back to article Blame Canada? $5.7m IBM IT deal balloons to $185m thanks to 'an open bag of money'

A CA$5.7m IBM contract to update payroll systems for the Canadian government has turned into a CA$185m boondoggle for the Great White North. That's $4.62m and $150m in US currency, respectively. The relatively straightforward task of installing PeopleSoft HR software for a few government agencies has morphed into a massive …

  1. Lysenko


    So actually "Project Chimera" then, which is the customary project name when the unholy trinity of Government, Consultants and Livestock Management (née HR) get together on anything.

    1. Fruit and Nutcase Silver badge
      Black Helicopters

      Re: Phoenix?

      $185m - about twice the cost of Phoenix Osprey V-22 Tilt Rotor aircraft.

      Ginni can afford to get one of her own and have spare for running costs. Essential for flying visits to IBM locations

    2. Hans 1

      Re: Phoenix?

      Project named Phoenix in the hope that should IBM f*up, IBM will still get the successor project ... which will arise from the ashes of the previous project ... a money well, if you will!

  2. Tromos

    Could have been worse.

    'Over the past 18 months, "thousands" of employees have experienced problems including not being paid or getting less than they were owed.'

    At least nobody seems to have experienced problems with getting more than they were owed?

    1. Chris 244

      Re: Could have been worse.

      Nope, that happened too. To the tune of $250 M, most but not all of which has been recovered.

    2. OhIthinkNot

      Re: Could have been worse.

      Actually there have been people overpaid. Of course they had to repay the overage, but then the system still mucked it up, and they were held accountable for income taxes on the already-repaid overage.

      It really is a clusterf*ck.

    3. ahjgta

      Re: Could have been worse.

      The banks / lenders get involved if they can't pay mortgages etc. Government employees living month to month? tsk tsk.

      CRA (Revenue Agency) gets involved as somebody has to play catch up to their taxes. If the catch-up is shoved into the next year then there's a danger of getting shoved into the next tax bracket.

      I read about people getting worried because after getting overpaid, they will eventually have to pay it back. I would have to put it in a time locked safety box to avoid spending it.

      Of course if they keep delaying it, it might get backlogged into oblivion and they decide to start over on a new slate. I suggest they call it: Financial restructuring and intitialisation for increased efficiency, employee participation exercises, global warming to counter fake news as well as preparation for image reconstruction.

      1. aqk

        Re: Could have been worse. $B?

        If this silly overpayment had happened to me, I would have put the excess in my bitcoin wallet for safekeeping.

        Then when they asked for it back, I would have sent them the same $ amount out of my $B wallet.

    4. Mi Tasol

      Re: Could have been worse.

      Ho Hum - a re-run of Australia's Queensland Health debacle where big blue did the payroll.

      And yes the next revelation in Canada will be thousands got overpaid as well, just like in Queensland.

      Given the percentage of "blues" (foul ups) made by big blue I am surprised that any corporation or government gives them any work.

    5. Anonymous Coward
      Anonymous Coward

      Re: Could have been worse.

      Yes, that happened as well....

      Some actings went on further and are still being paid out so a few

      employees are going to be stuck paying taxes on income they have

      to pay back.

  3. Anonymous Coward
    Anonymous Coward

    Idiots Building Machines

    Incompetant Bloody Morons

    I've Been Milked

    Inept Bungling Muppets

    1. a_yank_lurker Silver badge

      Re: Idiots Building Machines

      you are too kind.

    2. John Smith 19 Gold badge

      I've Been Milked

      That's nearer the mark.

    3. Anonymous Coward
      Anonymous Coward

      Re: Idiots Building Machines

      I've Bribed Management ?

    4. Anonymous Coward
      Anonymous Coward

      Re: Idiots Building Machines

      Irrelevance Bypassing Microsoft?

  4. julianh72

    Hmmm ... I'm begging to sense a trend ...

    Queensland Health payroll debacle - AU$6.19 million contract won by IBM; balloons out by AU$1.18 billion. (Yes, billion, not million.)

    Australian Census-fail debacle; IT services supplied by IBM.

    Pennsylvania unemployment benefits debacle - services provided by IBM.

    Canada payroll debacle - services provided by IBM.

    1. as2003

      Re: Hmmm ... I'm begging to sense a trend ...

      So bad that the Queensland government implemented a ban on any new contracts with IBM

      1. Mark 65

        Re: Hmmm ... I'm begging to sense a trend ...

