Proceedings of the Standing Senate Committee on
National Finance
Issue No. 4 - Evidence - March 9, 2016 (afternoon meeting)
OTTAWA, Wednesday, March 9, 2016
The Standing Senate Committee on National Finance met this day at 2:07 p.m. to examine the expenditures set out in the Supplementary Estimates (C) for the fiscal year ending March 31, 2016; and the Main Estimates for the fiscal year ending March 31, 2017.
Senator Larry W. Smith (Chair) in the chair.
[English]
The Chair: Good afternoon. Welcome to the Standing Senate Committee on National Finance. My name is Larry W. Smith, senator from Quebec. I chair the committee.
Colleagues and members of the viewing public, the mandate of this committee is to examine matters relating to federal estimates generally as well as government finance. Before we get to the specific topic of today's meeting, let me briefly introduce the other members of our committee. We are a little short on our committee today.
I would like to introduce our deputy chair, Senator Larry W. Campbell, former mayor of Vancouver and a high- ranking police officer too, Larry, in your time.
Senator Campbell: No, corporal.
The Chair: And, of course, one of the big supporters I had as the Commissioner of the Canadian Football League, Larry always supported bringing a franchise back to Vancouver, and there is one now so we're all happy as Canadians who love the sport.
Senator Elizabeth Marshall, former Auditor General of the Province of Newfoundland. And, of course, Senator Percy Mockler, a long-time Conservative operative, member of the New Brunswick government for I guess two terms. Was it two terms or three terms, Percy?
Senator Mockler: They call it seven where I come from.
The Chair: Seven terms. Wow! Thank you very much.
We may have one or two of our other members. Today is a busy time for us because we have Question Period at three o'clock, so we'll have to make sure that we get out at the appropriate time. We have the Minister of Natural Resources in today. It's a new part of the Senate operation, which is gaining in popularity but, more importantly, is gaining traction within the Senate.
With this in mind, we will look at the Supplementary Estimates (C) for the fiscal year ending March 31, 2016. We will also look at the Main Estimates today.
Today, we're very happy to have officials from Shared Services Canada: Ms. Manon Fillion, Director General and Deputy Chief Financial Officer, Corporate Services; Mr. Graham Barr, Director General, Strategic Policy, Planning and Reporting; and, hiding in the background, Mr. Surinder Komal, Director General, Service Management. I'm not sure if this is a tactic on your part to hide in the back, but any time you'd like to sit up with your confreres, please, go ahead.
[Translation]
Ms. Fillion, would you like to start?
[English]
Manon Fillion, Director General and Deputy Chief Financial Officer, Corporate Services, Shared Services Canada: Good afternoon. It's a pleasure to appear before the Standing Senate Committee on National Finance to discuss the SSC Main Estimates for 2016-17 and Supplementary Estimate (C) for 2015-16.
I will begin with the supplementary estimates related to this year, and I understand we will address the Main Estimates for 2016-17 later in the meeting. But first, a few words about SSC mandates and progress:
[Translation]
Shared Services Canada was created to help modernize government operations through the transformation of Information Technology (IT) infrastructure services, which will ensure a secure and reliable platform for the delivery of digital services to Canadians. SSC brought together people, resources and assets to develop and implement a transformation plan to improve the efficiency, reliability and security of the government's IT infrastructure, and to increase productivity across departments and agencies.
The department aims to deliver one single email system, consolidated data centres, reliable and secure telecommunications networks and protection against cyber threats 24 hours a day, 7 days a week, 365 days a year.
As outlined in the recent Auditor General's report, the department has faced a number of challenges. However, we have also made significant progress in improving the Government's IT infrastructure. This includes the establishment of new government-wide data centres, the awarding of contracts to Canadian companies for the development of an enterprise-wide secure network, and the start of migration to a single, out-sourced email service.
SSC also managed the consolidation of security services to prevent and detect cyber threats, and to secure and safeguard the integrity of data and technology assets. These accomplishments were made possible by strengthening relationships with partner departments and by leveraging expertise in the IT industry to identify best practices and approaches to IT infrastructure transformation.
[English]
Turning now to the Supplementary Estimates 2015-16, since the approval of SSC's 2015-16 Main Estimates of $1.44 billion, the department's authorities have increased by $71.4 million from the operating and capital budget carry forward and $18.4 million from the adjustment of the vote netted revenue of the employee benefit plan.
