place a process where certain events need to be finalized. It includes everything from awareness to the testing. Some departments today are in the testing of some of their own systems; others will be doing this later in the year. But we will be assessing them against the sort of industry standards or timeframe we've identified, and we'll be able to report on those.

So it's an ongoing process. It's one that we will continue to monitor and report back on.

Mr. Gurmant Grewal: Have any departmental heads or ministers set aside any timeframe for conversion testing at this moment? Or do they have deadlines?

Mr. René Guindon: All of the departments today have an individual focus on the year 2000 and are developing their own plans and their own schedules of activities, which is the one we're monitoring against. Testing is a crucial component; it has to be done.

We're pressuring a lot of the departments to do the testing as early as possible. We would like to allow a full year of operation before we convert to the year 2000. Some of them will be able to make that date; others will probably not. I can't guarantee you on a global basis what each one will do, but we're assessing it against the industry standard in terms of when is the optimal date to be able to deliver this.

Mr. Gurmant Grewal: Thank you, Mr. Chairman.

The Chairman: Thank you.

Mr. Philip Mayfield: On a point of order, Mr. Chairman, Mr. Guindon has two or three times said, in the light of requests made, that if the committee requires it he would be happy to supply the information. The question I have is this: is my request sufficient, or does there need to be a committee formal request?

The Chairman: After this hearing, Mr. Mayfield, the committee will write a report. No doubt that report will hopefully contain such things as your request. It will be tabled in the House, and then it becomes a directive of this committee.

Mr. Philip Mayfield: Thank you very much.

The Chairman: Normally we would now go to Mr. Desrochers, but he would like to split his time with Mr. Laurin.

[Translation]

Mr. René Laurin: Mr. Chairman, I would like to complete the question that I asked earlier. I'm worried about the 2000 specialists that you are going to need. You said that you will try to recruit them from the 8000 public servants who are already in these departments or in this field.

Given that we are dealing with a global problem, there are not enough people in this field. If you use staff who are already there, what will happen to the systems that these people are already working on? Either they are busy, or they are not. If they are not busy, there is no problem, or there is indeed a problem: we are paying them to do nothing. However, if they are busy and you remove them from their position and integrate them into the Year 2000 Project, there are systems that are being developed that are going to suffer. How will you resolve this problem?

• 1625

Mr. René Guindon: I apologize if I misled you by saying that we recruited the 2000 employees from the 8000 public servants. What I meant to say was that, right now, 8000 people are working in the computer field within the government.

The requirement for 2000 employees that I identified was the result of a poll that we conducted in about 20 federal departments. Obviously, we are going to have to get these people from outside the government, in the form of a partnership with certain private sector consultants. Our approach comprises two aspects. First of all, we want to have a collective agreement that will enable us to retain our staff, while at the same time promoting the entry of new CSs in the federal public service. Secondly, we want to find a procurement mechanism that will enable us to negotiate partnerships with the private sector to assist us in fulfilling the requirements within the federal government.

Mr. René Laurin: But for the time being, nothing has been done in this area.

Mr. René Guindon: On the contrary, we are working with Public Works and Government Services. There is already an office that looks after procurement for the Year 2000 Project. We've already held a one-day session with the private sector, where all the representatives from the associations and companies, such as IBM, BNR, LGS, CGI, CATA and ITAC, got together to identify the measures that the government could take to set up a contract. The general outline of an initial contract has already been put into the public information system. The second version of this contract should be out by November 6 or 7, and I would like to think that by early January, we will have the mechanism that will enable us to negotiate agreements with the private sector.

Mr. René Laurin: Here is my last question, Mr. Guindon. In the past, and it is the Auditor General who has told us this, scarcely 16 per cent of the systems developed were delivered on time and within budget. What makes you think today that your performance will be better?

Mr. René Guindon: Earlier, I said that I did not believe that our performance would necessarily be better. I even stated that, up until now, our experience in this field has been exactly as you described it. I was asked whether I could guarantee we would be able to convert all of the systems. I would like to be able to provide you with this guarantee, but unfortunately, I am not in any position to offer you any guarantees whatsoever. I can guarantee, however, that we will do all that is required to implement the procedures and required mechanisms. I am in complete agreement.

[English]

The Chairman: Thank you.

Mr. Harb.

Mr. Mac Harb (Ottawa Centre, Lib.): Mr. Guindon, we are dealing here with information technology and a lot of the government systems that are going to be updated. Some of them are 15 years old, and I understand that in some cases there are systems that are 20 years old. There is going to be a time when these systems become obsolete. Whether you want it or not, the information or the data stored within those systems will have to be transferred to a new system that's up-to-date technology.

I wonder whether or not this would be the most appropriate time to have a look at the possibility of transferring the data from the old, almost obsolete system into a new system and whether or not we have looked at the economies of scale to find out whether it would not be even wiser for us to try to get around the year 2000 by establishing some sort of interface with the old system and moving right away to a new technology, rather than going through code by code, which I have heard is extremely tedious.

Mr. René Guindon: Line by line.

Mr. Mac Harb: I have spoken with some people in the industry and they have told me that there is already a technology that would save the government a load of money if the government was to go out in the industry and do what they call a bulk purchasing.

After hearing your representation and looking at your brief, you are telling us that each department individually is responsible for ensuring the conversion of its own system. I came from a school where bulk buying could mean saving in some cases. Rather than allowing each department to do it on its own, why wouldn't your department consider sending out a directive saying, what we have to do is set up a collective strategy as a government whereby every department would have to fit within this strategy, and we're going to see if we can do it as whole?