        So bad that pretty much everyone would do well to implement similar bans.

    2. returnofthemus

      Re: Hmmm ... I'm begging to sense a trend ...

      Yes, contrary to popular belief IBM is predominantly a services company and now you know why ;-)

    3. Anonymous Coward
      Anonymous Coward

      Re: Hmmm ... I'm begging to sense a trend ...

      This is nothing new.

      The scope creep occurs when the IBM principal or lead on the project finds reasons to expand the contract and to add in change orders. In theory the gaps shouldn't occur or increase because you sign a MSA and then each change in scope is an SOW that references the MSA. So the gaps would have existed, unless the new work 'required' changes to the MSA. Of course YMMV and the 'contracts professionals' working for the Canadian Government were asleep at the wheel. Of course, once the initial project is in progress, IBM could use a stop work order until the MSA is being re-negotiated as leverage.

      The larger issue is that these sort of contracts have staffing clauses where they can pull experienced individuals out and replace them with lower cost, lower skilled workers. Hence the rampant bugs.

      (No, this software is not that complex )

      This is something that occurs and will continue occur when you have bean counters and staff who are compensated based on profit margins and not tied to customer sat.

      The point is that this is a recipe for disaster regardless of the customer and project.

      Its also a sign that IBM is still on the path of failure and Rometty is just the latest captain of the Titanic. She is incapable of effectng the necessary cultural change required to turn things around.

      IBM Is a damaged brand.

      Posted Anon for the very obvious reasons.

    4. Colin Tree

      Re: Hmmm ... I'm begging to sense a trend ...

      Just waiting for Census-fail II

      Same-Sex Marriage Plebiscite Yes / No / Don'tknow / Maybe

  5. Grade%

    As a Canadian...

    Sigh. Sorry.

    1. Anonymous Coward
      Anonymous Coward

      Re: As a Canadian...

      As an American - we wish we had $185 million dollar budget over runs. Add a few zeroes to that figure and then we'll be talking.

  6. ThaumaTechnician

    Put the blame where it's deserved: The Harper Government

    Incompetence or corruption? Both?


    1. Anonymous Coward
      Anonymous Coward

      Re: Put the blame where it's deserved: The Harper Government

      Has there ever been a problem that wasn't magically Harper's fault?

      They launched the initiative, but the entire implementation has been under Trudeau.

      Incidentally, I'm curious where El Reg found the numbers in this post? CBC reports that the original 2011 cost estimate was $310 million, $187 million for the payroll system itself. IBM's original contract awarded $141 million between 2011 and 2016.

      What has been an unmitigated disaster is the under/over/missed payment issues. The tax impacts of overpayments and the disastrous impacts of underpayments are really understated in this article if anything. From what I remember government employees have actually gone bankrupt due to this clusterfun. And the entire economy of Ottawa is suffering, with restaurants/entertainment/sports teams/etc all seeing huge revenue hits. It's bad.

      1. 2much2young

        Re: Put the blame where it's deserved: The Harper Government

        Has there ever been a problem that wasn't magically Harper's fault?

        Well let's see .

        The change programme was started three years after Mr Harper became PM and six years before he finished being PM (

        It was switched on some months after Mr Trudeau became PM.

        Why, oh why do people place the blame for this at poor Mr Harper's door ?

      2. Anonymous Coward
        Anonymous Coward

        Re: Put the blame where it's deserved: The Harper Government

        Has there ever been a problem that wasn't magically Harper's fault?

        They launched the initiative, but the entire implementation has been under Trudeau.

        You are corect is the sense that the Liberal government, which at the point where Phoenix went live was in power for three months, could have pulled the plug on the project. You are also correct in the sense that they could have stopped at the initial pilot implementation stage tgree months later, when it became clear to everybody in the trenches that Phoenix is not going to work properly without a major rejig.

        So yes, the Liberals under Trudeau failed at this, and they should be blamed fro it.

        On the other hand if you wish to learn something from this failure rather than just blame somebody, you would ask yourself: why is it people in the trenches were not heard or were ignored by the PMO? The answer to that is the complete breakdown in trust between the professional and political parts of the Canadian public service, which occured during the ten years of the Conservative reign, and was in no small part due to Mr. Harper personally and to his leutenants. This rift will take decades to heal, and will cost Canada billions more.

        So blame where blame's due.