[Translation]
In addition, the Supplementary Estimates (C) represent an additional $54.2 million in new funding and transfers from other departments to SSC's authorities. Of this amount, new funding represents $33.4 million for initiatives like increased cyber security, the expansion of biometric screening for Canada's immigration system and IT support for the resettlement of Syrian refugees.
Transfers from other departments amount to $20.8 million. This includes several projects with National Defence for the Carling Campus, software for workplace technology devices at Global Affairs, and data centre consolidation for Public Services and Procurement, not to mention a project for videoconferencing and extra bandwidth at Transport Canada.
It also includes such initiatives as workplace renewal at the Treasury Board Secretariat, meteorological service renewal at Environment and Climate Change Canada and various IT adjustments at Natural Resources and Employment and Social Development Canada.
[English]
In all, the extra funds for Supplementary Estimates (C), therefore bringing SSC reference level for 2015-16 to a total of $1.58 billion.
[Translation]
My colleagues and I would be pleased to take your questions. Thank you.
[English]
The Chair: Maybe we can start with questions on the Supplementary Estimates (C) and then get into the latest estimates after, if that's okay with you, Ms. Fillion.
Mr. Fillion: Yes.
Senator Marshall: I didn't distinguish between the mains and the sups because there was common thread running through them. My first question relates to the Carling campus. We had representatives of National Defence here yesterday, and they answered some questions with regard to the Carling campus, and I noticed that there's $8.7 million in the sups and $53.4 million in the mains.
Could you update us on that project? When is it supposed to be completed? What is going to be the total cost? For completion, I'd like costs plus timelines, if you have it.
[Translation]
Ms. Fillion: The total cost of the Carling Campus initiative in Kanata is a long-term project. SSC received funds upon approval of the project, which is split into three phases. We had to review the funding for 2015-16 and reprofile funds to 2016-17 to meet the timelines for the work in Phase 1 and Phase 2. The funding budgeted for Phase 2 in 2016- 17 will probably be reprofiled.
Today, in 2015-16, SSC has $20 million in appropriations for the Carling Campus initiative, which was already part of the 2015-16 Main Estimates. The Supplementary Estimates (C) provide for a carry-forward of $8 million, as well as a reprofiling of $6 million under vote 1, which comes to a total of $34 million.
The funding allocated for Phase 2 is $39 million and, with the reprofiling of $34 million this year, SSC plans to spend a total of $73 million as part of the Carling Campus initiative, if there are no significant delays. This also explains the $53-million variance between the two estimates.
[English]
Senator Marshall: Is this Phase 2 that you're in now?
Ms. Fillion: Phase 2 is $39.6 million.
Senator Marshall: Are we in Phase 2 now or Phase 3?
Ms. Fillion: No, we are completing Phase 1 and moving to Phase 2.
Senator Marshall: You're saying there are three phases. When is the projected completion date?
Ms. Fillion: I'm going to have to defer that question to DND because, according to our plan, it's 2019 and 2020.
Senator Marshall: It's 2019.
Ms. Fillion: It's 2019, 2020, according to the actual plan.
Senator Marshall: How much will Shared Services pay? What are your costs? Your cost is not the total cost. Public Works has so many costs, and then you have the Shared Services part. What's the total cost for your department?
Ms. Fillion: In 2015-16, $20 million.
Senator Marshall: Projected to the end. I mean the total.
Ms. Fillion: Total cost for the Carling Campus, I think it's $80 million, but I can check and come back.
Senator Marshall: You think 80 million. Thank you very much.
I wanted to talk about the Auditor General's 2015 report. You did mention it in your opening remarks. Could you give us an update? The report was, I found, somewhat negative toward some of the work that has been done or hasn't been done in your department. Could you give us a brief overview of the action that you have taken since you received the report of the Auditor General?
Ms. Fillion: I'll ask Graham Barr to answer that question.
Graham Barr, Director General, Strategic Policy, Planning and Reporting, Shared Services Canada: Yes. As you say, the Auditor General released a report on Shared Services Canada last month. We welcome that report at Shared Services Canada and its findings. The report focused on year two of our seven-year plan to consolidate and modernize the government's IT infrastructure. In fact, the Auditor General's findings confirmed the challenges that such a large- scale undertaking faces.
The Auditor General recommended that, among other things, we develop a service strategy, that we publish our service level expectations, that we report on our performance against it, that we clarify roles and responsibilities and security, and also that we improve our methodologies for calculating and reporting on costs and savings.