• 1630

Frankly, without commenting on the progress that has happened, I have found this a really great concern since the Auditor General came to us. One of the things I indicated to him was that maybe we should find a way around, not doing anything with the year 2000, because of the obsolete system we have in place. Maybe we have to find a way around, tricking the system that exists now, and move on to a new technology altogether. My main concern is that by the year 2004 the next Auditor General or the present Auditor General would turn around and tell us what a big waste of money the Government of Canada has done, what a fiasco, wasting millions and millions of dollars in updating a system that's obsolete, and now the government has to spend another $4 billion or $5 billion on new technology.

I would like to hear your comments on the possibility of going straight to a new system and transferring the technology from the old system, with the notion of having an interface.

Mr. Colin Potts: Thank you very much for the question.

We have done much over the last few years. I've been here since March 1 of this year, and I'm pleased to have joined the federal government. Observing our progress over the last several years...we've done very much in consolidating the administrative systems and financial systems we use across government, with the support of the Comptroller General and other groups. We've gone from an era where we had I think 120 different administrative systems used across the federal government and through a shared systems initiative we have focused that down on 7 systems which are key systems. We have bulk-bought those systems. We have done them on a bulk purchase, so we've saved a considerable amount of money on licence fees. We're also purchasing computer hardware through large tenders, which are giving us the best discount prices available. So I think we've made considerable progress in that direction.

A number of those systems are helping to solve the year 2000 date problem, but it's only part of the solution. A number of systems are quite specific to the Government of Canada, for example, social assistance systems. They are relatively unique. Those are the systems to which we have to make custom modifications to ensure the health, safety, and well-being of the Canadian public.

I hope that answers your question.

The Chairman: Mrs. Barnes.

Mrs. Sue Barnes (London West, Lib.): Thank you very much.

I'm going to follow up and ask how you established your priorities by department. Who got the most resources from you? When you tell everybody to manage their own affairs and you tell them to go at it, and obviously there are only limited amounts of money, how have we assessed it? What protocols were used, and were the protocols designed or did every department have to go and reinvent the wheel?

Mr. Colin Potts: We have gone through a relatively rigorous process. I believe there are some 80 departments and agencies within the federal government, so not every department or agency has a system on the list. Some departments have several systems. We've looked at those systems that have a broad impact on the health, safety, and well-being of the Canadian public. We've gone through a process where those are the systems that are important to the day-to-day well-being and safety of the public.

René can go into some additional details.

Mr. René Guindon: One of the areas on which we've been concentrating on a priority basis so we don't duplicate in priorities is to identify some of the common issues that cross all departments. That basically touches issues such as vendor compliance. I mentioned at the beginning that what we're trying to do with Public Works is to have a database of all vendor compliance issues so departments don't duplicate, so we don't waste time in trying to find the same information. We've established an intergovernmental working group where we meet with all the key people on the technology side in departments on a monthly basis to share that information and to share some of the best practices. We've identified the issues. We're working with departments on testing right now, because that's going to be a very crucial element of the whole element of ensuring that compliance will be met at the end of the day. We're working very closely.

About the mission-critical systems, with the departments we're fine-tuning the lists I mentioned to ensure those are the right systems we should be concentrating on and they do affect health and security and economic well-being. We've been dealing pretty much one on one. We've been concentrating on the key systems within the department, be they financial or human resource, which basically support all those activities. We're identifying the priorities and moving on that basis.

• 1635

At the board we're concentrating on what I call the “horizontal” issues, because those are the ones no single department can resolve on their own.

Mrs. Sue Barnes: Okay.

The Auditor General's report talks about having contingency plans. That's a nice, easy, all-encompassing word, but I don't understand what it means. What's a “contingency” plan when the system breaks down?

Mr. René Guindon: First of all, we want to assess what is the level of risk for certain systems. We may not necessarily have contingency plans for every particular system, but if, for example, we find we cannot issue any more cheques, one of the potential options of a contingency plan is that we do this manually, with all of the implications that may involve. We may have to hire thousands and thousands of people to issue cheques. That would be one form of contingency plan.

If one of our distribution systems didn't work properly, then we'd look at other means by which our regional office or another level of government could help us distribute those services.

Those are the different assessments we're doing today in terms of working with departments so that if there's a high risk that there may be problems with some of these mission-critical systems, what are the mechanisms we put in place to ensure that at least the services will be there. It may not be at the same level, it may not be of the same quality, but the service would be delivered.

That's what we had in mind with the term “contingency plans”.

Mrs. Sue Barnes: Okay.

I'll finish with a short question. Has a cost-benefit analysis been done on what the contingency plan would cost versus fixing the problem right off the bat? Because whenever you go human resources.... The way you're talking about it here, that sounds pretty expensive.

Mr. René Guindon: Our first priority, as I mentioned, is to solve the problem. That's our priority one. That's where we're concentrating our effort. But to go back to the question from Monsieur Laurin, there's always a risk somewhere. If the risk is high, then we're saying, what will we do if that situation occurs? What do we need to put in place?

So a contingency plan is not priority one. Our priority is to ensure that we solve the problem.

An hon. member: Good man.

Mrs. Sue Barnes: Thank you.

The Chairman: Mr. Myers.

Mr. Lynn Myers (Waterloo—Wellington, Lib.): Thank you, Mr. Chairman.

Mr. Guindon, I was interested in your final point with respect to your objective now to accelerate the pace. I'm trying to reconcile that with page 12-17 of the Auditor General's report, specifically paragraph 12.77, that “departments have not provided for slippage”.

