Ottawa’s Tech Strategy Is So Broken, Even Consultants Are Begging Us to Fix It

In 2011, the Government of Canada contracted American tech giant IBM to build a new system to manage its payments to civil servants. Beset by bugs, delays, and cost overruns, the new Phoenix pay system was finally unveiled in 2016. And it was a disaster. Civil servants were overpaid, underpaid, or not paid at all. The boondoggle racked up $3.5 billion in additional costs and forced the government to draw up plans to purchase an entirely new pay system. That, too, has been delayed. In 2020, Ottawa launched ArriveCAN: a nimble, Swiss Army knife of an app to allow travellers to submit health, contact, and customs information. Over the course of the COVID-19 pandemic, a long chain of contractors, subcontractors, and sub-subcontractors worked on the software, to a cost of nearly $60 million. Behind the interface was a mess of bureaucracy and backroom dealings, with some contractors wining and dining with civil servants for a piece of the action in return. The auditor general later found such “glaring disregard for basic management and contracting practices” that pinning down the app’s actual cost proved impossible. Today, the federal government is gearing up to deploy its newest program, an online system to manage federally provided payments. The Benefits Delivery Modernization program will create nothing less, the government said, than “a world-class service experience.” BDM has already taken over delivery for Old Age Security payments, and soon it will be responsible for Employment Insurance, then finally the Canada Pension Plan. The government budgeted $1.7 billion and promised to have it online by 2030. The auditor general has already warned that the program is at risk of going sideways, and civil servants say it will be the next white elephant. These blunders have triggered parliamentary investigations, years of media scrutiny, and a cascade of audits and reviews. They’ve also pushed Ottawa to pledge to do better: to invest in more reliable technology, to get smarter about dealing with corporate contractors, and to develop a clearer vision for how to drag the government into the twenty-first century—albeit two and a half decades late.

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But those who have to actually deal with Ottawa’s aging IT infrastructure say that the government still hasn’t learned the right lessons at all. In fact, things may be getting worse. The government’s inability to buy and build technology right was a looming disaster, even before Donald Trump’s election last year. But now, as Prime Minister Mark Carney takes up the urgent task of weaning Canada off the American economy—finding new trading partners and building more things here at home—this has become even more urgent. Get it right, and we deliver better programs—for less money and quickly. But if we keep getting it wrong, services will continue to worsen, costs will keep going up, and Canadians may start to lose faith that the government can do anything right. And they would be justified in that cynicism. When John Ogilvie joined my Zoom call, I was greeted by an anthropomorphic polar bear in a hoodie. “Lemme get rid of that avatar there,” the polar bear told me. “That’s for my son. I wanted him to be computer literate—so when he goes on a call, I put all kinds of avatars on it that he has to take off.” Suddenly, the polar bear is replaced with a chuckling, bespeckled, white-haired Ogilvie, a long-time technology consultant who works extensively with the Canadian government. A frustrated civil servant recommended Ogilvie’s name, specifically endorsing his frequent—scathing—LinkedIn posts about the state of government IT. He has taken particular aim at Shared Services Canada, or SSC, the agency ostensibly responsible for managing government technology and innovating new solutions. Except, Ogilvie writes, “SSC has an absolutely atrocious internal reputation for providing IT service.” He has chided the government for having little direction on improving cybersecurity and hampering scientific innovation with its ill-designed systems, and he has called for more data sovereignty in the face of an irredentist America. “The work that I do, it’s flying around and sketching out: ‘Here’s how you guys can do it. Here’s a product you’ve never heard of,’” he told me. “It’s fun,” he says about his work, “but the job shouldn’t exist.” A perpetual problem with how Canada acquires technology is counterintuitive. Government technologists—often spurred on by high-priced consultants with different ways of doing things than Ogilvie—have a terrible habit of building new things when existing products will do just fine. Because software can be designed from scratch, technology procurement can often become a form of wish-listing. Imagine a government department seeking to buy a car. A committee of bureaucrats might hold a series of meetings and consultations to come up with their desired features: four wheels, four doors, a windshield, an AM/FM radio, an electric motor, eight cupholders, and a footprint that fits