Employment and Social Development Canada’s Benefits Delivery Modernization programme is the largest information technology project undertaken to date by the federal government.
The programme had 2 key goals:
Migrate Old Age Security, Employment Insurance, and Canada Pension Plan benefits to a modern cloud-based platform; and
Transform benefits delivery and the user experience to meet the needs of diverse groups, including seniors, people in remote locations, Indigenous peoples, and refugees
In the face of ongoing delays, cost increases, and staffing challenges, the department showed flexibility by adjusting its approach from working on both of the programme’s goals in tandem to prioritizing the migration of the aging systems to reduce the risk of system failure. However, this approach meant delaying the programme’s much-needed transformation component, which is intended to improve how people access and receive these benefits, including reducing the occurrence of inaccurate payments. The programme is more than halfway into its initially planned timeline, and all 3 benefits are still operating on outdated systems with limitations.
As time goes on and estimated costs continue to rise, there is concern that decision-makers may scale back or eliminate the transformation component of the 3 benefits, resulting in a final product that does not consider the needs of millions of Canadians who rely on them. The Benefits Delivery Modernization programme is an opportunity for the federal government to demonstrate how it could improve the planning and execution of large, multi-year information technology projects
Key Facts and Findings:
The Benefits Delivery Modernization programme was launched in 2017 and was supposed to finish by 2030. Since its launch, Employment and Social Development Canada encountered numerous obstacles and delays in its implementation. For example, the department revised its estimated date for migrating Old Age Security benefits to a new platform from December 2023 to December 2024 and told the Audit General that any delays encountered during the migration may shift the completion date to December 2025. The review indicated that there is a significant risk this will happen.
In 2017, the department’s initial estimated cost of the programme was $1.75 billion. This estimate has increased twice since then and is likely to increase again. As of the latest estimate in April 2022, the cost had increased by 43% to $2.5 billion, even though no benefits had yet moved to the new platform.
Findings and Recommendations:
Finding: Delays and cost overruns could jeopardize the modernization programme’s transformation plans to improve benefits delivery
The migration portion must happen as soon as possible to ensure Canadians continue to receive benefit payments. This is because the current information technology systems are decades old and at risk of failing. Delays increase the risk of a major outage that could interrupt benefit payments and ultimately increase the modernization programme’s total cost. Migration to a modern cloud platform will also provide the technical capabilities to enable transformation
Since the launch of the Benefits Delivery Modernization programme in 2017, Employment and Social Development Canada encountered numerous obstacles and delays in its implementation of the programme and had to make difficult choices about the sequence of key steps. A June 2022 programme review by the Treasury Board of Canada Secretariat identified significant concerns in several areas including timelines, scope, and costs. The review recommended that Employment and Social Development Canada focus on migrating legacy systems before transformation. The department responded by choosing to focus its time and resources on the migration component first, shifting the next steps of transformation to a subsequent stage.
According to the AOG, the focus on migrating the legacy systems to the new platform is reasonable because migration is critical to ensuring the continuity of benefits and must be done carefully and properly even if it takes longer than expected. However, there are concerns that continued changes (leading to delays) and cost increases may jeopardize the transformation portion of the project, especially if the department tries to stick rigidly to the original completion date (2030) despite challenges that arise. For example, decision makers may decide to remove aspects of transformation or take shortcuts in order to maintain the timelines or budget, which occurred during the implementation of the Phoenix pay system (see the 2018 Auditor General’s report on building and implementing the Phoenix pay system).
Reviews conducted or commissioned by the government identified delays, cost increases, and adjustments to implementation plans. For example, in 2021, in response to a schedule review, the department moved Old Age Security (the oldest of the 3 legacy systems) ahead of Employment Insurance on the migration schedule to address that system’s higher risk of failure. This allowed the department to focus on prioritizing the migration of the oldest system, but it also led to a delay in the implementation and transformation components that had been scheduled for Employment Insurance.
Employment and Social Development Canada originally estimated that Old Age Security benefits could be fully migrated and operating on the new cloud platform as early as 2023. Further refinement of the migration plan showed that this was not possible, and the department set a go-live date of December 2024. The department said that any delays encountered during the migration will affect the go-live date, possibly shifting it to December 2025. The AOG review indicated that there is a significant risk this will happen. For example, in January 2023, the Treasury Board of Canada Secretariat identified the need to implement a higher level of cloud security control for the new platform than what Employment and Social Development Canada had planned. The AOG found that the department still has work to do to understand and address the security risks associated with the release of Old Age Security on the new platform. This adds to the work the department needs to do for the migration.
According to the AOG, together with the delays described previously, steadily increasing costs put the project’s transformation component at risk. Employment and Social Development Canada’s financial forecast for the Benefits Delivery Modernization programme had increased by 43% since the initial estimate of $1.75 billion in 2017, even though no benefits had yet moved to the new system. The financial forecast has increased twice since 2017 and is likely to increase again
Using its experience with the Benefits Delivery Modernization programme, Employment and Social Development Canada should work with the Treasury Board of Canada Secretariat to:
develop and implement a more realistic and precise approach to estimating and reporting costs for large, multi-year information technology projects that will be used by the programme going forward and also by other government departments planning similar projects
ensure that any future changes (including to cost estimates or timelines) do not result in the transformation component being curtailed or eliminated
Employment and Social Development Canada’s response. Agreed. The Treasury Board of Canada Secretariat’s response. Agreed.
Finding: Resourcing challenges
The AOG found that during the time of the audit, Employment and Social Development Canada did not yet have a clear understanding of its staffing gaps and needs for the programme and was working on a plan to recruit and retain staff needed to deliver the programme.
The department told the Auditor General that it could not specify the number of vacant positions on the programme because it was working to realign employees with the programme’s shifting priorities and timelines. The department also said that these changes were being undertaken in response to findings from a June 2022 programme review by the TBCS that also found that the programme had resourcing issues. In July 2022, the department had already addressed a recommendation from the review by appointing a deputy minister dedicated to overseeing the Benefits Delivery Modernization programme.
In December 2022, Employment and Social Development Canada developed a framework and a 12-month roadmap for improving the retention and succession of staff working on the programme. In January 2023, the department also developed a plan to engage the Office of the Chief Human Resources Officer at the Treasury Board of Canada Secretariat to help address recruitment and retention challenges. The AOG review of these documents found that Employment and Social Development Canada recognized that only a limited pool of candidates had the technical skills that the programme required, which made it inherently challenging to attract and retain staff for these positions.
The department told the Auditor General that by the 2023–24 fiscal year, it expected to have identified its staffing requirements for the remainder of the project and to have put in place the processes, tools, and performance measures that it will need to improve retention and succession.
Employment and Social Development Canada adjusted its approach to managing the implementation of the Benefits Delivery Modernization programme by changing the scope and schedule to prioritize the migration of Old Age Security to a modern system to ensure the continuity of benefits to recipients.
However, this approach meant delaying the programme’s transformation component, which is intended to improve the efficiency, service quality, timeliness, and accuracy of benefits delivery.
The delay of transformation adds complexity to subsequent phases of implementation for Old Age Security, Employment Insurance, and Canada Pension Plan benefits modernization. Combined with rising costs and delays, this puts the modernization programme at risk of not being on track to deliver on its transformation objective to better meet the needs of Canadians who are eligible to access those benefits.