        P.S. I quit Canadian public service toward the end of Harper's era, after nearly fifteen years. The morale and the stress level at my department went to the point where I had a choice of either quitting or having a breakdown. That was the best decision I ever made - even if it cost me a 30% pay cut.

    2. Anonymous Coward
      Anonymous Coward

      Re: Put the blame where it's deserved: The Harper Government

      Its really neither on the part of the government(s).

      (Remember that this is an ongoing problem with government contracts around the world)

      The problem is that rather than keep contracts and work orders separate, the customer is placing trust in IBM, the contractor, for being a professional organization.

      The real issue... the IBM lead is compensated based not only on revenue generated, but also the profitability of the project. So IBM is offering incentives for their tech leads to grow the business, and increase the profit margins on the project. They then get the bonus and move on to the next project leaving a mess for the next guy.

      Its a corporate sociopath if such a thing can exist.

      Posted ANON for the obvious reasons.

  7. mako23

    Not a surprise

    With so many experienced staff gone and the hiring of wet behind the ear kids .......this should not be a surprise. This is the sort of contract that IBM would of excelled at in the old days.

    1. Lysenko

      Re: Not a surprise

      IBM would of excelled at in the old days.

      No, this is the sort of contract IBM would have bungled in the old days. It would have come in working, on time and within budget - thereby failing to bilk the additional C$180M out of the customer. This is the sort of "success" you get when the C suite is stuffed with members of the Maldives Basketball Association with an attention span calibrated in quarterly share prices.

    2. defiler

      Re: Not a surprise

      IBM would of excelled at in the old days.

      You mean they'd just get a machine running Excel to do the work and wrap it up in a huge box with P O W E R stamped on the front? Thought they'd use Lotus 1-2-3... :-/

  8. John Smith 19 Gold badge

    So it started small, had lots of issues, then the PTB decide to roll out across the rest of govt

    Is anyone else having trouble wondering why you'd do this?

    Of course this is the best kind of IBM contract.

    The one with a blank check attached.

  9. kmiddleman

    Did they read the book?

    Have just the solution for them -

    1. returnofthemus

      Re: Did they read the book?

      You do understand that book is fictional, right?

  10. This post has been deleted by its author

  11. Jtom

    By contracts in "Atlanta," it's safe you mean the blue cesspool city government, not the state government located there.

    I was wondering when Atlanta would enter into its next round of IT contracts. The city's almost finished with its Y2k projects.

  12. cschneid

    Relatively straighforward

    relatively straightforward task of installing PeopleSoft HR software for a few government agencies


  13. tom dial Silver badge


    The (US) Defense Integrated Military Human Resources Management system (DIHMRS) was kicked off in 1996 with an initial target date around 2002 or 2003 (Wikipedia is incorrect about this) and the goal of providing an integrated personnel and pay system for all US military personnel. That goal was effectively met for the US Marine Corps in about 1975 or 1980 with the predecessor of the Marine Corps Total Force System; that IBM mainframe system was deemed "not scalable" from the ~200,000 Marines to the ~2,000,000 in all services - at a time when IBM mainframe capacity was two or more orders of magnitude greater than when the MCTFS predecessor was deployed.

    Northrop Grumman, rather than IBM, had the contract for this one, but the vehicle, as here, was Peoplesoft, with a requirement to provide "some" custom logic for the immensely convoluted military pay and personnel laws and regulations. There was some mission creep, rather than the gallop described here, but it dragged out much longer. My branch and a few others were sucked in about 2005, when it was around three years late, to develop some of the custom logic. And help spend some of the money, to be sure.

    By the time it was cancelled in 2010, undeployed and aged 15, DIHMRS had burned through around a billion dollars, $800M of it after Northrop Grumman got the $285 M contract in 2003. Part of the money went for IBM p-Series systems that were nearing obsolescence before being used for anything but maybe development. It was a mess.

    The DoD IG report at is mildly intereting to read and might be an outline starting point for a similar report on Phoenix.

  14. anody

    Even what works in there is atrocious

    When I, as a regular employee, log in to this confounded thing I see mess of menus that end in dead links or have options going nowhere. Or, they end up with an option which on clicking tells me that I am not allowed to look at what's in there. Why do I even see this then??? Why do I see the option called "Configuration for North America", or some such idiotic thing...? I'm just a regular employee who wants to see his last paycheck. It's like the concept of context-sensitivity haven't been invented yet. Looks like nobody really tested the user interface, they just left this confusing mess for people to figure it out.

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