INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, March 12, 1998

• 0906

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I'm going to call the meeting to order pursuant to Standing Order 108(2), a study on information technology: preparedness for the year 2000.

We're very pleased to have before us today Mr. Paul Rummell, the chief information officer, and Mr. Grant Westcott, member of the senior ADM review team on year 2000 readiness, from the Treasury Board of Canada; and Mr. Peter de Jager from de Jager & Company Limited.

I will begin in the order of the witnesses listed, and each witness can take approximately five minutes for an opening statement. We'll begin with Mr. Rummell, please.

Mr. Paul E. Rummell (Chief Information Officer, Treasury Board of Canada): Good morning, Madam, Mr. de Jager, Mr. Westcott, and committee members.

[Translation]

My name is Paul Rummell and I am the Chief Information Officer at the Treasury Board of Canada.

[English]

My office within the Treasury Board Secretariat is responsible for the monitoring and facilitating of the year 2000 conversion work within the federal government departments. I'd like to begin my remarks today by expressing my sincere appreciation for the interests of you as committee members in this extremely important issue.

The Canadian government began work on the compliance for federal systems long before most countries, and we're pleased that we started at that date. In 1988 the Treasury Board Secretariat initiated a four-digit date standard, and many departments began the repair work at that time.

Today Canada is recognized as one of the leading countries on this issue, along with Australia, the United States and the United Kingdom. The government has implemented a twofold approach to deal with the problem within the chief information officer office, which I head. Within the Treasury Board Secretariat we have established a project officer to monitor, assess and facilitate the conversion of federal government systems.

Mr. Grant Westcott, a senior assistant deputy minister from Justice Canada, has been a member of a year 2000 task force and senior review team that will address questions you may have based upon a recent review of our federal government's state of readiness.

Concurrent with the activities we started within the Treasury Board Secretariat, we also started work with Industry Canada to work with Canadian industry. I had the pleasure of being an ex officio task force 2000 member. I was the chair of a working group of chief information officers. We continue to work closely with Industry Canada to ensure cooperation and collaboration across industry in Canada.

• 0910

[Translation]

I would like to take a few moments to talk about the main aspects of the task force's activities.

[English]

In September 1997, Minister Manley invited chief executive officers from some of the major companies in Canada to participate in the year 2000 task force. I was very pleased that this has proven to be a very successful ongoing effort.

The mandate of the task force was to assess the nature and scope of the electronic challenge in Canada, the state of industry preparedness to deal with the year 2000 computer risks, and to provide leadership and advice on how to mitigate these risks. The task force was chaired by Mr. Jean Monty, president and CEO of Bell Canada.

One of the first initiatives of the task force was to commission Statistics Canada to do a quantitative assessment on the state of preparedness of Canadian businesses. The results of the survey, which were quite surprising to us, were completed in November 1997, and clearly illustrated that a number of Canadian business leaders were not giving the year 2000 challenge the serious attention it deserved. In fact, less than 10% of Canadian businesses had formal year 2000 plans in place.

The task force also commissioned the Conference Board of Canada to examine the effect of the year 2000 problem on the Canadian economy and the ability of Canadian organizations to compete worldwide. Again, their interim conclusions were that the repairs to the millennium bug were critical to the competitiveness of every firm.

The seriousness of the situation that we discovered prompted the task force to advance the date of its report—which I think was a rather exceptional event—to the Minister of Industry. The recommendations were presented in February of this year.

In addition, through the task force and through the work that we've done there, in February 1998 we launched a campaign called “A Call to Action”. I hope that many of you have seen the report that was prepared. It's a very worthwhile document, with a list of 18 recommendations that are very important for us all. We are also going to initiate another survey from Statistics Canada to keep an update.

We think the task force is creating a reasonable amount of momentum—sufficient momentum to encourage more businesses and industries across Canada to deal with the year 2000 challenge before it's too late.

[Translation]

In a nutshell, a lot of work has been done.

[English]

However, there is really no room for complacency at any level of government or industry or organization across the country. Our objective within the Treasury Board Secretariat and through the efforts at Industry Canada is to accelerate the pace of efforts and to increase collaboration with Canadian industry and government departments. I just finished a two-day meeting with the provinces, and one of the chief topics was this subject.

I encourage members of your committee and other members of Parliament to take a very active interest in this issue. We are confident that with your help we can help Canadians meet the year 2000 challenge.

Merci.

The Chair: Thank you very much, Mr. Rummell.

Mr. Westcott.

Mr. Grant Westcott (Member, Senior ADM Review Team on Year 2000 Readiness, Treasury Board of Canada): Thank you very much.

The reason for my appearing here today I think is because I was the co-leader of a team of senior officials and private sector consultants who have just completed a review, on behalf of the Treasury Board, of federal government readiness to address the year 2000, so this is the state of readiness of the federal government itself. Our recommendations and our findings were presented to the Treasury Board on February 5, and they were also presented to cabinet on February 17.

The focus of our examination was primarily on the state of readiness for those functions and systems of government that are critical to the health, safety and economic stability of Canadians. These systems are like those used to administer the Canada Pension Plan and unemployment insurance, collect taxes, support police activities, manage border crossings, forecast the weather, and issue payments to suppliers to the Canadian government.

• 0915

Overall our report is somewhat similar to the Monty report. It contains 19 recommendations, but in the interest of brevity, I'll only focus on five of them: those issues affecting awareness and priority, funding, procurement, our regulatory responsibilities, and emergency preparedness.

The first of our recommendations really deals with the question of raising awareness of the problem itself and ensuring that the right of priority is afforded by ministers and officials to the issues accordingly. We have recommended—and this recommendation has been accepted—that the year 2000 be considered a top priority of the government until it's solved. Cabinet has been briefed, as I mentioned earlier, and right now as we speak a letter is being sent from the Prime Minister to ministers and also from the President of the Treasury Board and the Clerk of the Privy Council to deputy ministers, clarifying accountabilities and ensuring that ministers and deputies are aware of the fact that it is a top priority of government.

Our next set of recommendations dealt with the whole issue of eliminating any contention to the focus on year 2000. We have recommended that all discretionary systems activities be suspended until such time as the year 2000 problem has been fixed, and any exceptions to that have to be justified to the President of the Treasury Board. The Privy Council Office and the Treasury Board have also accepted the idea that all proposed legislation, regulatory amendment, or policy change be assessed for its impact on progress towards the year 2000, and that all future cabinet and Treasury Board submissions have an assessment paragraph in them to explain that.

The issue of funding was a little bit problematic, because we found there was a lack of clarity as to what the strategy would be to solve the problem. It's estimated that at the federal government level alone it will cost in excess of $1 billion to fix this problem. Departments are capable of handling roughly half of this. Our finding was that we should make sure there are absolutely no impediments to progress because of funding issues.

The Department of Finance has agreed to establish a loan fund, and departments requiring incremental funding can avail themselves of that loan. On the secondary part, in terms of repayment, the finance department has also agreed that the repayment schedules will be established in such a way that they don't affect service to the public or cause any more downsizing of the public service.

On the procurement side, we found that the government was in reasonably good shape. We have procurement instruments in place. PWGSC has been quite active in this regard. I believe yesterday a series of seven contracts was awarded to the private sector to help us get this problem solved, covering the provision of services, consultants, as well as some elements of being able to buy equipment and software under that instrument.

However, we are very conscious of the fact that it takes a long time to acquire things, because of the public nature of public procurement, and we have insisted that in fact a special team be established at Public Works to handle all the procurement that's necessary to do that. They have accepted that role.

With respect to the government's regulatory role, we found, from our discussions with the 21 departments we met with, that there is an inconsistency as to the government's position on this. After consulting with our legal counsel, we have concluded that Canadians will be best served if government takes a very proactive approach to its regulatory obligations. Our recommendation on that aspect was to establish a multi-departmental committee of deputy ministers to in fact get the federal government's position clarified, and that there be a very proactive stance taken in that regard.

The federal government is very dependent on its partnerships and its relationships with other levels of government. So in this regard, as Paul has mentioned, he's already met with officials at the provincial and federal levels, and we're suggesting that the President of the Treasury Board and the Minister of Public Works also meet with their counterparts at the provincial level in order to share best practices and make sure there is a complete awareness of the interdependencies between the federal government and the provincial governments.

In closing, we also made a series of administrative recommendations affecting building systems, embedded scientific systems, financial systems, testing, monitoring, and human resource strategies, but I won't go into those, because I don't think they're of that much interest to this committee.

• 0920

I'll close on that point.

The Chair: Thank you very much, Mr. Westcott.

I'll now turn to Mr. de Jager.

Mr. Peter de Jager (de Jager & Company Limited): There should no longer be any debate over whether or not the year 2000 problem is real. Too many companies, organizations, and governments have discovered that not only is the problem real but it is larger than expected, more complex than imagined, and more time-consuming than allowed for. Despite the experiences of those who have been working on this problem for several years, some of the statements made before this panel will continue to claim that this problem is under control, that they have allowed for all eventualities, that they will deliver the project on time. These opinions are as unjustifiably optimistic as they are sincere and honest.

The likelihood of any organization delivering solutions on time in the future is predetermined by their past record. When told you should rest assured everything will be delivered on time, you are honour bound to ask the following question: Over the past three years, what percentage of your projects have you delivered on time? If the answer is unsettling or unacceptable, the next question has to be: What have you done differently to make sure history does not repeat itself?