perfectly into the parking spaces at the Global Affairs Canada building. A number of car companies might respond to that request for proposals to say they have cars on the market that meet nearly every criteria—but they have just two cupholders and are a few inches bigger than the parking spots. But one company comes along and promises to design a car from scratch that meets 100 percent of the government’s requirements. Trouble is, the company has never built a car of this size before, and before long, it is over budget and delayed. “You do need a group of people wandering around saying: ‘Please do not reinvent any wheels,’” Ogilvie says. These people need to say, as Ogilvie tells his clients: “You describe your problem and I’ll show you how your neighbours in other government buildings solved it last year.” Often, the novel requirement issued by the government is for the solution to be bilingual. So, faced with the choice of an English-only system that can be available almost immediately for a reasonable price and a bespoke bilingual option that will cost orders of magnitude more and take years longer, as it will need to be built from scratch, Ottawa will opt for the latter. Even if it’s the right thing to do, in order to meet bilingualism requirements, it can be the wrong thing to do in order to get the best product. As it stands, it is already common that many internal systems and processes are unilingual—civil servants may email each other in French or hold meetings entirely in English. The need for public-facing software that serves both language communities is also clear. But francophone users aren’t well served by bilingual tools that are both expensive and mediocre. It may actually be faster and more cost effective to translate off-the-shelf English software and programs before release rather than mandate full dual-language development from the outset. Language is a major reason why technology procurement goes off the rails, but it is far from the only one. Federal procurement often rewards the bigger, costlier, more complicated proposal that satisfies all the listed criteria, as opposed to the smaller, cheaper, quicker option that delivers the most important parts of what the government wants. One former civil servant put it this way: “They lock in decisions before you ever have a chance to talk to people and get feedback,” they said of the early stages of technology procurement. “It’s like: ‘We’ve landed on X product, we’ve landed on X timeline, we’ve landed on X approach.’ And you’re just like: ‘You haven’t talked to any real people about if that’s going to be useful or not.” The more government can standardize what it wants, the more its various departments and agencies can get on the same systems. And the more it can get actual experts opining on the best way to achieve these results, the more Ottawa can save money, improve services, and create efficiencies. “It’s a shame that there are forty or fifty departments each making these decisions independently,” Ogilvie says. “It’s just great for me. I’m always busy.” There is a growing movement of Canadians who deal with the ugly side of our government’s technology day in and day out and who have ideas how to fix it. There is the r/CanadaPublicServants Reddit forum, where civil servants—often with the benefit of anonymity—discuss their particular fears and grievances around Ottawa’s pitiful IT. Dozens of users recently vented about the state of the BDM system rollout. “Training was terrible and at this point it’s the seniors who will start to suffer,” one user wrote. “It’s unintuitive and has pretty much doubled the amount of data entry we do,” another chimed in. “It’s a MESS!” another wrote. (Given the forum is anonymous, there is no way to know for sure if every user is actually a civil servant.) There are others on the front line trying to make things work, like Ogilvie. And there are civil servants like Sean Boots. Boots has become a well-known name amongst forward-thinking civil servants. In 2017, he joined the newly created Canada Digital Service—then prime minister Justin Trudeau’s initial attempt to modernize the machinery of government. Boots left the service in 2023 and is outspoken, both on his blog and in a wide-ranging academic paper published with his colleagues, on the problems holding Canada back from real change. “Risk aversion, excessive oversight, reporting burdens and entrenched organizational silos,” Boots and his colleagues wrote last year, “render it incredibly difficult, and in some instances, impossible, for federal public servants to work across disciplines, to iterate and learn from service users, and to keep pace with now broadly accepted best practice in modern service design.” There is no shortage of ideas on how to start fixing those problems. Let civil servants work remotely instead of shunting them into aging Ottawa offices, for one. Move past Microsoft Outlook and Teams, Boots suggests, in favour of open-source tools with more adaptability. Promote people who understand technology, instead of sticking to the rigid rules of civil servant seniority to dictate who