The ‘incomprehensible’ Phoenix meltdown: entirely predictable and entirely preventable

Good whistleblower protection could have prevented Phoenix, argues David Hutton.

Calling the project an “incomprehensible failure,” Auditor General Michael Ferguson’s recent report on Phoenix describes not just a litany of outrageously bad and irresponsible decisions, but a stunning level of dishonesty among the senior executives responsible. For years—right from the start of the project—they knowingly hid important information and misled their superiors, concealing serious problems and risks.

Here are just two examples:

In 2012, when IBM’s estimate of what the project would cost came in at almost double the budget, Phoenix executives chose to simply cut down the project to meet the budget: removing more than 100 functions; reducing the testing; compressing the project timeframe; and cutting the number of development staff—all without acknowledging the destructive impact that these changes would have on the viability of the system. There’s a saying in the IT world:“If the product doesn’t have to work, we can meet any schedule and any budget.” That’s Phoenix to a “T.”

In 2015, shortly before the fateful decision to proceed with a huge rollout, an independent report by Gartner Group made it clear to anyone who read it that the project was doomed. In fact Gartner recommended an immediate, dramatic, 180-degree change of strategy, a massive infusion of resources and a new management structure. Their recommended recovery plan included: deferring any rollout, possibly for years; keeping the legacy systems running in the meantime; committing substantial resources to making Phoenix fully functional; and of course testing it properly before any attempted cutovers. Astonishingly, the minister responsible was not even shown this report.

Ferguson bemoans the “culture of obedience” which he feels led to this situation. But this culture is not an accident—it is the calculated result of a style of management that puts career and self interest above the public interest, and thrives when there is a lack of oversight, accountability, and too much secrecy. It is the result of a management culture of intimidation, promulgated by both senior bureaucrats and politicians. To change this culture requires putting in place the right organizational machinery.

There are many components to this machinery such as independent reviews and audits—all of which were either ignored or subverted by Phoenix executives—but one of the most powerful is whistleblower protection, since this can act as a safety net when everything else has failed.

Protecting whistleblowers is one of the most effective and proven ways for leaders to learn about problems within their organizations, by enabling honest employees to come forward without fear of reprisal, bypassing their immediate superiors if necessary (or even going to an independent agency) to share their concerns and to have them properly investigated.

With an effective whistleblowing law in place, and a competent integrity commissioner appointed, this officer of Parliament would have fulfilled his duty to investigate the allegations brought to him. This independent investigation would have undoubtedly led to a report sent directly to Parliament (and published for the public to read) setting out the misconduct and cover-up that Phoenix executives were evidently engaged in. Heads would have rolled, the project would have been cancelled or completely overhauled, and countless public servants and their families would have been spared years of unnecessary suffering. This would also have saved taxpayers perhaps $1-billion or more.

Does this scenario seem implausible? In the U.S., which has had whistleblowing laws for decades, one of the first issues to be exposed by whistleblowers (in the 1970s) was the shoddy construction of nuclear power stations by dishonest contractors. As a result of these revelations, reactors costing hundreds of millions of dollars that were 99 per cent complete, were mothballed and never brought into service, thus averting near-certain nuclear failures. Whistleblowers around the world have shown repeatedly that, if protected, they can protect the public by exposing wrongdoing—even in mega-projects where powerful vested interests are desperate to keep their misconduct hidden.

Unfortunately, nothing like this can happen in Canada because there is zero protection for whistleblowers. Instead we have a deeply-flawed whistleblowing law (unchanged for more than 11 years) and an Integrity Commissioner’s Office which is supposed to protect government whistleblowers but has consistently proven to be their worst enemy. And in 11 years not a single whistleblower has prevailed before the tribunal that is supposed to provide them with a remedy for reprisals. So rather than being protected, Canadian whistleblowers are routinely ignored, crushed, and silenced.

Could whistleblowers really have prevented the Phoenix disaster? The answer in our mind is an unequivocal “yes.” Literally hundreds of people working on this project had to know of at least some of the blatant misconduct by management, and at least some tried to blow the whistle. Four years ago, while running a small whistleblowing charity, I was approached by one person who had raised concerns about the fraudulent nature of the project—but had been forced out of their job as a result. Last year, colleagues at another whistleblowing group heard about several employees who were looking without success for a safe way to blow the whistle on Phoenix. We even heard of one who apparently approached the integrity commissioner and was given the brush off.

There may have been dozens of other potential whistleblowers who decided in the end to keep quiet rather than put their careers and their families’ livelihood at risk with little chance of making a difference.

Successive governments have shown that they are quite happy with this situation. Just last year, the Liberal government ignored an unanimous report from a parliamentary committee which conducted an in-depth review of the whistleblowing law and recommended sweeping changes. In dismissing these recommendations, the government threw away a valuable opportunity to help prevent recurrences of disasters like Phoenix.

What comes now? For its part, the government has freely acknowledged that it is responsible for fixing Phoenix, but it has said little about fixing the abuse of bureaucratic power in order to avoid similar recurrences.

Meanwhile, since the government seems determined not to help whistleblowers, at Ryerson’s Centre for Free Expression we are doing what civil society has done in other countries—we will help them ourselves. We are setting up a free confidential advice centre that they can go to for help. We expect this to be staffed and operational by the fall.

We have also decided to conduct our own investigation of the Phoenix project—to find out what happened to those honest employees who tried to blow the whistle, and to learn how others were deterred from speaking out at all. More information about this project will be forthcoming in the next few weeks.

For the past decade Canada has had the well-deserved reputation of being a Third World country when it comes to whistleblower protection. After Phoenix, we also have the reputation of being a Third World country when it comes to government competence and integrity. The Liberals should be demonstrating to Canadians that it is taking steps to fix, not just this broken IT system, but a broken bureaucracy. Protecting honest employees and enabling them to raise concerns safely—well that would be a great start.

David Hutton is a senior fellow at the Centre for Free Expression, Ryerson University.

This story was first published by The Hill Times on June 04, 2018, and is republished here with the author's and The Hill Times' permission.