Most organizations cannot honestly claim a better than 50% on-time delivery rate. I see no reason for this percentage to change with year 2000 projects.

The Auditor General has already testified before this committee that the Canadian government's record for delivering on-time projects is only 16%. Let me translate that: 84% of the projects the Canadian government attempts are delivered late. When you consider the consequences of failure, these odds are unacceptable—unacceptable, that is, unless you are willing to roll the dice to determine the future of Canadian business and government.

The Canadian government recently, in December 1997, sent out an RFP for a portion of the $1 billion worth of year 2000 renovations they have so far identified. As of March 9, I was not aware that this contract had been assigned to any vendors. In the Globe and Mail yesterday I learned that $100 million of this has finally been assigned. Given that most of the work must be done by the end of 1998, this leaves us little more than nine months to complete the work.

I need make no claim to paranormal powers to make the following prediction. Based on past and present experience, this billion-dollar renovation project will, to a large extent, not be finished on time.

I make this statement with no attempt or intent to discredit those working heroically on the project. I make this statement purely out of a firm knowledge and understanding of the normal fate of large computer projects, in particular large year 2000 projects. By their nature, they are invariably more complicated than expected.

An example should suffice. Telstra is the Australian telecommunications industry. Their first estimate of the size of their problem was $50 million Australian. When they had worked at it for about six months they came back with a revised estimate: $500 million Australian. They were off by a factor of ten.

It is my understanding that the $1 billion estimate provided to the government is merely a soft estimate. I can guarantee you it will increase.

My questions to governments are these. What assurances do I have as a Canadian citizen that the Canadian government will continue to provide critical services come January 1, 2000? Second, what contingency plans have been put in place to ensure you can provide critical services when this $1 billion project is late in part or in its entirety? Or is the government claiming it has never delivered a project late in the past, despite its best efforts?

In summary, I believe we can solve this problem. However, I do not believe the Canadian government truly understands the consequences of failure. It is therefore not treating this problem with the respect it deserves. The net result will be a general failure in the ability to deliver critical services and a resulting storm of non-productive finger pointing in the aftermath.

I wish you well.

The Chair: Thank you very much, Mr. de Jager. Those are definitely words we have to think about.

With that, I'll begin the questioning with Mr. Schmidt.

Mr. Werner Schmidt (Kelowna, Ref.): Thank you very much, Madam Chair.

I would also like to thank you gentlemen for appearing this morning. I think it's very good to hear some of the things we've heard.

I noticed with great interest, Mr. Rummell...when you made the comment, I got the distinct impression, by implication if not by statement, that the government is in good shape, but by golly, business had better get their act together. I was wondering whether that was an intended intimation or in fact you actually believe business is behind and government is ahead.

• 0925

Mr. Paul Rummell: This issue is a significant challenge for the government. It's a significant challenge for business across the country.

I have been here with the federal government for a year; I joined from industry. We're trying to take appropriate measures and have prioritized our efforts so that the mission-critical systems important to the health, safety, and well-being of the Canadian public are looked after.

In addition, we have a very capable team of people. There was some reference to the procurement activity awarded yesterday, but we have had a number of other procurements that were awarded prior to this. We also have a very capable team of some 8,000 computer specialists within the government. We really have to give them credit for working on this problem for a long period of time.

I can assure you that all systems are being looked at across the government. We prioritized those systems that are the most important ones for looking after the overall interests of the public in Canada.

Mr. Werner Schmidt: I think the issue isn't that you're not aware, I'm convinced you are aware. From the comment Mr. Westcott made just a moment ago, I'm especially encouraged that a report went to cabinet, and I'm encouraged that the Prime Minister has now written a letter to the respective ministers. I think that's very good.

I'm not so much concerned about all this activity that's been going on. You use the date of 1996. That's at least two years ago. By this time, we should be able to say a little bit more than saying we have a bunch of people working on it. There should be some evidence, it seems to me, that in fact some results have been achieved. It seems to me that the time has come for us to get pretty serious, because we don't have much time.

Now, 1999 is coming very quickly, and so is 2000. There's no such thing as waiting for a deadline. It's there: 2000 is coming just as sure as tomorrow's sunrise. Therefore, we don't have that flexibility of moving the deadline. So I want to ask you specifically: what benchmarks, if any, have been achieved to date?

Mr. Paul Rummell: I guess we're in the midst of completing our third survey. We completed two comprehensive surveys across the government. Since we're just in the midst of finishing the third survey, I'll quote from the survey of last fall.

There's an organization called the Gartner Group, which is a well-recognized technology specialist firm in the United States. They indicated that for large organizations, as of last fall, we should be at a 45% state of completion. Our state of completion for the federal government was at 44%, based on an index they applied that was based on our survey of all departments across government. So it would indicate that we have made considerable progress in terms of achieving a target.

Mr. Werner Schmidt: That's quite right, but you're behind schedule. They suggested 48%, and you're at 44%. You're at least 4% behind.

Mr. Paul Rummell: No. As a clarification, it was 45%, and we're at 44%.

Mr. Werner Schmidt: Okay. So you're 1% behind. If you're already behind now, what assurance do we have that you're not going to be behind next year?

The Chair: Mr. Westcott.

Mr. Grant Westcott: I tried to convince the committee that the number one priority for the focus of all systems is on the year 2000 today. So all of the government's resources—this has been accepted by cabinet—are focused on this issue.

Second, the funding and the organization around the funding has been clarified, so there shouldn't be any impediments in that sense. Ministers and deputy ministers are giving this attention. This is a general statement across all of the large departments we looked at. It's a regular part of their agenda. They are reviewing their progress in terms of management in that sense. So in that sense, I think we organized appropriately to solve the problem.

Mr. Werner Schmidt: Now I'd like to shift direction a little bit. One of the government departments has to do with OSFI, the Office of the Superintendent of Financial Institutions. When the banks appeared before this committee, they assured us that they would be ready. One of the regulatory functions of the government is to make sure that these financial institutions are doing the job they were legislated to do.

• 0930

So my question is a very serious one. What contingency plan do you have to make sure that in fact the banks are ready to prevent a run on the banks on the night of December 31, 1999?

Mr. Paul Rummell: We're unable to answer that question, because I don't have the regulatory responsibility within my mandate. You'd have to ask another group that question.

Mr. Werner Schmidt: In other words, the government has no plan. Is that correct? Whom should we ask? If you can't answer, who can answer that question?

Mr. Paul Rummell: I would direct that question to the Minister of Finance.

Mr. Werner Schmidt: The Minister of Finance.

Mr. Paul Rummell: Or the Deputy Minister of Finance.

Mr. Werner Schmidt: Shall we ask the Minister of Finance to appear, Madam Chair?

The Chair: Perhaps we can ask the deputy minister to appear.

Mr. Werner Schmidt: All right. That's a very critical question.

The Chair: I don't think anyone's disputing that, Mr. Schmidt.

Mr. Werner Schmidt: Okay.

I have one other question, which has to do with the factor of 10 that was experienced by a pretty major company in Australia, as Mr. de Jager suggested. Is there any suggestion? The $1 billion figure seems an awfully high number to begin with. If Mr. de Jager's projection is 50% correct, then we're out by a factor of maybe $4 billion. Is there any rationale that would make you think we're going to have to spend more than $1 billion?

Mr. Paul Rummell: Again, the figure was reviewed when I arrived. The project figure was set quite a bit lower when I arrived. We reviewed the overall scope of effort across the government and set the figure of $1 billion, which holds relatively true after the review that was completed by Mr. Westcott and Mr. Braiter.

Again, we are absorbing most of these costs within our information technology budgets across government. The information technology budgets across government are about $3 billion a year, including telecommunications, and that figure is spread across three to four years.

We did start on a number of these activities. It's not 1996, as you quoted, but it is back to 1988.

Mr. Werner Schmidt: I'm taking this out of your document.

Mr. Paul Rummell: What?

Mr. Werner Schmidt: That's what you said. It's not what I said.

Mr. Paul Rummell: Okay, but we did start some time ago with these efforts.

Mr. Werner Schmidt: It says in 1996 a CIO year 2000 project was established.

Mr. Paul Rummell: Correct, but our department started work in 1988-89.

Mr. Werner Schmidt: Okay.

The Chair: Last question, Mr. Schmidt.

Mr. Werner Schmidt: Yes, sure.

I'd like to ask you, Mr. de Jager, what was it that went wrong with the telecommunications company to cause them to underestimate by a factor of 10 the cost of conversion, getting ready for the year 2000? That's a big factor. Most people at that level aren't wrong by that kind of factor. What went wrong?

Mr. Peter de Jager: There was a basic lack of understanding of the complexity of the problem. As you delve into this thing more and more, the analogy used in the industry is it's like peeling back the layers of an onion. It gets more and more complicated and more and more tearful as you dig deeper.

The factor of 10 is an unusually high factor.

Mr. Werner Schmidt: It is.

Mr. Peter de Jager: Usually the factor is between three to five times incorrect at first glance. That's not unusual.

Mr. Werner Schmidt: Thank you.

The Chair: Mr. Lastewka.

Mr. Walt Lastewka (St. Catharines, Lib.): Thank you, Madam Chair.