gets to lead tech-oriented projects. For years, suggestions like these have been treated like nice or marginal concerns. Improving technology has been talked about like the need to hit net-zero emissions or replace the first-past-the-post electoral system—great ideas that you can pledge to work toward and do precious little to achieve. But we are now in a position where our inability to do technology properly isn’t just a lost opportunity but a calamitous risk. When the auditor general looked at the planned BDM, she raised the alarm at the state of the aging technology—acquired between twenty and sixty years ago—which we used to make sure people get their pension or receive EI payments. “If these systems were to fail,” she wrote in 2023, “it could greatly affect the more than 10 million Canadians who rely on them to meet their daily needs.” Unfortunately, the system designed to replace those archaic tools already looks broken. A 2022 review by PricewaterhouseCoopers on behalf of the government suggested that the cost would at least double and the program would take an additional four years or more to be ready. By 2022, the government had already spent $2.5 billion on the project—even though not a single piece of government infrastructure had moved over to the new system. “As time goes on and estimated costs continue to rise, we are concerned that decision makers may scale back or eliminate the transformation component of the 3 benefits, resulting in a final product that does not consider the needs of millions of Canadians who rely on them,” the auditor general wrote. The simple fact is that there is no good reason why Canada paid to build this system from the ground up. There are a litany of software solutions—used by the United States, European nations, massive multinational corporations—that could have handled this modernization plan. But Ottawa opted to build something bespoke. What’s so jarring about that warning is how closely it echoes the failures of the Phoenix debacle. When the federal procurement department first drew up plans for a modernized payroll system, they budgeted a total of $155 million to build and implement the technology. Some three years later, after IBM won the contract, the company provided their new estimate: $274 million. Rather than go to the Treasury Board and request more funds to pay for what the system actually costs, Public Services and Procurement Canada decided to try and build the system with the reduced budget, the auditor general found. That meant cutting out functionality, reducing testing, speeding up development, and scaling down the number of staff tasked with working on the project. It was the first crystallized example of Canada trying to build a massive piece of software without appreciating just how difficult—and expensive—such a project could be. The lesson that Ottawa should have learned from the Phoenix disaster is that it does not have the expertise, patience, know-how, or resources to create big new IT infrastructure projects to address its many needs. If Ottawa focused more on buying off-the-shelf solutions when possible, it could save both time and money, reserving its capacity for building only when truly necessary. That’s the consistent advice from consultants like Ogilvie, innovators like Boots, the auditor general, and even public servants themselves. But the message doesn’t seem to be landing. The same missteps keep repeating. Between 2017 and 2022, Canada spent about $20 billion on IT services. That is an enormous pile of money. But 40 percent of these contracts went to just thirteen companies, with more than half of those going to three companies alone. These numbers are staggering because Canada is not lacking in firms capable of delivering IT solutions—slightly more than a fifth of these procurement dollars is spread out over more than 7,000 firms. The single biggest vendor, at nearly $2 billion per year, is IBM Canada: the company responsible for the Phoenix pay debacle. And despite their role in the fiasco, IBM continues to receive hundreds of millions of dollars in contracts to manage the plague-ridden system, the Investigative Journalism Foundation reports. The whole point of the federal procurement system is to make sure that the government gets the best product for the best price—and, to do that, the system is supposed to foster healthy competition. But, in their investigation into the ArriveCAN scandal, the auditor general found that the Canada Border Services Agency showed a total “disregard for policies, controls, and transparency in the contracting process restricted opportunities for competition.” It’s a problem that permeates every department. Some of this opacity is caused by the dense ecosystem of consultant firms who bid for, and win, many of these contracts—only to subcontract much of the actual work after taking their cut. These “pass-through” firms are good evidence that the procurement process is rewarding the ability to jump through the bureaucratic hoops of the expensive and costly tendering process, not to deliver the best technological project. But the vast majority