We take that report very seriously, and we have already taken some concrete steps toward addressing the findings. In the past few months, we have finalized and distributed our service management strategy. We have published, for all of our partner departments, our service catalogue, which includes a complete list of our services. For many of the services, we have published service-level expectations so that our partner departments know what level of service they can expect from us, and, in the coming months, we will be reporting against those service-level expectations. We have just finished our first customer satisfaction survey, and we are developing an action plan to address areas for improvement out of that.
We are currently working with partner departments, as well as other lead security agencies in the government, like Public Safety and TBS and Communications Security Establishment to finalize and clarify the roles and responsibilities that SSC and the departments vis-à-vis security. Finally, we are also implementing a cost management framework, which will help us to support decisions and reporting on our costs and savings.
Then, overall, what we're doing is we have launched a pretty intensive review of our plan to modernize and consolidate the IT infrastructure to ensure that the timelines, the costs and the scope are realistic.
Senator Marshall: Thank you. You have gone over security and your services, and you have also mentioned costs. I know the Auditor General did have some comments with regard to the generation of savings because, when Shared Services was initially established, one of the premises was that, by consolidating the services in one department, there would be savings. There are some comments there about the challenges that you face in accurately determining your savings. I know that, in your performance reports, you do indicate the savings that are being realized as a result of all of the departments coming together. Would the savings that are in your performance reports still be reliable, bearing in mind the comments of the Auditor General, or is that something that you would have to go back and take another look at?
Mr. Barr: The numbers in our performance report are accurate. They represent reductions in SSC costs. As you've noted, the modernization and consolidation of IT will result in greater efficiencies because the unit costs of IT services will be going down, but, as with all big transformation projects, there is a requirement for some upfront investment in order to realize those savings down the road.
Part of what you're seeing in our performance report was that SSC's annual reference levels were reduced by about $200 million in anticipation of those savings. However, because of delays in some of our transformation projects, as well as unplanned growth in demand for IT services, those savings didn't materialize as early as originally expected. To address that, as I mentioned earlier, we're putting in place the cost management framework, and we're doing that review of our transformation plan to make sure, going forward, that our costs and savings and the scope are realistic.
Senator Marshall: Do you have those services now for all government departments, or are there still some to come on stream? Exactly where are you with transferring those services? You have it all now?
Mr. Barr: I wouldn't say we have it all. Starting in 2011, what was transferred to Shared Services Canada were e- mail services, data centre services and network services. A few years later, in 2013, we were given responsibility for the procurement of hardware and software for devices like desktop computers and laptops, et cetera, but very important responsibilities for IT services remain in other departments.
Senator Marshall: Okay. Those will, in the future, come over to you?
Mr. Barr: That's not necessarily the plan at this point.
Senator Marshall: Okay.
Senator Campbell: That you for coming today. We have been hearing quite a bit about biometric screening over the past few days. I'm wondering exactly what is your role in biometric screening as it pertains to the Canada immigration system, which includes Border Services, Citizenship and Immigration, and the Mounties? What is your role in all of that?
[Translation]
Ms. Fillion: Our role in the biometric project is to give our support to the project and to other partners, particularly in terms of equipment purchases, servers, data storage, archiving-related equipment, storage capacity and every aspect of purchasing applications.
[English]
Hardware and software equipment and the back-up and archiving capacity. So this is the role of SSC in supporting this project.
Senator Campbell: Basically, and this may be simplistic, but you have an IT role.
Ms. Fillion: Yes, of course.
Senator Campbell: Would they come to you for advice on these areas? "We want to set this up; what do we need?'' You would tell them, "These are the servers you need. Here is how you can archive it, how the data is collected and the programs to do that.'' Would you be the ones that say yay or nay?
Ms. Fillion: Yes. SSC's mandate is to provide an IT infrastructure, so everything that is supporting these projects. We have to work in close collaboration with all the partners for any kind of project like that, and we are reviewing their business requirement and defining the best enterprise solution that could be used for these projects as a more efficient way of planning that. Of course, we are building the architecture to support these projects.
Senator Campbell: It's $230,000, which — I know you don't hear this much — doesn't seem like very much money.
Ms. Fillion: This project is at the planning stage. The amount of money that we receive this year, yes, is small. Next year, we're planning on receiving another $2.3 million. In the future, actually, the big crunch will be when we are going to implement the project, and SSC will receive an amount of $13.3 million to support the implementation. Ongoing, we will receive and have permanent funding for this initiative of about $6.6 million.