I see that as a bit of a contradiction. On the one hand, acceleration pace; on the other hand, there's no contingency in place, for lack of a better way of putting it, for the slippage that might occur. I wonder if you could respond to that.

Mr. René Guindon: Again, this was based on the very preliminary assessment we had done in April. That gave us an overview of the situation at that particular point in time.

My observation is that since that particular point in time we've made a lot of progress. We still haven't solved the problem, but we can't lose sight of how this problem can be resolved with the proper leadership and assigning the proper resources, getting the proper people to deal with the issue. That's really what we've been concentrating on, and that's where we're making some important progress.

We have the heads of ITs in every single department dealing with that issue on a continuous basis. We have the deputy ministers heavily involved with the process. That's why we feel very confident that if we're able to get these people involved with the process, this problem can be at least addressed properly, and we therefore minimize the risk of not achieving that objective.

Mr. Lynn Myers: Thank you.

The system's triage approach was referenced. Have you taken a look at that? If you have, what was your conclusion?

Mr. René Guindon: That process of triage is always ongoing. What we're saying is that if we concentrate on the mission-critical systems, that in itself is a triage. It basically says those are priority one for the federal government.

There are a lot of feeder systems in this. What we've talked about in our systems are basically functions—the delivery of income tax, the delivery of income security, old age pension—dealing with the methodology. Those are the key systems, but there are a lot of feeder systems for all this.

We're saying that the concentration should be on those. If it's a non-mission-critical system, we're not saying leave it aside. We're saying, you have to concentrate and resolve the first one first. If you have anything to do in any resources, concentrate on the mission-critical system. When you've done that, then start addressing the other issues.

• 1640

Mr. Lynn Myers: Finally, Mr. Guindon, would it be onerous to provide us with a time line? You reference 113 weeks, I think, between now and then, give or take? Would it be an onerous task to give us a time line as to what's happened, what's being projected, and what's going to be done?

Mr. René Guindon: As I said, I'd be very happy to able to come back to the committee in the December timeframe when all of the results are in. These will be based on seven-step industry standards we put together, which deal with the awareness and where we should be with respect to the standards and, in terms of the testing, where we should be. I could then give you an overall report. I'd be very happy to do so.

Mr. Lynn Myers: Thank you.

The Chairman: Mr. Mahoney.

Mr. Steve Mahoney (Mississauga West, Lib.): What is the impact internationally? How closely are you working—really, it would be throughout the world—with the various offices the federal government has and also interprovincially with your counterparts across Canada, throughout the United States and the world? Is that included in the cost estimate you've given us and is there a timeframe available on that? It's a soft estimate; I should not try to pin you down to that.

Mr. René Guindon: Mr. Rummell, please.

Mr. Paul Rummell (Chief Information Officer, Treasury Board Secretariat): To answer your question, first of all, we're fortunately not going to be fixing all the systems for the whole world; we're just concentrating on the Canadian federal government. That's our objective at this point—

Mr. Steve Mahoney: We're not taking over the world? Why?

Mr. Paul Rummell: —which is enough work as it is. As the chief information officer for the federal government, I have the good fortune to be on a task force with Jean Monty as the chairman, through Minister Manley, to deal with the year 2000. Jean Monty is the chair of it, and he is chairman of Bell Canada Enterprises. Stephen Bachand is on the task force, and he is the president of Canadian Tire. John Cleghorn from the Royal Bank is on it. Brian Johnson, the president of Crown Life, and Yves Landry from Chrysler are also on it. It's a very impressive committee.

I'm very impressed with the intellect and the knowledge of the CEOs of some of the major Canadian companies in terms of their concern about dealing with this. They're very committed to dealing with the issue and they're interested in helping the federal government and their provincial governments in dealing with this issue.

I've also had meetings with the chief information officers, or equivalents, for the various provinces. We just had a meeting last week and we had some discussions about the year 2000. We are actively dealing with them to deal with year 2000 interfaces between the federal government and the provincial governments.

On the international scale, the Department of Foreign Affairs has dealt with the issue to some extent and we get the reports on what other countries are doing to deal with this problem. I'm reassured by the fact the Canadian government appears to be taking a leading position in terms of dealing with the year 2000 issue.

When I joined the Canadian federal government in March of this year and came here from British Columbia, I did some due diligence and I felt we had taken a very strong position in terms of dealing with this issue. I'm proud to say that, as a government, we're dealing with this in a very effective way. I hope that answers your question.

Mr. Steve Mahoney: That's an impressive committee. I hope you have some of their staff there too to make sure the work gets done.

Mr. Paul Rummell: I have a shadow committee of their chief information officers that reports to me on this.

Mr. Steve Mahoney: Perfect. That's all you need.

In terms of other agencies, other governments, other departments, I think of the impact, for example, on the stock exchange. The impact could be quite catastrophic. As a government I'm not sure how far our responsibility extends, but we represent all Canadians and want to maintain some stability in the markets, etc. Is there some dialogue going on at that level in Canada?

Mr. Paul Rummell: Again, I'm not really able to comment. The reason this committee is there is to make sure Canada takes a leading position in terms of dealing with the year 2000 issue from the different industrial sectors, financial sectors, across the country, and that there's a broad awareness of this issue, not just with the large businesses and the large organizations—and they've expressed their very strong understanding of this issue and the threat that's presented to them—but also with the small businesses, the sole proprietorships or individuals across this country.