I want to thank the witnesses for coming forward. This has been an interesting project for our committee. We've had so many witnesses and we're going to carry on.

First of all, I'd like to ask Mr. Rummell and Mr. Westcott, I understand your procedure that you started in 1988 and 1996 and so forth. My concern is that the government should be ahead; it should be helping industry, not trying to go for a target date to be there just in time.

For example, the Health Canada group needs to have work done such that industry can help on medical devices, and my concern is that the target date of completion is too far down the road. Could you explain to us when you've targeted for completion—that is, completed, tested, verified—what the government will have in place? And could you give any comments on my example of where Health Canada has to be ahead of the game in order to help hospitals and other people?

Mr. Paul Rummell: Again, for the mission-critical systems—systems that are important to the health, safety, and well-being of the public—our objective is to have those converted and start testing operations this year. Some of them are set for the latter part of the year, some of them are converted, and some of them we'll start testing this summer. So we allow a great deal of time for testing.

• 0935

With regard to the health issue, if you're interested in that issue, I suggest you call in officials from Health to deal with it. There's a regulatory responsibility within the federal government, but the jurisdiction for the delivery of health services is actually through the provinces. The provincial governments are making preparations with the hospitals and others for actual delivery of or changes to the systems within the hospitals.

Mr. Walt Lastewka: We did have the health committee people here, and the message was very loud and clear that they're not far enough ahead to be helping the hospitals. The hospitals are therefore waiting for results from Health Canada. That was made very clear to me on Monday.

Mr. Paul Rummell: Based upon what I've seen from industry analysts, the health industry is quite a way behind globally. It's an issue that would require significant support from this committee, and I would suggest that you continue on that line of question.

Mr. Walt Lastewka: In the future—and not today—I'd be interested in hearing from the overall coordinator of the government that, by December 31, 1998, we're going to be at a certain percentage completed level. I'm going to leave that with you.

I'd like to go over to Mr. Jager if I can. I'm sure he realizes what we've been trying to do as a committee, and that's to get the message out that the problem is bigger than just trying to do something over a weekend.

My concern has been that I'm not sure how deeply we are getting to all businesses, large and small. I'm more concerned about small, because large corporations can throw more money and more people at this. They can really get down to it. But the smaller businesses will have to go out and look for support. With everybody concentrating on the last twelve to fifteen months of this project, there won't be support for those small businesses.

I read your column, the write-up yesterday, and I thought it was very well done. What additional things can we do as a government, as an industry committee, to get that message out loudly and clearly that there is a problem, that it's much bigger than people realize, and that it's going to be more costly than we think it is, that it's going to cost more by not attacking it?

Mr. Peter de Jager: I've been speaking about the problem for seven years. If I had a final answer to that, we'd have solved the problem a long time ago.

What is required is that someone in government show leadership. When Peter de Jager or anybody else in this industry speaks, we lack a certain amount of credibility. After all, we're merely consultants. What is required is for a leader in Canada, perhaps someone like Chrétien, to get on TV for half an hour to talk about the issue plainly and frankly in order to mobilize industry.

Until someone of credibility speaks about this issue and helps to put aside the notion that this is hype and exaggeration generated by consultants, you're not going to get the awareness level that you require. Until a political leader gets up and makes this the number one priority to the exclusion of practically everything else, we're not going to achieve what you want to achieve. We need a leader, and no one has stood up yet.

Mr. Walt Lastewka: Thank you, Madam Chair.

The Chair: Thank you very much, Mr. Lastewka.

[Translation]

Ms. Lalonde, please.

Ms. Francine Lalonde (Mercier, BQ): Thank you. Mr. de Jager, in reading yesterday's newspaper I learned that you were one of the first to sound the alarm and that, to a certain extent, this has now become an attractive livelihood for you. It is essential that you keep sounding the alarm.

I'm inclined to borrow your questions and put them to both Mr. Rummell and Mr. Westcott. What guarantees do I have, as a Canadian citizen, that the government of Canada will continue to provide essential services as of January 1, 2000?

• 0940

Although I am saying January 1, in certain instances, this date could be earlier because of bugs that could crop up, or as in other cases, this problem could arise later on. I have been told about February 28, in the year 2000, which will not be a leap year. Even if we manage to get to the year 2000 without problems, we could be facing some challenges towards the end of February the following year. I think that it is wise to wonder what guarantees we have as citizens.

I would like to go back to Mr. Schmidt's question and put a different slant on it. All we ever hear about is that there will be some progress reports. However, the more we committee members hear from the witnesses, the more convinced we are that this question is in fact important and complex. For example, at the outset, some members of the committee were not at all convinced that this issue was important. I recall someone asking what the worst case scenario would be and the witness replied that there may be an electricity failure, that the elevators may stop running, that planes would not be taking off and that we would not be getting our cheques. This was just the start of a long list.

And so what guarantees do we have? Madam Chair, it's great to have Mr. de Jager here. Earlier, you referred to Mr. Chrétien, but perhaps the leader is not needed everywhere. I thought I understood you to say that the people in leadership roles in society had to be on alert. I fear that the governments are afraid of looking as though they haven't met their responsibilities in time, and that they understate their evaluations so as not to alarm the population.

I learned that a big department, taking advantage of the down-time resulting from the ice storm, had decided to run a test and to set its computers to the year 2000. This department was confident that everything would operate smoothly. However, this department wound up with a system that had shut down completely. They looked, looked and looked for the problem and finally discovered that one of the chips that guaranteed that the batteries would always be adequate was in fact defective. The department realized that in the year 2000, the system would not operate with batteries that were so old. The consulting company discovered that it had to change all the chips in all of its computers. The government is not the only organization that has computers. They are everywhere. And this is just one example.

The Chair: Ms. Lalonde, do you have a question?

Ms. Francine Lalonde: Yes, what guarantee do I have as a Canadian citizen?

[English]

Mr. Paul Rummell: Again, we've taken this matter as a very serious issue. The reason we established the year 2000 task force, SOS 2000, with this very distinguished committee, and I don't know that you've seen the report—

[Translation]

Ms. Francine Lalonde: Yes, yes.

[English]

Mr. Paul Rummell: It's a very distinguished committee of some of the top business leaders in our country. The reason we set that committee up, and also a very large publicity campaign—and Mr. Manley and the government have given it very strong support—is to get the word out to businesses across the country to deal with this issue earlier rather than later, particularly based upon our findings that there was a very high state of awareness, which is good in this country, better than in other countries. There was a 97% state of awareness, but we wanted to make sure that they took appropriate steps and we prepared guides and this report in order to bring them along to deal with the year 2000 problem.

Again, I guess we should be proud of the hard work of the civil servants and the organization of the Canadian federal government in dealing with the year 2000 problem. We have many people who are working very hard on this issue.

• 0945

I also provide advice to the U.S. federal government; I'm on the advisory panel for the General Accounting Office. The amount of money that the Canadian federal government is spending to deal with this issue, the commitment of resources, is three to four times that of the U.S. government. So we've taken a much more serious stance in terms of dealing with this issue.

I'm pleased with the efforts we've taken. We will not guarantee that all systems will be converted in time, because there are too many variables. You as committee members are well aware of the variables that take place within the critical infrastructures across society. The types of things we saw during the ice storm certainly showed the criticality of infrastructure across the country. But we're taking all the measures we can possibly do in the most efficient way possible to make sure that we look after our Canadian public. And I think we should give a word of encouragement to our people who are working so hard to make the necessary repairs.

The Chair: Mr. de Jager.

Mr. Peter de Jager: I'd like to add something to the comments. Despite my request for a guarantee or an assurance, there is none. There cannot be. The best you can hope for is focus on mission-critical, which is what is being done; contingency planning, which I'd quite frankly like to see more of; and a total focus of IT resources on this.

For example, if today our government decided to get rid of the GST, despite the fact I hate that tax, if they decided today to get rid of it I would fight against it. Why? Because it would add a programming burden to the existing computer problem. We can't afford it. The notion that the year 2000 problem will push new policies aside I know is distasteful to politicians. But the reality is that all legislative changes that require computer changes must be put on hold. Not to do so is an indication that this government doesn't understand the problem.

There is no guarantee. There are no assurances that everything will be right. The best we can hope for is to do our absolute best to get this thing done on time, and that means quite frankly that this notion we are working inside existing budgets is nonsensical. One of my recommendations would be for the government to immediately get rid of the procurement rules so the departments can move quickly to solve this problem, and to increase budgets automatically by 100% in every IT department in the government. Make it possible for these heroic people to get the job done, because I'll tell you something: on January 1, 2000, Saturday, when it breaks, you're not going to get it done by Monday, just because it's a long weekend. We need to do it now, not then.

The Chair: Thank you very much, Mr. de Jager. Merci, Madame Lalonde.

Mr. Peric.

Mr. Janko Peric (Cambridge, Lib.): Thank you, Madam Chair.

It's very scary. Mr. de Jager, in your summary you said that the net result will be a general failure and you went on to talk about “useless finger pointing in the aftermath”. It's sending alarming signals. What's going to happen five minutes after midnight, year 2000? We'll be probably celebrating and half drunk, and as soon as we get sober we'll realize that we're not there. Who's going to be responsible? Mr. Westcott, who can we call or point the finger at?