Senator Campbell: Can you give me a figure of what the total is going to be for the biometric screening?
Ms. Fillion: For SSC only?
Senator Campbell: Total.
Ms. Fillion: Total project. I don't think we have the costs of all of the other partners because there are costs for CBSA, RCMP and Citizenship and Immigration.
Senator Campbell: But this is one program; right?
Ms. Fillion: Yes.
Senator Campbell: The problem I'm having is that you want $200,000, which is really not very much money. Border Services wants X amount. The Mounties want X amount. Citizenship and Immigration wants X amount. I'm having difficulty putting this all together to try understand what this is going to cost.
I suppose maybe you can answer: Who is in charge of the overall program?
Ms. Fillion: This program is really led by Immigration, Refugees and Citizenship Canada. They are the lead of the project. This initiative was approved as part of the Action Plan 2015. Of the four partners, we're the smallest part of the project.
We have the submission that it will go through and Immigration can probably speak about this in their own reference levels in Sup Cs.
Senator Campbell: To try to understand this program, if I were any of these other services, I would come to you and say, "This is what we would like to do.'' Is your role to tell us how to do that and how we can go about that? "This is the information I would like to gather on a biometric basis. How do I go about that?'' Is that what you do?
Mr. Barr: We work in partnership with the other departments. They discuss with us what their business requirements are based on their mandates and ministerial direction, the priorities of the government.
Part of our role is to talk about what's possible with the existing infrastructure, what concerns we might have with respect to the impacts on that infrastructure, where we may need to build incremental infrastructure and what that might cost and what that might look like. It's very much a partnership among the departments.
Immigration, Refugees and Citizenship Canada is the lead, but we work in partnership with them to make sure that, at the end of the day, the end product or the end service is something that works for all of government.
The Chair: Maybe I can ask a question from a macro perspective. Your mandate in terms of Shared Services Canada is to consolidate the various IT elements within the various departments of government. Is that correct?
Ms. Fillion: Yes.
Mr. Barr: Consolidate and modernize, so bringing them together as well as upgrading them.
The Chair: If I understand correctly, X ministry would have had their own computer services operation. You now have been asked, over time and by various departments in the government, how we can save money if X ministry is spending $50 million and the other is spending $100 million and we spend $3 billion a year. Can we bring the cost down to $2 billion? One way of doing that is going to a service bureau or centralized service concept. If I understand correctly, you would be like a CGI, which is the largest supplier in the world, or one of the largest suppliers, to bring in a centralized service.
Do you folks do the actual set up and physical work, or do you hire a third party to do that? Are you contracted to a service bureau who is the implementer of the services within the government?
Mr. Barr: Right now, the way we deliver our services is through a mixed model. Some of our services are delivered in-house, but many of our services are delivered through third party contractors. For example, in the telecommunications area, two-thirds of our services are managed services. We are the broker for the other departments in those services. It's very much a mixed model that we have with respect to the sourcing of the services.
The Chair: You have service providers for some of the different elements of the requirements of your consumer. Your consumer is really the inside ministries; correct?
Mr. Barr: Correct.
The Chair: You said that Citizenship and Immigration is the lead. Are they the lead player for all the ministries or just for their own needs? How many partners do you have inside? How many ministries do you work with?
Mr. Barr: We have 42 partner departments. Earlier on, when we were referring to Citizenship and Immigration — I looked at my notes because the name changed recently — we were only referring to the biometrics project.
The Chair: Which Senator Campbell brought up. So you deal with 42 departments. Within those 42 departments, you have a variety of suppliers because there are different parts of their operation that need to be addressed; whether it be the actual telecommunications element, whether it be the actual computing the big box necessity of processing, for which there are suppliers out there.
Are we on the right track? Part of the question that we want to ask — and Senator Marshall initiated and Senator Campbell followed up on — is if you looked at your original objectives and timeframes, where are you in the process in terms of your completion? One of the questions was more of an indirect question on the biometrics. That could lead to the big question: How much money will be required on an annual basis rolling forward? It's great to say we only have two or three year deals, but if you're going from a decentralized to a centralized system, that's a huge commitment. You have to stay in the game and make sure it happens right.
It would be helpful for us if you had a diagram of your configuration of your partners and how far you've gone. You probably have a war room someplace with some pictures. Do you have that type of setup?
[Translation]
Ms. Fillion: We will see what additional documentation we can give you.