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I guess this group also is aware that they want to make sure they deal with this issue in an effective way so the Canadian economy is able to maintain some strategic economic advantage as we go through this. There is some anticipation by the press that this will be an event of some magnitude outside of Canada.

The Chairman: Thank you. I'm going to ask a few questions myself here. I think I'll step in. I'm surprised that no one has said you should be brief and succinct with your questions. Perhaps I can ask you to do that.

In the Citizen today, Kathryn May writes about the 2,000 extra people you intend to hire. Roughly speaking, I expect that's a salary bill of $80 million to $100 million a year. Maybe over the next three years that would be $300 million. Does that mean you plan to spend maybe $700 million in acquiring new hardware and software for this problem to add up to the $1 billion? Do you expect a massive investment in new computer hardware to resolve this problem?

Mr. Paul Rummell: Again, I would say it's a combination of services. There would be some term employees. There would be some contracting with different systems integration firms. There would be computer hardware and also computer network equipment included in that bill. I don't have the exact breakdown.

If you like, Mr. Chairman—

The Chairman: I did a simple calculation of 2,000 people at $40,000 to $50,000 per person, which adds up to $80 million to $100 million a year. So your salary bill over three years would be about $300 million. That leaves $700 million unaccounted for, if we take the $1 billion cost. Do you expect to spend a large amount of money on computer hardware?

Mr. Paul Rummell: The only thing I can add, Mr. Chairman, is that we are losing people today. There's a certain level of attrition going on in the government.

The Chairman: My question is, are you going to spend a massive amount of money on computer hardware?

Mr. Paul Rummell: I'm not sure—

Mr. Denis Desautels: To address your question—

The Chairman: Maybe Mr. Desautels has an answer for us.

Mr. Denis Desautels: I'm going to jump in, Mr. Chairman. As for the billion-dollar estimate that comes from the Treasury Board Secretariat in the first place, the way we understand this, it's a global estimate that was arrived at by making some rough calculations that are not unreasonable. But it's not a department-by-department estimate of where they're at and how much each is going to need to carry this out. I think that step has yet to come.

The Chairman: I appreciate that.

Mr. Denis Desautels: I'm looking forward to seeing this. That's what we don't have yet.

The Chairman: The question I'm trying to find out is this. We are going to make some major computer acquisitions because of this. Private industry will do the same right around the world. Can the suppliers provide the hardware you intend to purchase over the next two years to help you resolve this problem? Is it going to be available?

Mr. Paul Rummell: One of the reasons we're going out to tender right now.... We had some discussions with vendors. I asked them the same question, and we're waiting for their response. That's again dealing with all the issues we're dealing with. We're dealing with HR issues and procurement issues, but again, we're looking to make sure there's an adequate supply of computer equipment in place.

The Chairman: Do you feel it will be there?

Mr. Paul Rummell: I hope it will be. We're waiting for a response.

The Chairman: Okay.

Mr. Paul Rummell: So when we hear the response from the vendors, we will give you an affirmative answer.

The Chairman: Perhaps you may want to include that in your report later on.

Mr. Paul Rummell: Thank you very much.

The Chairman: Your priority is to protect the core of the data banks. Therefore, the peripherals will be set aside to be dealt with later if you have to leave it until after the deadline of January 1, 2000.

It would appear that the peripheral is customer service. Mr. Guindon talked about the manual writing of cheques. Is customer service designated as a peripheral area, or is it a core requirement that's going to be addressed?

Mr. René Guindon: Our end objective from the beginning is to provide the best service to the Canadian people. So the services that support that activity are very key to the projects we're now developing. There are projects that are now under way that deal specifically with the level of the services we provide to the Canadian people. Those services are part of solving the year 2000 problem, so they're continuing.

• 1650

The Chairman: But my question is about whether customer service is designated as a peripheral issue or a core issue to ensure that customer standards are met if you can't get the whole job addressed in time.

Mr. Rummell.

Mr. Paul Rummell: I can unequivocally say that customer service—meeting the needs of the individual Canadian citizen and the small and large businesses of Canada—is the central focus of our mission. Those systems that we've identified in our 40 mission-critical systems or so—that's an approximation—are those systems that provide that level of service and that's why they've been classified as being mission critical.

The Chairman: Okay.

Let me quote some paragraphs from the Auditor General's report. In paragraph 12.27, we see that in the fall of 1996 senior management needed more awareness and support from them was lagging. Paragraph 12.33 talks about the availability and the cost of replacement. In paragraph 12.40 it is noted that one particular department had issued a warning about this problem in June 1995 and talked about it a lot, but by April 1997, two years later, they were still working on an inventory and an impact analysis.

Can you assure us that every department is fully aware of the urgency of this issue?

Mr. Paul Rummell: We have gone through a very comprehensive awareness program. The deputy ministers are certainly well aware of this. It's been spoken about to deputies at deputies meetings on a number of occasions. They've been written to and have been asked how they're dealing with the issue. Surveys have gone out to them. We've had numerous meetings with the heads of—

The Chairman: Are you quite assured today that every department is fully aware of the urgency of this issue?

Mr. Paul Rummell: We believe that most departments and most people in the departments are aware of this issue. I cannot say all are.

The Chairman: Whose responsibility is it to ensure that all are?

Mr. Paul Rummell: We have communicated to all departments and agencies in the federal government that this is a major issue and we've done that on a continuous basis since 1994.

The Chairman: But who carries the responsibility? Is there any one person in the Treasury Board who carries the responsibility for this so that we don't have to revert to writing cheques by hand as a contingency plan?