The Chair: Mr. Westcott.

Mr. Grant Westcott: It's interesting that when we briefed ministers and deputy ministers on this issue, there was a clarity of accountability. They understood operationally their responsibilities. An example would be the Minister of Human Resources Development Canada on the issues of responsibility for the Canada Pension Plan, on unemployment insurance, old age security, those sorts of things. They understand that operational responsibility.

The contingency planning that Mr. de Jager mentioned has started. We have not at this point devoted a significant amount of resources to contingency planning, because we do not want to divert attention away from the main problem. But the notion of contingency planning will start in the fall of this year.

• 0950

All of our attention is on trying to get...and I'll mention this in general. The overall target date to have this problem resolved across the federal government is next April, so that we have one year in order to ascertain whether everything is going to work properly or not. We put that room in the scheduling.

I would recommend that this committee call for another review in the fall, because the federal government will be doing a review at that time. That's the nature of what we're trying to do, so that we try to make it as surprise-free as we possibly can. We cannot give guarantees, as mentioned by Mr. de Jager, but the attention of ministers, deputy ministers and officials is on the problem.

Mr. Janko Peric: How far are you going to get by fall?

Mr. Grant Westcott: In the fall, major departments like Revenue Canada Taxation, for instance, will be able to tell you that they have completed their code conversion, done their testing, and are in the process of final adjustments. That's an example where they should be able to give you, with assurance, the statement that, yes, we've identified the problem, resolved it, fixed the code, gone through it and run through our testing approaches to make sure that we can ascertain that it's all been resolved.

At that point they should be able to give you an absolute assurance in being able to say that the problem is no longer in their perspective...but it's not uniform across all departments. For instance, Revenue Canada and Statistics Canada are the most advanced, and those are the types of departments that can give you the kind of assurances that you're asking for.

Mr. Janko Peric: This is my last question, Madam Chair.

Mr. de Jager, what would you do differently?

Mr. Peter de Jager: I am quite pleased with many of the recommendations and many of the things that the various departments are doing. The trouble is that they're doing it alone. You keep asking for assurances, but you're not giving them the tools necessary to act on this much faster than they're able to act.

One of my great fears is that particular 16% on-time delivery number. Let's assume that all of these departments, through heroic efforts again, can increase their on-time productivity by 200% and increase it to 48% on-time delivery. That still leaves 52% of the little projects that will be delivered late.

Just because we're working on this does not guarantee that we're going to get it done on time. When we talk about focusing on mission-critical, it means to the exclusion of everything else.

We'll use a specific case as an example. If there are any plans in the Canadian government to bring in a product like Windows '98 this year, cancel them. Windows '98 has absolutely nothing to do with the year 2000 project. It has nothing to do with the survivability of existing systems. Don't do it.

And that applies to every other IT project. If it is (a) not mission-critical, and (b) not associated with the year 2000 renovation project, cancel it automatically, out of hand, today. You need those resources for other projects. If there are services we provide that are not mission-critical, get rid of them.

Again, I'll be specific. This may not be a good example. If drivers' licences are a part of the federal mandate and if that system is broken, let it break. Let the entire nation of Canada be without drivers' licences, because you cannot afford the resources to fix that when old age security programs are broken. That's the type of hard decision that is required.

And I'll make a statement here. I do not believe the Canadian government has the courage to make those types of decisions now, when they could be effective. But come the year 2000 everybody will be saying, “But we could have done this!” Too late.

You ask who will be responsible in the year 2000. That's not the question. The question is this: what do we do today to guarantee that infrastructure systems are available? That's the challenge ahead of us.

None of them are easy decisions. No one will want to make them. They will change the nature of Canadian politics and policy. It's either that or your critical systems are not delivered on time. It's time to make choices.

Mr. Janko Peric: Thank you.

The Chair: Thank you very much, Mr. Peric. Mr. Jones.

• 0955

Mr. Jim Jones (Markham, PC): You said 44% of all your work is completed. Who checks that work to make sure they can go back in and see if they can find any flaws in that completed work? And what work has been completed? Can you name systems or departments?

Mr. Paul Rummell: I don't have all those figures with me. We have 84 departments and agencies across the federal government, so it's a very long list.

Basically, we in Treasury Board go back and check. We have an independent review team which is going back and checking—

Mr. Jim Jones: But it's a government team.

Mr. Paul Rummell: That's correct.

The purpose of the team is to provide for independent verification for departments. We're there working with departments. We're helping solve problems. In addition, though, we're providing for verification and review of their progress. We're doing that really as a double check to be sure the appropriate steps are being taken.

That's one of the roles we're playing in providing some coordination for this project. If they don't have the amount of resource they need or are running behind, we basically make sure they get back on schedule.

That's the role we're playing. We're trying to be relatively more severe as we go in making sure our departments are staying on schedule.

Mr. Jim Jones: What systems, what departments are done now?

Mr. Paul Rummell: No one will be done until we actually reach the dates for failures, because you can never do enough testing to deal with the year 2000 problem.

Mr. Jim Jones: You said you're 44% complete. Does that mean everyone is 44% down the road, or are 44% of the 85 departments completed?

Mr. Paul Rummell: On average we have 44% of the work done. I was speaking of the average.

Certain departments are further ahead. We have some small departments and agencies that are finished, and that is just great. But we have others.... Revenue Canada has done a fabulous job in dealing with this issue. HRDC, for the social programs, is right on target. They are doing just a tremendous job.

We had some other departments that were running behind. Environment Canada was running a bit behind, but they are right on target now. They have done a great job in managing the conversion work at Environment Canada.

It's a management process, and we're doing our best to manage it. Again, if anybody can offer a suggestion.... We're the people who are doing the work. We're providing the resource. We're providing the coordination. We're the people who have to deliver the services to the public. So we're interested in any constructive recommendations from the committee to help us actually deliver this. This is important to all of us across the country. If there are any suggestions you can give us to do a better job, we're happy to hear them.

Mr. Jim Jones: But for the departments that are finished, I know you said you had an independent body, but is there a totally independent body, somebody like the Auditor General or an outside firm, that can come in and audit that organization that you have said is done and give us 100% assurance that what you think is done is going to be okay?

Mr. Peter de Jager: The search for 100% assurance is the search for the Holy Grail. It is not going to happen. On January 1, 2000, you find out whether you got everything.

Software has bugs. It has been proven in the universities and the academic world that it is impossible to prove that a program does not have bugs. If you're asking for assurances from anyone that you are done, complete, finished, have no problems, you're not going to get the answer. There is no assurance. I'm sorry.

Mr. Jim Jones: My take is that sometimes when you're so close to the problem you don't see everything that is a problem. So other people have to come in there, totally objectively, and audit it. If they don't find anything in their audit, then I would say you're ready for the year 2000.

Mr. Paul Rummell: The very purpose of having the Braiter-Westcott review team.... Grant Westcott here comes from the Department of Justice, and Hy Braiter is a very senior assistant deputy minister or associate deputy minister from HRDC, from the program delivery side. They did a review of the departments that were working on mission-critical systems. As for the purpose of that review, they were not predisposed on this issue, but they were there to deal with this in a semi-independent way, to provide an independent assessment. That's why they're here.

• 1000

The Chair: Mr. Westcott, did you have anything to add?

Mr. Grant Westcott: I might try to share with the committee some other insights, perhaps.

Government does a lot of change management. We introduce changes all the time. Every year, roughly 30% of the code that operates at Revenue Canada taxation goes through change, because there's a lot of tax policy change that goes on.

In some sense, the year 2000 is being viewed as a one-time event, but in reality, government-large IT organizations are used to handling substantial change all the time. In some respects, we're able to understand, look, you've got a problem; analyse the problem, understand what it takes to get that problem solved, and test it. Testing is an essential part of what we do. Every time we change all these programs, we have to go through a rigorous process to make sure that it works.

I also agree with Mr. de Jager that we've probably underestimated the amount of effort that's going to be required to do the testing. In reality, though, we know the process, so this is not new for us in that sense, particularly in the large departments like HRDC and Revenue Canada, because they are used to doing that. HRDC two years ago introduced substantive amendments to the Canada Pension Plan. That required them to re-examine all that code, introduce change, test it, and implement it. They did it, and that worked.

Another example would be when one talks about the ice storm. The committee may be aware, but not one of our major systems failed throughout that entire process. Meanwhile, we had infrastructure failures all around this region, yet the major data centres were able to continue on. There was not a single payment missed all through that period, because the government is used to operating in that mode. We have contingency plans, disaster recovery plans, back-ups in situ, anticipating that kind of issue.

Now, I'm not trying to give you a guarantee, because as Mr. de Jager says, I can't, but we are in some respects quite mature in our ability to handle these types of problems, because we do it almost as a matter of course. This is not to say that the year 2000 isn't a matter of course, but what I'm trying to convince you of is that I think we have an awareness of the problem and know how to fix it, and we are working our way through it.

The Chair: Thank you very much, Mr. Jones.

Mr. Bellemare, s'il vous plaît.

Mr. Eugène Bellemare (Carleton—Gloucester, Lib.): Merci, Madame la présidente.

Mr. de Jager suggested, if I understood correctly, that 16% of the government contracts are not finished on time. Was it 16%?