However, to get back to the basics and the initial questions, when SSC was created, all IT support services were centralized and entrusted to the department. We received an envelope from the 43 partner organizations that represented, or should have represented, the costs of these services at the time. We centralized those services at Shared Services Canada and with this money we tried to organize and focus our service offer.
Today, we manage 25 services that we provide to our clients, which are partners and departments, as well as municipalities. We also have a mandate to provide IT support to 95 other clients who use our IT services.
When SSC was created, we consolidated services or contracts that allowed us to generate savings, something we have not mentioned. In addition, when the department was created, the consolidation of certain contracts and processes generated $150 million in savings.
SSC then focused on the transformation of these services. We took over the services of the 43 partner organizations, while continuing to run them in 43 silos. One of the major objectives of our transformation plan is to introduce enterprise solutions, such as the ability to offer common messaging services, instead of the 62 networks that we initially inherited.
When we talk about transformation, this means proposing modern solutions and enterprise solutions. We are now at that stage after five years of operation. We can now delineate the costs of our services to 25 partners. We also worked with the partners to clearly define the service standards that Shared Services Canada should use. When a partner needs a service that is much more complex, or more substantial in terms of volume, then, at that time, we prepare an agreement that provides for additional charges for those services that were not initially part of the transfer.
I just wanted to give you a quick overview of the department's creation process, the costs that were associated with it, the services provided and the transformation program that we are working on right now. As for the major initiatives, such as the biometric screening and the Carling Campus, the budgets come from the partners, when they submit their project proposal.
In addition, SSC still retains part of these projects, in terms of the support to be provided to the projects or new programs that require more substantial IT services.
[English]
The Chair: It's important to understand conceptually when you go to a third party supplier whether it's one or two suppliers because you will have different suppliers with different services. Then you will have to sell your wares to your partners. You will either go and use a third party who has big boxes and their own location, and you're going to hook up to their system, or you will set up your own centralized system. Most people would say to go to a third party who is a professional in that field because they have more expertise. I'm not sure of the mixture of what you have done, but understanding where you are and the degree of satisfaction within your own clients would be helpful for us. If you could give us even an overview of that, that would be fantastic.
Let's go to Senator Neufeld.
Senator Neufeld: My question was answered very ably just a few minutes ago, so I don't need to ask it again.
Senator Marshall: I'm digesting what she's telling us, so I have more questions. I may have asked this question before. You start out, and there are so many departments. You're taking all the departments, are you? I know you said you have municipalities and other organizations, but I'm just thinking departments now. You're supposed to take the IT services from all departments.
Ms. Fillion: For the 43 partners, yes.
Senator Marshall: Is that done now?
Ms. Fillion: Yes.
Senator Marshall: Are you taking all the IT systems from all those departments?
Ms. Fillion: The infrastructure, yes, from the 43.
Senator Marshall: There's not even small agencies? There's nothing —
Ms. Fillion: Small agencies, yes.
Senator Marshall: It's all converted to Shared Services Canada now.
Ms. Fillion: For all of the 43 partners, yes. There are still some agencies — you said small agencies — that we still don't have that we are in the process of getting. But the answer is yes.
Senator Marshall: So you have everything, okay.
As an unrelated question, what's in the statutory amount, the 89 million that's in the Main Estimates on page 248? I know we're dealing with main supply. Usually, there's not much information given on statutory, but it is $89 million. What's in that?
Ms. Fillion: This is the incremental of the statutory debt that we asked from Main Estimates 2016 from the 15-16.
Senator Marshall: What are you paying for?
Ms. Fillion: It's the statutory amount that is funded by Treasury Board for the employee benefit plan of our employees, and it's always shown separately from our appropriation. This is the budget that has been allocated, the salary dollar, for the total of our employees, and the statutory comes from a central vote from Treasury Board. This is where we have authority to draw from this central vote.
Senator Marshall: This is for payroll, for salaries?
Ms. Fillion: Absolutely. It's for benefit plans.
Senator Marshall: Is it the salaries or the benefits?
Ms. Fillion: The benefits.
Senator Marshall: It's the benefits, okay. The salaries would be in operating, wouldn't it?
Ms. Fillion: Exactly.
Senator Marshall: Thank you.
The Chair: Getting back to where you are with your mandate, since you started, I'm sure you do office reviews each year. Are you at 20 per cent, 30 per cent, 40 per cent, and where were you supposed to be at this particular time in your history?