Mr. Paul Rummell: As the chief information officer, I carry the primary sponsorship for this project. I'm working through people like Mr. Guindon on this project, and as a team we at Treasury Board are working through this issue. It's not just an enterprise...it's a very large activity of the federal government and we're dealing with this as Treasury Board as a whole.

The Chairman: But it's your responsibility to ensure that every department accepts its responsibility to get the job done, if at all possible on time.

Mr. Paul Rummell: Yes, through the Treasury Board.

The Chairman: The Auditor General mentions that he would like Parliament kept informed about this particular issue. Are you suggesting that this would be through subsequent reports of yours, Mr. Desautels? Or how would you suggest that Parliament be kept informed of this important issue?

Mr. Denis Desautels: Mr. Chairman, I don't think it should be through our reports. I think it should be Treasury Board's responsibility to report directly to Parliament on the progress made.

I think there are various mechanisms, such as the performance reports that are now requested of each department and organization. I believe that would be the proper mechanism for Treasury Board to use to report on the progress that they've achieved with this situation.

The Chairman: Thank you.

I have one last question. I'm concerned about the potential of serious staff turnover based perhaps on the inability of the government to recognize escalating wages during the next little while and thereby losing people to the private sector. Do you have a contingency plan to resolve that issue if it should arise?

Mr. René Guindon: We are presently assessing to see what that contingency plan would be. We're developing a process and working very closely with the department to get a better handle on it in terms of exactly what the impact will be.

As I mentioned before, I think the fact that we now at least have a collective agreement in place is going to be very positive. I don't believe it's going to solve all of our problems, but again, we're working very closely with the departments and with the private sector to ensure that adequate resources will be available. So the process will work in terms of the procurement deals with those issues at this time.

• 1655

The Chairman: Okay. One question from Mr. Mayfield.

Mr. Philip Mayfield: I've listened with some interest as we try to understand what this will cost. I'm wondering how the cost estimates are calculated. Do you have a method for doing that?

Mr. René Guindon: I was not responsible for the first cost, but the industry standard—when it first started looking at the $400 billion to $600 billion, which I said was pretty wide-scale—was that if you looked at your total IT budget, the conversion to the year 2000 would probably be about 25% of that cost. I think that's one approach the worldwide system was looking at.

Mr. Philip Mayfield: I was thinking specifically for the federal government.

Mr. René Guindon: Through our evaluation process there's a specific question to departments in terms of their best estimate of the cost of solving the problem. That's what we're summing up right now and trying to get a better handle on.

The indications are that it's in the range we've identified. We're now trying to determine how much we'll need in terms of additional resources and additional dollars, which is the question that was asked before. I'll be able to report back later on that.

The Chairman: Mr. Desrochers.

[Translation]

Mr. Odina Desrochers (Lotbinière, BQ): Mr. Guindon, you have said several times today that you were not able to provide us with an answer because you were waiting for the assessment results, that you were missing information.

Once you have got all of this information, when you come back to see us sometime in December, can we expect to see a specific action plan with a realistic timetable, a mechanism that provides for strict follow-up in each of the departments involved in this vast undertaking? It would be helpful to have a better understanding of where we are heading, particularly after the message conveyed to us by the Auditor General.

We would like to know whether everything will be clarified when you come back here in December.

Mr. René Guindon: I hope so.

Mr. Odina Desrochers: But what can you tell us today? When you come back, will you really know where we are heading, what stage we are at, what the implementation date will be, etc.?

Mr. René Guindon: This is the objective that we set and the one we are currently striving to attain. I do believe that we will be able to give all of the details that you mentioned today. The assessment is providing us with a great deal of information, but I have not yet seen all of the results, as I said earlier. We are in the process of compiling these results.

Therefore, if I have the information when I come before you, I will be very happy to share it with you.

Mr. Odina Desrochers: Thank you, because time is of the essence.

Mr. René Guindon: I fully agree.

[English]

The Chairman: Thank you. Mr. Pagtakhan.

Mr. Rey D. Pagtakhan: Mr. Guindon, how long will it take to develop the contingency plan?

Mr. René Guindon: I wish I could give you a definite answer, but I can't. We are just starting the process right now with departments. Some systems already have contingency plans based on some work that was done in the past. I wish I could answer you today, but I really don't have the details.

I think it will vary from system to system. We are assessing the situation right now. We've been concentrating over the last five to six months on getting the work done, and this is in the second phase of our program. I haven't really addressed the problem to the extent required at this time.

Mr. Rey D. Pagtakhan: To the Auditor General, in paragraph 12.87 you indicated it ought to be completed with sufficient lead time for implementation. What is your expectation for completion of the development of the contingency plan in relation to the implementation date for the compliance system? How do the two relate?

Ms. Nancy Cheng (Principal, Audit Operations Branch, Office of the Auditor General of Canada): Thank you Mr. Chairman. It's important to understand that when you put forward a contingency plan it takes time to actually implement. Mr. Guindon gave the example of having to issue manual cheques. If you intend to issue manual cheques, who will write those cheques? There may be a staffing issue. Once you have the staff members, what will they actually do and what procedures might have to be followed? In other words, somebody might have to sit down and say “Here's how you're going to do it” and that takes time to actually develop.

Then the people might need to be trained so they can carry through with those procedures. Some of these procedures might not be complete, so afterwards you also have the need perhaps to actually make up for differences, be they people who are missed in the system or people who might have been sort of caught in two places. So you have to sort out the anomalies afterwards.