Mr. Peter de Jager: Sixteen percent is not my number. It's a number from the Auditor General's report, and it was presented to this committee within the last two months.

Mr. Eugène Bellemare: Madam Chair, there was an article in the Financial Post on March 11 regarding the government addressing this particular problem. It says the total cost of year 2000 conversion for all federal systems is about $1 billion. If we listen carefully to Mr. de Jager, that would be an underestimate as far as realism is concerned, according to him.

However, about $500 million is to be contracted out to the private sector. To date, about $150 million in contracts have been issued. That seems to be quite a large shortfall. If you go back to the comments of Mr. de Jager about how we're possibly underestimating the fact that the estimate is $1 billion, the fact that out of $500 million of contracts only $150 million have been given so far, and the fact that there is a deadline, I wonder if you could explain to the committee if this report is in error or if we should be worried about something.

Mr. Paul Rummell: No, no. It's just that I guess there are a lot of factors that have to be accounted for, and probably not all the factors are accounted for. I think there was a considerable amount of money in contracts let to date prior to this $100 million dollar contract. I don't have all the exact figures, but up to $150 million were let prior to this for contract work, supplemental work to that of the government's people, who have been working on this for a very long time.

• 1005

In addition, we have this procurement that went out for $100 million. It's a $100-million guarantee. The work can be much larger than just that guarantee, so that figure can expand to a larger level. We just wanted to be sure that the contractors were available for the Canadian federal government, because there can be a great competition for expert resources and we wanted to be sure that the resources were available to us and not sent off to other locales, because we're in a situation of high demand for technology people.

In addition, that number includes the internal resources working on this problem and also supplemental software and equipment, so that money has quite a wide-ranging distribution.

Mr. Grant Westcott: I just want to reconfirm that the contract that was placed yesterday went to seven firms. It guarantees $100 million worth of work to keep the firms here, because there's a lot of competition here, particularly from the United States, to in fact attract people from Canada to the United States. So the folks at Treasury Board felt it prudent to actually put a guarantee in place so that they would be here. But the actual upper bound on that contract can go to $1 billion over the next two years. I think that corresponds to the number.

Mr. Eugène Bellemare: As a member of Parliament representing a large number of public servants, it was with a sense of pride that I heard you say you were part of a U.S. government task force. Why were we picked to be part of a U.S. government task force?

Mr. Paul Rummell: I guess the Canadian government is looked at as a leader in the use of information technology. We're recognized as one of the leaders in this, and they wanted to have a few countries represent a view to the U.S. government and provide advice so that they could probably come up to some of the standards we've established in Canada.

Mr. Eugène Bellemare: Was this a one-day stand?

Mr. Paul Rummell: No, it's a quarterly event. I'm meeting with them in a week on the year 2000, incidentally, so that will be good fun.

Mr. Eugène Bellemare: Do we have a similar task force for all the provincial governments with the federal government?

Mr. Paul Rummell: Thank you for the question. We have had meetings to discuss coordination on the year 2000. We have a special group with the provincial governments for the year 2000 leaders across those governments.

Yesterday, I concluded a meeting of a day and a half with the chief information officers of the ten provinces and two territories, and one of the top items for discussion was our mutual coordination for preparedness for the year 2000.

Mr. Eugène Bellemare: What are your comments on Mr. de Jager's suggestion that government should get rid of procurement rules?

Mr. Paul Rummell: I would say that we're going to look at taking emergency measures when necessary for departments but there are some very important reasons for having our procurement rules for equality and fairness in the acquisition of equipment. We also have trade regulations that we have to respect, so we will have to really apply a great deal of diligent research to suspending those rules. I would be quite concerned about that.

We will take measures as necessary.

Mr. Eugène Bellemare: In the procurement rules, the other side of the coin would be that a lot of companies have contracts with the federal government. Have we instituted in these procurement rules, inside the contracts, statements saying that if you're not ready for the year 2000 yourself...? The breakdown could be with these companies, could it not?

Mr. Paul Rummell: We have gone through a compliance exercise. We have an existing group of 5,000 vendors who we surveyed to date with regard to their compliance. They provided statements in terms of their compliance. This is a rather long list, and we have published it on a website on the intranet within government. We are in the process of surveying 5,000 additional vendors that are suppliers to the federal government in terms of their year 2000 compliance. We started on this some time ago because it's a very onerous task to go through this level of survey.

• 1010

Mr. Eugène Bellemare: But their reaction could be, “Yeah, yeah. Sure, sure.” Do we have a penalty clause so that if they break down, they're off the list?

Mr. Paul Rummell: We want to try to get them to move along as much as possible to be sure they're also year 2000 compliant, so we have to walk a line to encourage them to become year 2000 compliant as well, because we have an obligation to support Canadian industry. I think we have to strike a fine balance there.

Mr. Eugène Bellemare: Thank you.

The Chair: Thank you, Mr. Bellemare.

Mr. Schmidt, please.

Mr. Werner Schmidt: Thank you, Madam Chair. I really am pleased that we can be proud about this. I share Mr. Bellemare's comment about our civil service.

I think you can also be justly proud, and I think that's good, but I really want to challenge this. It's not because we're not proud of you; that's not the issue. I think the issue is whether or not we're ready.

The point that was made by both Mr. Westcott and by Mr. de Jager is that we do not have adequate testing to provide assurances that we will be ready. You see, the interesting thing is that we can apply some tests. You've said we can somehow do this testing and can be ready in the finance department, changing codes on CPP and all those sorts of things. But Mr. de Jager also made the point that we can't apply the tests.

We had the bankers before this group. We asked them if there will be a run on the banks on the night of December 31, 1999. They said there would not be, that they're going to be absolutely ready, there's nothing to fear.

How in the world can these guys be so sure when Mr. de Jager says we can't be sure? Something is going on here. What is the test that can be applied so that we know we are this much ready or that much ready, that we're totally ready, or that we're not ready at all? What's going on?

Mr. Peter de Jager: I'd like to clarify the matter. When I said we can't have 100% assurance, I wasn't being specific about any department or any organization. The fact of the matter is that in the computer industry itself, you cannot test a program to the point where you can sign a guarantee and put your life against it that the program will not fail. That's what I meant.

When the banks say they will be ready, they are being incredibly optimistic, and with a tremendous amount of good reason, quite frankly. Especially in Canada, our banks and our financial industries have done more on this project than any other industry sector. They have a lot to be proud of. They believe their mission-critical systems will be done. Again, they are taking huge efforts to make sure they will be there.

But when they say to you that everything is going to go right and that there will be no problems, to use a phrase I've used quite frequently on the whole topic, they are unjustifiably optimistic. They cannot give you that assurance any more than I can give you the assurance that when I walk out of this building, I will not be hit by a truck. It could happen.

Mr. Werner Schmidt: I don't think that comparison is an accurate one nevertheless, because that's sort of beyond another issue here.

Mr. Peter de Jager: So are computer problems. When you make changes to a computer system, for every thousand changes you make, you introduce eight new errors. Until the final testing occurs, you do not know that you've got everything. The industry standard is that when a new program is put into production, it will fail.

Mr. Werner Schmidt: Okay, now you used some very significant words there, “final testing”. Can you not simulate the situation with a final test in it?

Mr. Peter de Jager: Not 100%. To simulate that, you'd have to have the entire world go to the January 1, 2000 date, and than have the data start flowing. You cannot perform a final simulation of this project.

Mr. Werner Schmidt: Okay. Well, that really answers it and begs the second question: what is the contingency plan for the Government of Canada? I really like to hear that we're the leaders in IT and so on. I think that's wonderful. But what happens if the other countries are not ready? We are tied into a global system and cannot ignore the readiness of other nations and other companies that are global in scope.

• 1015

The Chair: Mr. Rummell.

Mr. Paul Rummell: Again, this is an area on topic. We're preparing contingency plans for our foreign service, for example, to deal with the situations in different countries overseas because we don't believe other countries are as well prepared as Canada. We want to be sure those people are looked after and are safe. We want to be sure our citizens overseas who are celebrating the millennium are looked after as well, so we're making sure appropriate plans are made. I've had a chance to review those plans and they're really coming along quite well. They're excellent plans and I think they've taken this very seriously.

We have excellent contingency plans in place right now for our systems operations. We had to exercise a number of those contingency plans during the ice storm and were able to move many of our computer operations to alternate facilities. We were able to run with diesel generators. We kept our weather forecasting centre running in Montreal despite the power being shut off. We have a super-computer up in Montreal that helps us forecast the weather and we were able to keep that running during the ice storm. We do have contingency plans, but we are developing contingency plans over the next year and a half that will deal with this problem.

As Mr. de Jager says, this is a very unique problem. The scope of it is greater than any I have seen in my quite a few decades in the computer industry. We will have to develop special contingency plans to deal with the scope of this issue. The analogy I use is that it's better to be prepared for a hurricane and have it pass the island and never have to use the contingency plans. That's our hope, but we will still have them in place anyway.

I hope that answers your question.

Mr. Werner Schmidt: Partly.

The Chair: Thank you, Mr. Schmidt. Mr. Ianno.

Mr. Tony Ianno (Trinity—Spadina, Lib.): I am intrigued, Mr. Rummell, that you said 44% is the average and some small departments have completed their work. What is happening with the people who have completed their work who are in the information technology sector? Are they being moved to another segment where they haven't completed yet?