Mr. Barr: Thanks for the question. We've made a lot of progress since we began our plan to consolidate and modernize the IT infrastructure. With respect to email, which is the first part of our mandate, we awarded the contract for consolidating the email systems back in 2013. As of now, we have transferred about 10 per cent of the government mailboxes to the new solution.
With respect to data centres, another part of our mandate, we have opened up three what we call "enterprise data centres,'' so these are state-of-the-art facilities that house the government's computing and data systems in a secure environment. We have three of those that have been opened, and we have been able to close 60 old data centres that weren't top grade, that didn't have the appropriate security, et cetera.
With respect to telecommunications, which is the third piece of our mandate, we have awarded the contracts to consolidate the government's Wide Area Networks. When we started, there were 50 Wide Area Networks. Our plan is to reduce that to one state-of-the-art and secure Wide Area Network. We've awarded the contract there.
With respect to software licensing, we've awarded and we have in place a contract with software vendors for the whole enterprise, which saves money compared to having individual contracts for different departments.
You asked where we are compared to where we thought we were going to be when we started this journey. In many of our projects, we are behind. In some of them, we're a year and a few months behind. Reasons for that were alluded to a bit earlier. Unplanned growth in IT demand has diverted some of our resources from funding these projects. Some of the vendors that we worked with have had some challenges meeting the government's requirements for scale and complexity. That's why, as we both mentioned earlier, we're right now in the process of undertaking a comprehensive review of the transformation plan to make sure that the costs and the timelines and the scope are realistic for the way forward.
The Chair: It's not a negative thing, but these things happen in huge projects. You have undertaken a project that is immense. This is not to criticize where you folks are at. Obviously, you're under the gun to re-evaluate where you are and then what you need to do to go forward. There is no negativity about that.
You said you had three centres that would be your big data centres. Is that correct?
Mr. Barr: The three enterprise data centres. We still have hundreds of other data centres. We call those legacy data centres. Those are the old data centres that we inherited from departments.
The Chair: You closed 60 so far.
Mr. Barr: We've closed 60.
The Chair: How many more do you have left?
Mr. Barr: About 400, 450 small data centres that we need to close.
The Chair: What's the definition of a small data centre?
Mr. Barr: The very smallest would be almost like a coat closet. A small one would be a small room, maybe 10 feet by 10 feet. Some data centres are as large as entire floors of large office buildings, but the vast majority are very small. They were often set up in a way that wasn't appropriate for a data centre, so it didn't have the right physical security, for example.
The Chair: You had a combination, I understand, of 1960s, '70s, '80s, '90s computers that were not properly connected.
Mr. Barr: Absolutely. Right.
The Chair: Just like many corporations and even small businesses now. Usually one of the major challenges for a small employer is to be able to move to that next step, and that defines whether many small companies become intermediate and large companies with their data capabilities. You have just gone through it on a larger scale.
Would the 60 old data centres that have been closed be considered the major centres and the other 450 the smaller? You alluded to the fact some could be the size of a big closet or a small room. If I understand what you're saying, you closed the big old centres that needed to go to get the base re-established.
Mr. Barr: Not really. The 60 are a mixture of sizes. There are a couple that were considered large data centres that we closed, but we have also closed some of the smaller ones as well. Regardless of how large the facility is that the data is housed in, it's really important, whether it's housed in a small or a large place, that we get the security right.
The Chair: These are all prioritized in terms of your setup?
Mr. Barr: That's right. We have a strategy for prioritizing how we transfer to the new data centres.
The Chair: In the review that you're doing now, what is your number one priority? Give us your top three priorities.
Mr. Barr: First and foremost, our overall priority is to improve service delivery, our service to our partner departments.
Another big priority for us — and we alluded to it — is security, making sure that government data and Canadians' data is secure.
The other piece is around capacity. As we know, the government priority is all about digital service delivery to Canadians. In order to provide secure and reliable digital services to Canadians, we need to make sure we have the security, but also need to make sure that we have the capacity so that those services are available when citizens need them.
I would say those are the top principles that we have in mind as we carry on with our transformation plan.
The Chair: How many folks do you have as FTEs now within Shared Services, and what's the morale like?
Mr. Barr: We have about 5,500 what we call full-time equivalents in the department.
Improving morale at Shared Services Canada is a top priority. Our employees believe strongly in the vision of Shared Services Canada and the importance of their jobs, but many of them are frustrated because it's taken quite a while to build a common organizational culture and business process within our department. They're frustrated because many of our transformation projects are behind schedule. Most importantly, they are frustrated because, in some instances, they're not able to deliver the level of client service that they aspire to.