• 1700

Alongside all of that, if you are dealing with program beneficiaries, there has to be a communication plan so that the beneficiaries can understand that this is a different procedure and they can expect changes.

All these things don't happen overnight. While it takes time to develop contingency, the contingency plan itself takes time to be implemented. So you can't wait till, for example, December 1999 to do this. What it requires is probably for the programs people to understand: by this particular date, if it doesn't look as if my main system is under control—however that's defined—I'll have to start contingency planning, and that can't be at the last minute.

Mr. Rey D. Pagtakhan: Based on that, Mr. Guindon, what time line do you give to your staff as to when you will move with the development and completion of the contingency plan, knowing that April 1, 1998—154 days from today—will be the target implementation for the compliance system? We have 154 days left. What approach do you have in place and what approach do you have in mind doing in terms of designating a specific project, precisely and only focused for the development of the contingency plan?

Mr. René Guindon: One of the first things we're doing before we even develop the contingency plan is we're finalizing right now what we call an impact analysis, which basically gives us what is the risk associated with that particular mission-critical system.

We have a group of people right now assessing and looking at that issue.

I'm not sure I understand the 154 days. The 154 days probably brings us to July 1998. We will not have a contingency plan in place in mid-1998. The contingency plan will trigger in only when the system is not able to be delivered.

Mr. Rey D. Pagtakhan: But you have to have the plan before that.

Mr. René Guindon: The plans that are in the process now with departments are being developed on certain systems, and some of them....

[Translation]

Plan B. That is what Plan B is all about. Plan B begins...

Some hon. members: Oh, oh!

[English]

Mr. Rey D. Pagtakhan: To complete the thought, how do you assess the response, Mr. Auditor General?

Mr. Denis Desautels: I don't think there's that much inconsistency between the two. I think what Mrs. Cheng explained is that you can't wait until the very end to start defining what the contingency plan is.

Mr. Rey D. Pagtakhan: Right.

Mr. Denis Desautels: As we speak today, people have to start identifying those systems where there is a risk, where a contingency plan might be needed.

The decision to actually start drafting the contingency plans can be made a little later, as it becomes more certain whether or not you're going to meet the deadline.

I understand that at this point in time they have not started drafting contingency plans, but the process of serving might identify those systems where there's a risk and where we have to keep that in mind and at one point there will be a need to make a decision.

Mr. Gurmant Grewal: Mr. Guindon, this is a global issue we're talking about, and as far as I assess it so far, we don't have any solution to the problem at this moment.

Have you done anything to have any investigative studies done to find out how other countries are doing and what private sector companies who are specializing in this business have done? Is there any possibility that, rather than starting to reinvent the wheel ourselves, from those high-tech companies or high-tech industries or high-tech countries who have done something we could buy a ready-made solution to the problem?

Mr. René Guindon: My information to date, and based on a lot of information that the CIO mentioned just a few seconds ago, is that to date we have been taking a leading role with respect to the year 2000. We've had people into the United States, we have had people into the U.K. I have personally even met with the CIO of Australia and compared our plans. We were ahead of Australia in this particular instance.

• 1705

So we are confident that what we are doing right now is consistent with what needs to be done to resolve the problem. We have the industry task force right now, and it is providing us with additional data in terms of how the private sector is addressing this issue. I must reassure you right now that it is not different from what we are actually doing within the federal government. We are taking a lead role—and I think Canada as a whole is taking a lead role—in trying to address this issue.

Mr. Gurmant Grewal: It's fine that we're taking a lead role, but how about the cost-effectiveness of this whole program, in case somebody else could have been taking a good lead role? We know they are reaching to find a solution, either before us or probably at the same time. It would be cost-effective to buy a ready-made solution to the problem rather than reinventing the wheel right from the beginning. What is the cost analysis coming into the picture?

Mr. René Guindon: I want to reassure you that we are sharing information between various entities, such as the private sector, the major companies. As I said before, we haven't found any magical solutions right now in terms of trying to solve this problem, so the cost-benefit analysis is very straightforward. It's based on what you're reading, what we've seen, and what we've talked about today. There is a cost associated with solving the problem, but the cost of not solving it is even higher.

Mr. Gurmant Grewal: I'm aware of that. My idea is simply that in this case some other company is doing research and development to find the solution, so we could probably avoid the expenses in research and development. I mean, what is plan A and what is plan B, in comparison?

Mr. René Guindon: If you can find such a company today, I would be very happy to sit with them and to see what they've done.

Mr. Gurmant Grewal: Has any investigation been done to find out?

Mr. René Guindon: We are doing that through various.... We've just finished a government telecommunications week about a week or so ago. We had representatives from provincial, federal, the private sector, and the banking environment. We have the industry task force, which is dealing with all of the major CEOs and CIOs of the major Canadian companies, be it Chrysler, be it Canadian Tire, or the banking environment. We are sharing. I mean, the whole purpose is to ensure that we don't do exactly what you are saying, that we don't duplicate. That's what we're trying to do right now. There was an international meeting in Sydney, Australia—I think it was a few weeks ago—that basically did all of this.

The Chairman: Thank you very much.

Ms. Caplan.

Ms. Elinor Caplan (Thornhill, Lib.): The concern I have is that there is sufficient time for testing the systems as you put them in place, for making sure that they're going to work. I understand that you have an advisory committee. I'm just wondering how your plan, including the need for testing, compares with what's happening in the private sector. Is there, for lack of a better word, a technology transfer or a usefulness that you can share—information and perhaps a testing application—to shorten the time line for the testing that is required?