Mr. Paul Rummell: We made a decision not to penalize departments for finishing early. We want to be at this point, so they can move on to their regular changes for their legislative changes, regulatory changes, to support their user communities. We have contingency plans in place so if we run short of resources that are on the critical list, we will make the necessary reallocation of resources. We don't think we're at that point yet. We're always taking this into account.

Mr. Tony Ianno: You're responsible for doing the inventory in terms of figuring out the average and figuring out which department is critical in the process, as Mr. de Jager said. If something is needed versus something else, this one has high priority.

Mr. Paul Rummell: The deputy heads are responsible for the individual departments and they take the responsibility for completion of their systems, but we have helped identify those systems we feel are most critical overall.

Mr. Tony Ianno: I want to break up your question into two. I go back to my original question. Who is responsible for determining which department is more critical than another?

Mr. Paul Rummell: We made the initial cut at that, but that was confirmed by the Braiter-Westcott report.

Mr. Tony Ianno: I have a slight concern with your first answer, that you don't want to penalize. You talked about spending $100 million to ensure seven companies stay here, yet instead of rewarding in some fashion the ones that did finish, you're getting them to do the critical work required in some of those areas you and the Westcott report identified. You're letting them do other things that may not be as critical or important, and that is time we'll never get back.

Mr. Paul Rummell: Again, I believe we are making good progress with our systems.

Mr. Tony Ianno: I understand that.

• 1020

Mr. Paul Rummell: Our results to this point are acceptable in terms of our performance, in terms of dealing with this problem for those systems that are most important for our day-to-day activities.

Mr. Tony Ianno: Do you have a critical path that's set up in terms of time line, so that by the end of April you want 68%; at the end of June you want 90%? What numbers do you have, and when do you start getting nervous?

Mr. Paul Rummell: We're increasingly nervous each day as we go along. We've never not been nervous about this issue.

Mr. Tony Ianno: So if you're somewhat nervous, yet some people have finished and they're working on things that aren't critical, who is responsible to ensure that resources are put where they're needed most, so that the nervousness starts to be reduced in a dramatic fashion?

Mr. Paul Rummell: Right now...Grant Westcott and Hy Braiter have had meetings with the deputy ministers for the departments that have mission-critical systems, and they made recommendations to the deputy ministers. Some of them are further behind than we would have liked, in terms that they might step up some of their efforts.

Mr. Tony Ianno: Mr. Westcott, before you answer that, if you can just tell me in the end—

The Chair: Mr. Ianno—

Mr. Tony Ianno: I just want to add a caveat there.

The Chair: Okay.

Mr. Tony Ianno: Who is responsible, as you answer this question?

Mr. Grant Westcott: Do you want to take it, Paul?

Mr. Paul Rummell: No, go ahead.

Mr. Grant Westcott: We have agreement amongst the deputy ministers and the cabinet ministers that if there are departments that are in serious trouble next spring, then we will introduce this concept of triage, which is what you're talking about, actually moving resources from one department to another.

So if you're looking for a critical point, it will be a cabinet discussion, without question, because it does affect ministerial accountabilities, and it will take place next spring if, when we do another review of the situation, there are departments, for instance, that are—

Mr. Eugène Bellemare: This spring?

Mr. Grant Westcott: No, next spring.

Mr. Tony Ianno: Who is responsible today?

Mr. Grant Westcott: I thought—

Mr. Tony Ianno: You've answered that cabinet will get together; they will discuss it. You are communicating with department heads. Everyone is discussing, but I wonder where the buck stops.

A voice: Who is in charge?

Mr. Tony Ianno: Which minister? Which deputy minister?

Mr. Grant Westcott: It's a shared accountability. I think Mr. de Jager tried to answer it, and I'll try to answer it again.

Each minister has operational responsibilities, and we reinforce those operational responsibilities. But when it comes to redeployment or movement across departments, then that has to be a committee discussion, and in that sense, one minister has to agree, yes, I'm going to take resources from my operation and move it to another minister. I think that's the approach we're trying to—

Mr. Tony Ianno: But somewhere, someone—

The Chair: This is your last question, Mr. Ianno.

Mr. Tony Ianno: Sorry. Thank you.

Someone is doing an inventory.

Mr. Grant Westcott: That's correct.

Mr. Tony Ianno: That person has to make judgments.

Mr. Grant Westcott: Of course.

Mr. Tony Ianno: At that point, someone receives that information, and if you're talking about a minister who is responsible for the year 2000—

Mr. Grant Westcott: No.

Mr. Tony Ianno: Okay, and if you're not talking about the deputy minister who is responsible for the year 2000, because everyone is responsible for the year 2000, my question is, could there be a flaw in the system of who is responsible?

Mr. Paul Rummell: I believe the deputy heads and the ministers responsible for the different delivery services across the government are taking responsibility for the repairs within their departments, and they're being very, very effective in terms of looking after this issue. So that's where the accountability rests.

Mr. Tony Ianno: What I'm hearing is that there isn't anyone in particular who is saying you are 80%—

The Chair: Mr. Ianno, he said very clearly that deputy ministers and the ministers are responsible for their own departments. I think that question has been answered.

[Translation]

Mr. Dubé, the floor is yours.

Mr. Antoine Dubé (Lévis, BQ): Before asking the witnesses some questions, I would like to ask you a question, Mr. Chairman. Is it by chance that the organizers of the meeting invited Mr. de Jager and the departmental officials to the same meeting or was this done intentionally?

• 1025

[English]

The Chair: Actually, it has turned out by accident. Originally we had invited two companies to come with the department. It just worked out this way. We have round tables with obviously different varieties of people all the time. I don't see a problem.

[Translation]

Mr. Antoine Dubé: That's too bad, because if this had been the case, I would have congratulated you. Although I am no expert in this field, I think that it is a good idea to invite someone who has been concerned about this issue from the start along with the departmental officials. I will reserve my final question for this gentleman.

Many questions have been raised about dates. We've heard about a deadline sometime next spring, when all departments should be ready, and we've heard about a date on which all the departments could run a test simultaneously, even though the true test will take place on January 1 in the year 2000. What should this exact date be, when we can ensure that we are ready?

[English]

Mr. Paul Rummell: Year 2000 is an interesting science. There is a whole series of potential failure dates we are well aware of. For example, there could be potential problems with the global positioning system, which is the satellite location system, in August 1999. That's not a year 2000 problem. It's just a design problem with the system. We're aware of that date.

There's another potential problem—again, I don't want to get too technical.... Computer programs used to use a technique of having all 9s written across a numeric field for dates. That meant “end of file”. So we may have a problem as early as September 9, 1999, or at some time when that information would be called up on the computer systems.

So it's not just January 1, 2000 we should be concerned about. What we're doing is working back for potential failure dates and making sure appropriate preparations are made to work back from those potential dates, which will be sooner than the year 2000.

[Translation]

Mr. Antoine Dubé: Perhaps it's not always easy to communicate in the two languages and that wasn't quite what I was asking. You have mentioned several systems. In order for all of the departments to be ready, what is the deadline marking the end of your planning? I'm not asking you about when you foresee problems, I'm asking you about the planning date.

[English]

Mr. Paul Rummell: The planning for the work is finished and all departments have embarked on corrective measures. The planning is actually finished and there are various stages of completion for the actual conversions and testing.

The Chair: Mr. Westcott.

Mr. Grant Westcott: The general deadline is April 1 next year. That's what most departments are targeting for, in order to leave nine months of leeway in case there are any problems. And there will be problems. We know that.

[Translation]

Mr. Antoine Dubé: Thank you. My next question may seem very naive to you. You are a computer expert. Why is this year 2000 problem occurring when we in fact appear to have been aware of it more than a decade ago? I find it hard to believe that the people who developed the programs and the software didn't foresee this occurring. Can you explain this?

[English]

Mr. Peter de Jager: The explanation is actually very simple. We created a two-digit year usage to save time and money, and it was mandated by management. When a programmer wrote a program, the programmers said, “Look, we can save money. We don't have to expand the system; we don't have to expand storage; if we use only two digits we don't have to do the key-stroking.” Management always seizes on short-term financial gain. They say, “Choose that solution.” The programmer says it will not work in the year 2000, and the management says, “You're the programmer. I'm in charge of the money. You do what I say, not what you think.”

• 1030

Some hon. members: Oh, oh!

Mr. Peter de Jager: The programmer, not being a professional—professionals do not allow management to make decisions like that—says okay. They justify it to themselves by saying...and you have to understand something about the computer industry. The computer industry is a very young industry and we are making this up as we go along. Computer people don't admit that too often because we like the mystique of computers, but the reality is that we are making this up as we go along.

So the computer programmer says to himself that there is no way the program he is writing today will work in the year 2000, in the sense that it will no longer be working, it will have been replaced with something else. We will have bought a new system or we will have upgraded this one, he thinks.

The reality is, unfortunately, that the myth of the five- to seven-year upgrade is just that: it is a myth.

We have applications running in government that are more than three decades old. What is surprising and paradoxical—and this is sometimes difficult to accept—is the reality: we wrote programs much better than we ever expected and they have lasted much longer than we ever expected. So in a sense we did a better job than we thought, but the trouble is that by doing the better job and by keeping the programs around, now we're into this danger zone.