Clearly, we take this very seriously. Morale is very important to us, so we have a number of initiatives underway to improve morale. We're engaging directly with employees to develop concrete solutions on organizational issues like better sharing of information and streamlining of business processes. We're doing a big review of our transformation plan to ensure that the timelines and scope are reasonable. Most importantly, we have just implemented a new service management strategy that really puts our customers at the heart of everything that we do.
We believe that as we improve service delivery, as we improve customer satisfaction, we're not only going to restore our customers' confidence in us, but we're going to rebuild our employees' pride in the department.
The Chair: So you guys have some big challenges in front of you. Of the 5,500 FTEs you have, what would be the percentage of people who came out of departments that you consolidated? Were these new employees? Were they new hires?
Ms. Fillion: The vast majority of these employees came from the 43 different organizations. We haven't recruited much since the creation. At the creation, there were 6800 FTEs. We're more in the decreasing mode of FTEs, of employees, than recruiting, which is something that we are taking seriously in order to deliver on our transformation agenda. We need to have the capacity, the right people and the right skill of people to do that.
The Chair: Do you also have a changing of generations? Do you have people retiring that are flowing through the system?
Ms. Fillion: We are building now a very comprehensive HR plan to address this kind of succession plan or the new generation. We do not have a higher or lower rate of new generation than the rest of the public service. We are relying on attrition to recruit the new generation.
Senator Marshall: Have you detected security breaches? Security is a big issue. I know the Auditor General addressed that area in his report. Could you speak to that?
Mr. Barr: Yes. We take security very seriously at Shared Services Canada. As you've said, that was a part of the Auditor General's report. The Auditor General examined in his report whether roles and responsibilities were clearly defined. The Auditor General did not test the effectiveness of security control, so that's important to know. As I mentioned earlier, we are taking the Auditor General's findings very seriously and we are improving our reporting on security, roles and responsibilities and compliance to departments.
Overall, the Government of Canada's IT infrastructure is more secure now than it was before Shared Services Canada was created. Before Shared Services Canada, the government's approach to securing its networks and data was fragmented. It was covered by a patchwork of different firewalls of varying effectiveness, and no one single organization had an overall perspective on the state of the security.
Today, as mentioned in the opening remarks, we have a security operations centre that operates around the clock to monitor and detect cyber incidents and to respond to them as well. We have a computer incident response team that provides advice, warnings and mitigations to departments on how to deal with security threats. We have also put in place a supply chain integrity process to ensure that no untrusted equipment, software or managed services are procured by Shared Services Canada and are used in the delivery of government services to Canadians.
Of course, despite all the best intentions, there could always be a security breach. Cyber incidents continue to evolve. They become more sophisticated and more customized, but our plan is to minimize those risks as much as possible.
Senator Marshall: The Auditor General didn't look at your security procedures. Do you do evaluations or audits? Are they internal or are you contracted with an outside party? Who performs that function? Is someone independent coming in and doing the assessment?
Mr. Barr: We do security assessments and threat assessments of our various programs. It's a combination. We do them. We have auditors who conduct them as well.
As I mentioned earlier, with respect to security, we're not alone in the security sphere in the Government of Canada. There is the Treasury Board of Canada Secretariat that sets policies. There is a Communications Security Establishment that does the foreign signals intelligence and provides advice. There is Public Safety Canada that takes a lead role in coordinating a response to security incidents as well. We work closely with them through extensive governance to ensure we have the confidence that what we're putting in place is secure and that we're working together to monitor that it stays that way.
Senator Marshall: I realize that you as a department are very conscious and working with that in mind, but I'm interested in knowing that there are independent assessments, whether they are independent audits or independent evaluations. Are there independent third parties that are coming in and looking at your infrastructure and your procedures? You are a major operation. You're just not some little system off in the corner. You're a big enterprise now.
[Translation]
Ms. Fillion: Indeed. In order to comply with the Policy on Internal Control, we have a working group that works with operations, and is primarily jointly linked to finance and operations, to review the whole of our IT controls, access, fraud, and so on. This is part of our obligations as a department, and we have to be accountable to Treasury Board. To carry out this work, we hired IT audit specialists and consultants to ensure that our controls are in place and to develop concrete action plans that will enable us to fill the gaps.