Mr. Paul Rummell: We've again started to do some of the testing, and we've gotten some interesting results. It's good to have started with some of the testing at this point. I guess we're pleased about that. We have been able to take that information and feed it back to the other departments so that they are able to learn from what's happened there. We'll keep improving upon best practices and sharing best practices between departments.

Ms. Elinor Caplan: Is there a forum for the sharing of those best practices? I guess that's the concern I have: that it will actually be institutionalized so that you save time by not having everybody—

Mr. Paul Rummell: We've done this through a number of things. We have a year 2000 task force. We do it through the heads of information technology for large departments. We do it through the heads of IT for small departments and agencies. We're doing it through deputy ministers. And we're also sharing that information out to industry and to the provinces, and it goes both ways so that we have as much dialogue and communication as possible. We have newsletters, websites that have been established on the Internet, that have been established for sharing information on best practices, and we've done our utmost as we start testing.

It's sort of the year of the beginning of the test, and we'll be testing and sharing results through 1998 and as we move into 1999. Again, 1999 will be a year for testing and preparedness, so we're leaving a lot of time for dealing with these issues that come up during the test cycle.

• 1710

It's not just the systems themselves but the interdependencies that are important. If we move into a digital economy, this is an issue that we all have to be particularly aware of and take some responsibility for—this interdependence we have. We are working towards understanding that, and we can discover those things through proper testing. So we are doing that.

Ms. Elinor Caplan: The last question I have in this round—I don't want to monopolize, but this is an issue I am very concerned about—is how much of the problem, particularly for the smaller office sites or services, could be and will be resolved by the natural upgrading of new hardware, which is just part of your cycle for replacement and upgrades? For example, MPs' offices are not yet Pentium-standard. In fact, most are not even at 486 standard. I know there is a plan to look at the upgrading of systems in all offices. How much of the problem will be resolved by new hardware? Not only in MPs offices, but elsewhere—I just used that as an example.

Mr. René Guindon: For many of the small and medium-sized agencies, the hardware solution in terms of changing equipment is a total solution and solves the problem. We have looked at some of them, and that's exactly what's happening—it does resolve it. If you have a very small operation that requires very simple financial systems to run—to go back to the question that was raised—if you can just replace that operation and it meets your requirements; it solves your year 2000 problem.

We are looking at some of the shared systems and some of the financial systems, or parts of that—the human resources—in the same way. So some of them will. Unless you have some major databases that were developed in the 1920s or something, I think it solves the problem.

The Chairman: Thank you very much, Ms. Caplan.

Mr. Harb.

Mr. Mac Harb: Frankly, Mr. Chair, I am very reassured after hearing the presentation by our guest.

I have a point to raise, and that is, while we are looking at the year 2000, and with this task force we have now, I wonder whether there is any possibility at all of trying to deal with this whole question. We have departments that are all members of the same family, the Government of Canada, yet their information systems are not compatible. They don't interface and interact with one another. There seems to be always a time lag. One's starting one and the other one's starting the other one. There's a sense of protectionism within the different departments.

Wouldn't it be an appropriate time for your team now, since you are hitting so hard—and I'm quite pleased to see you doing that—to come down on them and say, look, there's cost; if you don't harmonize your systems so we will be speaking the same language, it's going to cost us in the long run in terms of lost productivity, in terms of costs to the government?

I also have an attachment, so I'm not asking a second question. There was a concern in the small business community, in the private sector, that many of those small companies that may be capable of providing services to the government are not allowed to even bid on the year 2000 system because they have not done $10 million worth of work in the last year, or something like that. It's a major concern, because what will happen is we'll end up having just one or two companies bidding on a job that any Joe Blow who knows how to operate the system can do. We'll be having a lot of small companies across the country completely phased out and not allowed to get in because of that rigid requirement of Public Works and the Government of Canada. That is my question, in two parts.

The Chairman: Yes.

Mr. Colin Potts: Thank you for the question. We have done much, and have a very high level of concentration and harmonization of systems. We have standards that have been in place, and they have allowed for a lot of interoperability across the government departments. We have one of the largest electronic mail systems in the world. We're the marvel of other countries in terms of what we've done with that. Also, we have directory services and you can exchange information across government departments here, as in very few other countries.

We still have further to go, though, and I appreciate your comment. It helps provide reinforcement for that. We're using this as an opportunity to be innovative, to take a leadership role, and to get rid of redundancies and other things that basically have been an impediment.

My role is very much to work for us all here to provide for integrated services—a single window of services for the public to the Government of Canada. That single window is not just through the federal government, but it's through the provinces and it's through the municipalities, so there's really one-stop shopping for the public. It's a long road to go, but we've started on that.

• 1715

To deal with your second question—

The Chairman: Quickly.

Mr. Paul Rummell: —with small business, when we've had discussions with the systems integration groups we've said we want to have a significant component that's provided by small business, and I've had dialogues with them on a very frequent basis to be sure they're represented. They have a very large part of the systems offering in Ottawa and across the country.

The Chairman: Thank you.

We're going to try to wrap the meeting up fairly quickly, because the Minister of Finance is next door and needs the extra space to expand his committee meeting. So we'll have two more short questions, one from Mrs. Barnes and one from Mr. Laurin. Then if there's agreement, we'll try to wrap up.

Mr. Mac Harb: We have a vote anyway, Mr. Chairman.

The Chairman: We have a vote, and we'd like to have a short steering committee as well.

Mrs. Barnes.

Mrs. Sue Barnes: Thank you.