of these contracts end up with American firms like IBM and Microsoft—and their Canadian subsidiaries. They win contracts because they can be trusted to deliver and support the software for years to come. These firms are added to privileged lists of trusted suppliers, making it even easier for them to win these contracts, as well as further reducing access to smaller and innovative firms. This isn’t because those large companies are the best placed to deliver these services. Competitions to buy new technology for the government are, Ogilvie says, “arranged in such a way that the company’s financial track record . . . really matters. So if you have a really good technical solution, but you are only in business for a year, I suspect you won’t even be invited [to apply].” As Boots et al. found, it was high barriers to entry in the procurement process which ensured these big firms won the contract. “New entrants are at a disadvantage compared to vendors with existing relationships with government departments,” they wrote. Certainly, the knowledge that IBM will be around in ten years is a great selling point. But in any market, a privileged position breeds complacency and sluggishness. In essence, we have chosen to orient this entire system for stability—with little regard for efficacy, cost, quality of the product, or innovation. But stability and consistency are not the only objectives we should concern ourselves with, particularly not as we find ourselves in a trade war with our closest neighbour. We have become so accustomed to things going off the rails that we can hardly imagine government procurement being an asset. And yet smart people in this country are positive that the way in which the Government of Canada buys technology could be more than just improved—it could be the single largest driver of innovation in Canada. When it comes to technology, says Benjamin Bergen, president of the Council of Canadian Innovators, Ottawa “is already the largest needle-mover.” But so much of this money, Bergen notes, is “going to a handful of multinationals that are masquerading as Canadian companies.” Beyond just the need to deliver better technology, we now have a strategic imperative to stand up a purely domestic, made-in-Canada technology sector—one that exists independent of America. This industry can’t grow if we don’t award them contracts. But we currently refuse to give them contracts because they’re not big enough. It’s a Catch-22. In 2021, Ukraine adopted the world’s first digital passport. That milestone didn’t happen in a vacuum. In the past decade, the country overthrew its corrupt Russian-backed government, installed a new democratic system, got invaded by its neighbour, and then faced a full-on onslaught which jeopardized its very existence. Through it all, Kyiv managed to become one of the most seamlessly digitized countries. When I visited Kyiv last year, I booked all my train travel on an app that puts Via Rail’s online system to shame. I was alerted to incoming air strikes by an app that didn’t just function but was reliable. When I struggled to get some e-payments to go through, Ukrainians gave me bewildered stares, as though I was visiting from another century. Ukraine didn’t innovate because it wanted to. It reinvented what a modern state could be because it had to. Corruption was rampant, trust in institutions was cratering. President Volodymyr Zelenskyy pledged a “state in a smartphone,” one where bureaucracy would be simpler, more transparent. This vision led to the creation of Diia, a platform that now offers over 120 government services through a single app. Over 21 million users interact with it as part of their daily lives—nearly half the country’s population. Everything from registering a business to enrolling children in kindergarten can be done in minutes. By all accounts, Ukraine pulled this off efficiently and cheaply. Driven by existential necessity, Kyiv has also financed one of the world’s most impressive innovation incubators. While they certainly partnered with, purchased from, and were inspired by large American, Canadian, and European firms, they took risks to build out a domestic industry. They are not only forging the foundations of one of the world’s most impressive digital governments but they now also mass-produce drones and find themselves on the cutting edge of AI. Ukraine is, of course, far from perfect. And while its economy is significantly smaller than Canada’s, its centralized national government procures a comparable total value in contracts. There is absolutely no reason why we can’t be as good as Ukraine at buying technology. You can come up with excuses about why its experience doesn’t map onto ours. Or you could try and learn some of those lessons. We, too, are facing an existential threat. And moments like these require us to take risks and make changes. They require us to challenge the established way of doing things, to demand better, and to slaughter some sacred cows. So let’s get to it.The post Ottawa’s Tech Strategy Is So Broken, Even Consultants Are Begging Us to Fix It first appeared on The Walrus.