We do this work on an ongoing basis, because we must ensure that the platform is compliant and, in addition, we must provide certification to all our partners for their financial statements or public accounts certifications confirming that we maintain up-to-date and adequate security controls.
[English]
The Chair: I have a numbers question. On the outline from Shared Services, I'm looking at the budgetary voted appropriations and then funding to implement government's response to the Syrian refugee crisis, funding to expand biometric screening, funding from Environment, National Defence, Transport to Shared Services Canada, funding from Public Works and Government Services. Are these amounts of money that are transferred from these other departments to you to pay for the services you render to them?
Ms. Fillion: Yes.
The Chair: If we're looking at your budget of $1.549 billion in the 2016-17 estimates, how much revenue or transfer do you get from other departments to constitute your total operating budget?
[Translation]
Ms. Fillion: The total operating budget, which also includes the revenue portion. The revenue portion is still around $400 million, with a base appropriation that now stands at $1.55 billion, which gives us a total budget of about $1.95 billion.
The Chair: If I understand correctly, you are working with an operating budget of approximately $1.6 billion and you receive almost $400 million from the partners you deal with.
Ms. Fillion: Absolutely.
The Chair: Your enterprise is therefore a two-billion dollar business.
Ms. Fillion: Absolutely.
The Chair: Moreover, that may increase over time, because you will sell other services to other departments, whose systems you have not taken over yet. Is that correct?
Ms. Fillion: Yes. The goal is to develop a better pricing strategy for our clients so that our budget is dedicated to standard services for all partners. Accordingly, the pricing structure will focus on the most complex services, for example, services to provide a much more secure system for the Department of National Defence. The department would then pay the portion related to the added services.
The same applies to volume. In the case of a major project that shows increased demand for data storage or bandwidth, if Shared Services Canada did not receive the necessary budget at the beginning of the project, all increases related to the new program will be transferred to SSC as revenue from the partners.
[English]
We have a funding structure that is much more adequate and sustainable for an organization like ours to continue to provide a secure, reliable and modern IT infrastructure, and also all of the ever-greening piece to make sure that we can maintain these assets and these infrastructures.
The Chair: Colleagues, do you have other questions you would like to ask at this time?
Maybe we should look at it from an initial perspective. This has been a fascinating meeting for us. We have asked you a lot of questions, not only financial questions but also questions about your operations. We appreciate the honesty with which you responded, and we thank you for that.
Is there anything else you want to add on the Main Estimates?
[Translation]
Ms. Fillion: No, not necessarily. I know that we prepared a second presentation on the Main Estimates.
[English]
Maybe there is a little confusion between Supplementary Estimates (C) and the Main Estimates. The first speech was about sup (C) and the second speech was on the mains.
The Chair: Would you like to fill in any blanks that you did not talk to us about in our discussion on the mains? I'm looking at your mains for 2015-16, where $1.498 billion, of which statutory was $71 million. For 2016-17, you're looking at $1.46 billion plus $89 million statutory, for a total of $1.549. You have $100 million incremental —
Ms. Fillion: Yes.
The Chair: Is there anything really different? If I understand correctly, it falls into the day-to-day operations and your long-term plan of trying to service your customers. Is that correct?
[Translation]
Ms. Fillion: Yes, absolutely. The additional money is mostly associated with the incrementals we discussed under the Supplementary Estimates (C), which are projects we carried out in 2015-16. However, we will receive permanent funding in 2016-17. Therefore, we are basically talking about the same items.
[English]
Senator Marshall: If you have a statement, could you provide copies to us? I would be interested in reading it. When I was asking my questions, they were for both sup (C) and mains because some of the projects in sup (C) flowed over into the mains. I tried to scoop them up together. All of my questions have been answered, but if you have any other material, I would like to have a copy.
The Chair: My sense is that you are in an evolving situation, and you have a tremendous amount of work in front of you. You probably have tremendous pressure from your user groups because some user groups may not be totally satisfied with you. Thus, you have the creation of a customer service concept, which is laudable. You have a work in progress, and we would love to sit down with you in another six or seven months or when you come back for Supplementary Estimates (A) or (B) or (C) and continue the discussion. Would that be fair enough? Colleagues, is that acceptable?
Senator Marshall: That's acceptable to me.
The Chair: Senator Campbell, are you okay on your side?
Senator Campbell: I have all my answers.
The Chair: On behalf of our group, I thank you for your participation today.
(The committee adjourned.)