In preparation, I asked my staff to pick up two government documents that came across my desk this week to see if they had anything on the millennium. Here's the “Year 2000: Making a Mole Hill Out of a Mountain” in the Canadian Government Executive and BDC's “Prepare Computers for Year 200 Now”—I can see some heads are moving. One of the things that struck me was the very aggressive marketing on the back of the magazine about the government, about contracting, offering services.

My simple question is how much are we doing internally to manage this problem and deal with it, and how much are we actually creating work for outside consultancy firms? Do you have any idea what's outsourced on this project and what we're being able to manage inside?

Mr. Paul Rummell: Again, I'm very pleased with the progress we've made in the collective bargaining for the civil servants. We've tried to look after their interest first, and that's our primary interest. If needed, to protect the interests of the Canadian public, we're going to be bringing in research from the outside so we can look after the best interests of the public. But that will also be creating jobs.

We've made some very strong statements that the systems community is an important part of the government. We've stated this publicly on numerous occasions. We look at it as a core competency of government. We're looking after the people who are doing these jobs within government.

I hope that answers your question.

The Chairman: Mr. Laurin, you said you had a very short question.

[Translation]

Mr. René Laurin: I am still not satisfied. We are talking about a problem that could cost billions of dollars. Resolving the problem could cost a billion dollars; if we don't resolve it, it will cost us even more.

We were also told that the technology existed, that we were familiar with it, that it wasn't a technical problem. We know how to proceed. It's just a matter of time.

Our witnesses are telling us today that they are going to do their best. Personally, if I had invested a few billion dollars in a private company, and I knew about a solution that could cost me a billion dollars and had just been told that people were going to do their best to deal with the situation, I would look for somebody who was sure that they could do the job.

I would expect the government to take steps to guarantee that the problem would be resolved on time so that we don't find ourselves in an irreversible situation costing billions and billions of dollars. I think our witnesses must convey this message. We will ensure that we make this message heard from our side, Mr. Chairman.

[English]

The Chairman: Before we wrap up, I would just like to say that the Auditor General pointed out in paragraph 12.66 that 16% of new systems were delivered on time and on budget. If you are making new acquisitions, I would want you to make absolutely sure you take that issue into consideration.

In paragraphs 12.100 to 12.102 he talks about new equipment, that it may not accurately be converted even though you receive it at this very late date, and therefore you should have contingency plans to ensure that new equipment is compatible.

He also talks in paragraph 12.103 about the very complex issues of interface within different government departments and external computers as well.

So I do hope you will take those issues and have them as part of your report back to this committee, which I expect the committee will call for.

Because, as I mentioned earlier, the Minister of Finance would like to use part of this room, I will call this meeting to a close.

Mr. Telegdi asked that the household moving chapter be delayed until the springtime. We had planned to have a briefing on that tomorrow and the hearing next week. We've therefore had to rearrange the schedule and we're not able to have a briefing tomorrow on chapter 17, so the meeting tomorrow will be cancelled.

• 1720

We expect that the next meeting will be on Tuesday, November 4, to deal with chapter 17, results-based management. We will not be having a briefing because we have been unable to replace the household goods moving, which we had intended to have by this point in time.

[Translation]

Mr. René Laurin: I have a question, Mr. Chairman.

The Chairman: Yes.

Mr. René Laurin: At a previous meeting, I had asked the Auditor General to provide me with an answer pertaining to the department that had managed to reduce its procurement costs by 40 per cent. The Auditor General told me that he would send his reply to the clerk. I would like to know whether or not this has bene done. I am still waiting for an answer. This pertains to services and contract costs.

Mr. Denis Desautels: Mr. Chairman, I have been told that the answer to Mr. Laurin's question is being forwarded to the committee. We waited for the transcript of the meeting in order to interpret the request as it was formulated. You should be receiving it over the next few days.

Mr. René Laurin: We will ask you for a timetable.

[English]

Mr. Rey D. Pagtakhan: After the witnesses, is it the feeling of the chair that we are ready to write our report on this issue?

The Chairman: If you wish to have a further meeting on that issue, mention it to the steering committee. If they decide that, then we will bring the witnesses back a second time.

Mrs. Sue Barnes: I just want to put on the record that I need notice of steering committee meetings. I did not get notice today. Less than 24 hours is not sufficient notice for me to adjust my schedule.

The Chairman: I appreciate your point, Ms. Barnes. As I say, because of Mr. Telegdi's request, it got all changed around. We had it all put together and we had to change things dramatically. That was the reason.

Mrs. Sue Barnes: Well, I had no notice. In future, I take it, there will be adequate notice?

The Chairman: Absolutely.

Mr. Rey D. Pagtakhan: Before the witnesses leave, should they have any comments by way of addenda, I suppose, Mr. Chair, that they can be requested to submit them in light of the overall discussion from the departmental officials as well as from the Auditor General, so that they may help us in our deliberation on whether in fact to reinvite them or not, and to save time.

The Chairman: Thank you, Mr. Pagtakhan.

The witnesses may take that under advisement. If they wish to advise us, they may feel free to do so. We welcome all input. I think we want, as do all parliamentarians and all people involved in providing services to Canadians, to see this issue resolved and resolved satisfactorily by December 31, 1999.

As Ms. Barnes pointed out about the party at the beginning of the year, we want to go and enjoy the party.

A point of order, Mr. Harb.

Mr. Mac Harb: On behalf of all my colleagues, I want to thank the witnesses for the excellent presentations they made and the way in which they have answered all of our questions, as well as the Auditor General for bringing up this very important issue once again.

The Chairman: The meeting is adjourned.