I would like to make a comment on the earlier question, if I may.

The Chair: Sure.

Mr. Peter de Jager: This is where the esteemed gentlemen in here and I part ways. They have a deadline of April 1, 1999. I think that it's April Fool's Day, not by intent. The reality is that we differ 100% here. We differ totally. The final deadline for completing this project must be by the time we next see Christmas trees, December of this year. Any deadlines in 1999 are totally unacceptable. And they are totally unacceptable because most systems start failing on January 1, 1999.

To have deadlines for safe delivery in 1999 is wrong. What happens then is that the systems start failing, and as they fail...they are operational systems. You must fix an operational system when it fails, so you will end up taking the very best people you have working on the conversion project and putting them on operational problems, thereby further delaying the 1999 deadlines, and you will go into a negative spiral of delays. December 1998 is the absolute final deadline for getting this thing done, and unfortunately this is the one area where we disagree to the point of non-compromise.

The Chair: Thank you very much, Mr. de Jager.

Mr. Lastewka.

Mr. Walt Lastewka: I had another couple of questions.

I'm glad Mr. de Jager made his last comments, because my concern is that the focus of the government and this committee has been to move things up and to have score sheets to gain confidence in the committee. I would ask, maybe, that come September you provide a little more of a score sheet of the government, of those agencies and areas you said have been certified or are past that point, such that we can gain confidence as a committee that the government is doing its work properly...and also taking into context Mr. de Jager's previous comments.

The other thing is that I'm really concerned, from the deliberations we've had here for the last couple of months, that the government departments and agencies that are required to provide information data to business and industry and other governments and agencies...that their work has been done and that work been provided to those businesses and agencies, knowing full well that as those businesses and agencies get further into their work, they're going to come back for more information. But I would hope we would be past the post by September, that whatever has been asked for from business and government agencies and affiliates has been provided at least past its first phase.

The Chair: Mr. Rummell.

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Mr. Paul Rummell: First of all, to respond to Mr. de Jager's comment, the main objective is to get our changes finished this year. Grant had expressed a date that was the very last date. Again, it's hard to speak in generalities or just final dates when we're speaking about a very wide range of systems.

We appreciate the work that's been done by this committee. I would encourage you to continue to encourage the different organizations across government to basically make sure that they stay with this issue and provide ongoing support to the industrial segments that they look after on year 2000. So I think that's a good comment. I certainly agree with the direction in which you're taking this process, because, again, this is a very serious issue with serious implications.

Mr. Walt Lastewka: Mr. de Jager, I have one more question for you, and it is about your comment that I read in the Globe and Mail yesterday. You made the comment that IT, in a very, very real sense, has let business down, and if we don't learn from that mistake then we shouldn't be in the business. I'm not sure how we can continue to get the message in your words out to business, because I think you hit it right on the nose in that statement.

Your previous comment is that we need a champion and we need a leader to express it out there. The next question is, that's one way; how else do we get the word out to business? I know you've been a champion on that.

Mr. Peter de Jager: Many of the things that the task force is doing, getting letters out to business leaders and the rest, are exactly what's needed. What is needed, though, is an added level of credibility, as I've said. There wouldn't be any harm in enticing our media to start dealing with this thing from a serious perspective. I know we have a free press. I know they're entitled to say what they want. But at the same time, you have the money to buy your own advertising space if you wish to send out a message, full-page ads.

The problem is real. It's not hype. There are risks. That message has not been communicated by people who matter. If it came from the Government of Canada, it would not only have an impact here, but it would have an impact worldwide.

There is no government yet that has really taken a stance of communicating to business leaders that this is important. The bottom line is that our systems are broken. If today were January 1, year 2000, our society would come to a crashing halt. As we stand today, our systems are broken. They have to be ready by January 1 of the year 2000. We're not good at delivering it.

What part of this don't we understand? Where's the hard part? The systems are broken. We can demonstrate it. Bell Canada is spending $450 million to fix the problem. What are they spending the money on if it isn't a real problem? It's real. It needs to be communicated by government. Give individuals like me some support. We've been out there, myself and others, for years, a lone voice crying in the wilderness. It's good that you're starting on it now, but you can provide more support.

Mr. Walt Lastewka: Thank you.

The Chair: Thank you, Mr. Lastewka. Mr. Jones is next.

Mr. Jim Jones: You mentioned something earlier about how you had 8,000 people. Let's say that a lot of the departments get their work caught up. Are these skills transferable, or do you not really have 8,000 people because only those with certain skills can work on certain projects or certain vendors?

Mr. Paul Rummell: We have a very diverse technology workforce within the federal government. It's a good team. There are different computer languages. It's like speaking different languages.

Some people have an aptitude for moving between different languages, and certain languages are close to each other, like the romance languages would be. So it's easy to do certain structured language procedurals. There are procedural and non-procedural languages. So those people could move around. Other people we just can't move.

Mr. Jim Jones: So we don't necessarily have 8,000 people?

Mr. Paul Rummell: We have 8,000 people. We actually have 8,000 people in our CS community, our computer specialist community, and we have quite a few thousand other support people for technology in government. So again, those people provide support, because this is not just a problem for the technologists, it's a business problem. We'll also have to call upon our program delivery people for testing and other things, because they are the end users of the system. They are the people in the field for the government and will be testing the system.

• 1040

So quite a large number of people will be involved in this at the end of day. Everybody should be involved in this because it's not just a technology problem, it's a business problem. So that's another thing we can continue to carry as a message here.

Mr. Jim Jones: What's the status of the air traffic control system?

Mr. Paul Rummell: I would have to have Transport Canada speak to that because it involves NAV CANADA, which is an agency outside government.

Mr. Jim Jones: If you had started a couple of years ago instead of today, would you be any further ahead, or have better tools, techniques and programs come on board in the last little while that will help you solve the problem quickly?

Mr. Paul Rummell: There has been a rush of new tools into the market. Certainly it would have been better if they had come into the market earlier. It would have been better if this issue had been recognized earlier by the computer industry and organizations had had the same level of fervour three, four or five years back as they have today. It certainly would be a better support for us.

Mr. Jim Jones: You said you're spending more money than the U.S. government, or is that just in relation to the GNP?

Mr. Paul Rummell: We will never spend more money than the U.S. government, so we'll just set the record straight on that.

Mr. Jim Jones: Do we have any dependencies on the U.S. government in terms of the Canadian economy? What impact does that have on us?

Mr. Paul Rummell: Yes, we do, and I can speak as an ex officio member of the task force. A very large percentage of our trade is with the U.S. It's our number one trading partner.

We have trading relations with many other countries. Canada is not an island; we're a country that's been built on trading relationships with many countries. We have a strong export-based economy. Many of our businesses depend on that. We have to be concerned about making sure other countries will be there to receive our goods and buy our services so we can move in the future as well. So this is something we should be concerned about.

Canada is one of the top four and we still have a lot of work to do. I don't mean to make a big speech here, but we have an obligation to make sure all those other countries....It would be great if they were as far along as we are. We still have a big challenge. We will be dealing with this situation for the next few years, but they are not going to be prepared, and I can say that unequivocally. Europe and other countries are farther behind than we are, so we will have some significant problems with those other places. I think it's something we have to be concerned about.

The Chair: Thank you, Mr. Jones. Mr. Lowther.

Mr. Eric Lowther (Calgary Centre, Ref.): Thank you, Madam Chair.

This is such an interesting debate, but I was interested to hear Mr. de Jager say the deadline has to be December, 1998. That's nine months away. We have summer holidays in there that most people aren't going to give up and everybody wants to goof off at Christmas, so it won't be nine months.

I think it's a nice date but it probably isn't going to work. It's not realistic in some ways because the problem is just too big. We're all on this software solution track—let's get the software fixed. It's probably good to put all this energy into path one—fix the software problem. But I don't hear anything about another path that needs to be there at the same time.

You talked a little bit about the contingency thing. In any software implementation I've ever become involved in there's the new system, but part of the whole plan is, gee, if it doesn't work we have this other process that might take longer, or it might be more manual, or there's some escalation thing for the big issues. We really need to face the fact, as Mr. de Jager said, that the thing is broke. We painted ourselves into a corner and we're going to mess up the floor trying to finish the job.

• 1045

The other aspect to this is that we've admitted there's a limited number of resources that can actually address the software problem. So trying to pour more people at it who don't have the skill sets really doesn't help.

Why don't we use that energy to start constructing this parallel path that says, okay, we're doing the software thing over here, but we need to have another path of energy that says that when the dates roll over—1999 or 2000, whichever it's going to be—there's someplace people can call and say they don't know what to do, that things are breaking or not working there, and they can be helped? There's some expertise there that can navigate that company, department, person, or whatever, through this problem. I would sure like to see some energy applied in that arena at the same time as we're doing the software thing.

Can you speak to that?

Mr. Paul Rummell: The approach we've taken is to focus on mission-critical systems, to be sure they're corrected, but we're still going to have contingency plans for those systems.

But for those systems that are distributing the cheques to our public, those systems that are providing important search and rescue services—there's quite a long list of functions, with many different computer systems—we're going to take all the steps we can that are humanly possible, that are within our resources within the government, to be sure those systems are delivered to the public. We want to be sure that those things people rely on, on a day-to-day basis, are delivered in a very unfailing way.

But in addition, for all those systems.... In spite of the problems we had in Winnipeg during the floods, we were able to work out and get cheques out to the public through alternate means. We have ways of dealing with these things. We did a great job getting through the ice storm, as I said before.

But that's where we're focusing, on those systems that really affect all the public across the country, and we're going to make sure those systems work. I have very few reservations that those systems won't work properly.

Mr. Eric Lowther: So when you say you're focusing on them, you are not just focusing on the year 2000 problem software fix and everything is going to be rosy on the morning of the year 2000. You're saying you're focusing on the software, and if it doesn't work, here's what we can do.

Mr. Paul Rummell: That's contingency planning. But again, we won't have to go to contingency plans for those important systems, because we're really putting our efforts in those places that are most important for us all.

Mr. Eric Lowther: I appreciate your confidence, but we had the banks in here, the guys who are leading the charge on this, and they themselves said they don't know for sure that everything is going to work—and they're way ahead.

Mr. Paul Rummell: We will have the contingency plans in place, as well. We're going to do all things that are necessary.

We probably haven't publicized as much—and I worked in the banks prior to joining the civil service—but we've taken similar measures to those that have been taken by the Canadian banks in dealing with this issue. We started even earlier than some of the major Canadian banks in dealing with this issue. Our people should be proud of that. We're not the greatest publicity machine, but we should be proud of the work we've done.

The Chair: Thank you. Thank you, Mr. Lowther.

Mr. Shepherd, you had a couple of questions.

Mr. Alex Shepherd (Durham, Lib.): Yes.

I guess when we see conflict, we try to find some way to reconcile it here. I wonder where this April 1, 1999 date comes from. To me, it sounds strangely like a new fiscal year of the government. Does it mean you're going to get access to more resources in another budget? Is it as simplistic as that? Why can't we reconcile to Mr. de Jager's December 31 figure?

The Chair: Mr. Westcott.

Mr. Grant Westcott: What I'm trying to do is give you an example.

For instance, Revenue Canada has to have all of its systems ready for the following tax year. So in order for them to do that, usually around the summertime is when they have to have all their codes done, and they do their testing from, say, September through until Christmas to make sure they're ready. Then they put the systems in place in February and start their tax years.

So it's at that point, as an example. It's when we put it in production. It's not when we actually finish the work. That is what we're trying to get at. What we're trying to say is that we want all of the systems servicing the major mission-critical activities in production, fixed and changed by April 1, 1999. That's the stake in the ground. That's what we're trying to get at.

• 1050

So in essence that leaves us nine months, accepting the fact that we're probably going to have difficulties. It won't go perfectly. As Mr. de Jager said, we're going to miss deadlines. We know that. So what we've tried to do on a broad set of issues is to have target dates so that departments know that's when they have to have it done and in place and running, so that we have the year.

I beg to differ with Mr. de Jager in terms of whether it's the right date or not, but that's where we are.

The Chair: Thank you.

Mr. Shepherd, are you finished?

Mr. Alex Shepherd: Are you satisfied with that comment?

Mr. Peter de Jager: I agree to disagree, I guess. My belief, though, is that on January 1 all systems, even systems that start their cycle on April 1, will start looking out into the future. It's my concern that these “one-year event horizons”—that's what they're called—where a system looks out to the future one year...if it can't handle a 00 date on January 1, 1999, it will fail.

Now, understand, there are systems that won't fail. And I have not had the opportunity to look at the specific code of the systems that are being discussed, so there's no guarantee that I'm right. But if I were a betting person, I'd sure want my systems complete and in production on December, not January.

It's not just myself either. This is the recommendation made by organizations such as the Gartner Group that was mentioned earlier as well as by any other consultants in the industry. We're all pleading with people to have their deadlines on December 1998.

The Chair: Mr. Rummell, do you wish to reply to that?

Mr. Paul Rummell: I would agree now with Mr. de Jager in terms of the fact that we're looking at the event horizon and we're trying to manage our systems based upon...and that's a complicated term, it's sort of a $5 word, but we're trying manage back from the event horizon. That's why we're looking back at the potential failure dates for systems and trying to manage back from that. And that's why we're trying to get most of the work done this year. That was the point that we made too, but Grant was taking a more academic approach in dealing with the systems that weren't subject to any earlier event horizons. So I think we are perhaps in more agreement than we thought.

The Chair: Thank you, Mr. Shepherd.

I have two brief questions before we go to a final comment.

I guess I'm probably the most pessimistic person sitting around this table when it comes to dates because, Mr. Rummell, you mentioned that in August 1999 there's a potential satellite problem that we won't really want to talk about because it's very complicated, but it could affect the entire world and probably every computer system somewhere in the world. That causes me great concern.

September 1999 causes me great concern, and when I hear April 1, 1999, I don't hear nine months, I hear four months, five months. I also know 1999 is an error code for some computers. And as the federal government, we enter 1999 as of April 1, 1998, when we go to our budget year 1998-99, so I would have thought our deadline would have been long before March 31, 1998.

However, that being said, we've been working on it since 1988. We've had a large downsizing in the federal government. Has that affected our ability to deal with this problem with regard to the computer people? I hear that the United States is looking for ten times as many and that we're short thousands in Canada. It causes me great concern that as we've downsized in government...that we haven't let people go, that we've now hired them back and we're paying them.

Mr. Paul Rummell: A very interesting statistic is that we've gone through a very significant downsizing of the federal civil service over the last few years, but the one group that has grown significantly—it's grown by two-thirds—is the CS community. We've had a very significant influx of young people with technology backgrounds into the government. It's sort of the new civil service that's joined the government.

We have very major efforts to recruit people into the government at all levels and we're working with the Public Service Commission and other groups. We've even taken measures so that we can recruit people who have technology backgrounds right on the spot. We've taken some very exceptional measures to be sure people join the civil service, and we think they have a very bright career with us in the technology field, because in government we really are in the information and knowledge business. So they're quite enthused about the work they do here and they have some unique opportunities to work with us in the public service.

• 1055

The Chair: That assures me that we haven't lost a number of people and that it's growing, but I'm still concerned that there's a huge problem out there.

Here's another thing I'm also concerned about. This committee is very concerned about small and medium-sized business, small business in particular. I don't see a lot of sharing of information going on. Are there any plans to share information when the problem is solved? This is as much to make small business aware. It was raised, I believe, by Mr. Lowther, who wondered whether we could have a communication type of network.

We had Mr. Monty before the committee. That's what started the group on these hearings. I still don't see it. The banks tell us they're ready, they're testing, they're almost there, and yet when I talk to the credit unions, which are regulated by the provinces, they say they don't have a solution at all. Is anyone going to share it with us?

So that causes me great concern. All those systems are interrelated. As much as we can be ready as a country, if the stock market doesn't work on January 2 or January 3, 2000, whichever is the first day the stock market will be open after January 1, 2000, where we going to be as a country?

Mr. Paul Rummell: Madam Chair, I share your concerns. I think that you're certainly dealing with the right questions. I think those are important questions for you and the other committee members to continue to ask. Again, the concept is through this document and in the mail-outs going to literally hundreds of thousands of businesses across Canada.

I'm putting my task force 2000 hat on here. The approach we're taking is to try to communicate with all businesses. We're doing it through the Canadian Federation of Independent Business. Industry Canada, through their Strategis site, which has millions of visitors every month, has tremendous information on the year 2000.

Our colleagues in the banking industry have tremendous information on year 2000 on their sites. These are the websites. There are mail-outs going from the utilities to make sure that people are aware of the year 2000. There are mail-outs going from the banks.

I can't speak on behalf of the credit unions, but again, they probably should be sensitized to this issue across the different caisses populaires and credit unions across the country. I think that in league with all those organizations, we can get the word out to hopefully most of the far corners of the country.

Again, I believe government has a very important leadership role to play in terms of asking the right questions and making sure the right information is disseminated to businesses and public, but at the same time, doing it in such a way that people don't panic.

The Chair: We don't want people to panic.

I'm going to turn to the witnesses before us now for closing comments, because they have time restraints.

I'll begin with Mr. Rummell and Mr. Westcott, if you have anything you wish to add.

Mr. Paul Rummell: Thank you very much for the opportunity to be at this committee. We looked forward to being here. We appreciate the work you've done, and the dedication to dealing with this issue. I think this is really one of the number one issues in business and quality of life facing us. We would not like to see any significant problems with this electronic infrastructure we depend on.

It's not just an infrastructure of computer systems, it's an infrastructure of telecommunications, power systems, and a number of other things that we have grown to depend on. We think it's most important that you continue with your questions and encourage your other compatriots in the political and parliamentary systems to make sure they make real due diligence on this issue. Thank you.

The Chair: Thank you, Mr. Rummell. Mr. de Jager.

Mr. Peter de Jager: I know the message I carry sometimes is portrayed as very gloomy and doomy. It's not my fault; that's the message. That's the reality of the situation.

But I honestly believe that we have the people, tools, and skill necessary to get this thing solved. I hope we can demonstrate that management will encourage us to do the things we have to do. I wish us all the very best of luck.

The Chair: Thank you. I want to thank you, Mr. de Jager, Mr. Rummell, and Mr. Westcott, for appearing. We'll continue our year 2000 issue.

The meeting is adjourned.