EVIDENCE

Standing Committee on Public Accounts NUMBER 012 1st SESSION 45th PARLIAMENT Tuesday, October 28, 2025 Le mardi 28 octobre 2025 Standing Committee on Public Accounts CANADA [Recorded by Electronic Apparatus] EVIDENCE October 28, 2025 Committee NUMBER 012 NUMBER 012 NUMÉRO 012 12 28 10 2025 2025/10/28 15:45:00 House Of Commons Comité permanent des comptes publics Standing Committee on Public Accounts PACP Chair John Williamson 1 45

(1545) [ Translation ]

The Chair (John Williamson (Saint John—St. Croix, CPC)) :

I now call the meeting to order. Good morning, everyone. Welcome to meeting number 12 of the House of Commons Standing Committee on Public Accounts. [ English ] Today's meeting is taking place in a hybrid format, pursuant to the Standing Orders. Members are attending in person in the room. I don't believe any witnesses are attending virtually, so everyone's in the room. I remind you, if there is a point of debate, to wait until I recognize you by name before speaking. All comments should be addressed through the chair. Should you wish to speak on any matter, just raise your hand. The clerk and I will make a note of that. [ Translation ] Pursuant to Standing Order 108(3)(

g) and the motion adopted by the committee on Tuesday, October 21, the committee is resuming consideration of the report on the Canada Revenue Agency’s communication centres, taken from the fall 2025 reports of the Auditor General of Canada. [ English ] I'll welcome our witnesses. Thank you all for coming in on relatively short notice today. From Shared Services Canada, we have Scott Jones, president; Scott Davis, assistant deputy minister and chief financial officer; and Kristin Brunner, assistant deputy minister, digital services. Thank you all for coming in.

From the Canada Revenue Agency, we have Hugo Pagé, assistant commissioner and chief financial officer, finance and administration branch; Melanie Serjak, assistant commissioner, assessment, benefit and service branch; and Denis Skinner, deputy assistant commissioner, information technology branch. Thank you all for coming in again on even shorter notice. I do appreciate it. From the Office of the Auditor General, we have Andrew Hayes, deputy auditor general—it's nice to see you again—and Lucie Després, director. It's nice to see you as well. I understand there will be three opening statements, although, Mr.

Hayes, I think you have briefer comments. If you're okay with it, I'm going to end with you. Mr. Jones, you have the floor for five minutes, please.

[ Translation ]

Scott Jones (President, Shared Services Canada) :

Thank you, Mr. Chair, for the opportunity to discuss the Auditor General’s Report on Canada Revenue Agency Contact Centres. As you already indicated, I am accompanied by Kristin Brunner, assistant deputy minister, digital services branch and Scott Davis, assistant deputy minister and chief financial officer, or CFO. Shared Services Canada, or SSC, welcomes the Auditor General’s findings. They help us continue to improve and support vital service delivery to Canadians. SSC agrees with the recommendations. Many have already been implemented and we are working to address the remaining items.

SSC provides essential IT services to departments and agencies that enable secure connectivity. It also provides cyber security, hosting and digital services. I am very proud of our dedicated teams that work 24/7 to ensure secure, reliable digital services. Since its creation, SSC has worked relentlessly to modernize IT infrastructure, all while consumption of our services has skyrocketed. Today, SSC is at the forefront of driving digital transformation for the government. [ English ] Part of our work is to provide technology solutions for roughly 220 contact centres for our partners across government.

These solutions vary in size and complexity, based on our partners' business needs, such as consumption, infrastructure and capabilities. They support major programs, such as employment insurance, old age security and the Canada pension plan, and smaller programs, such as Transport Canada's marine safety and security program. Every day, these systems route calls across the country to thousands of agents with the right expertise to respond. Demand can fluctuate rapidly, requiring a scalable and flexible infrastructure to adapt quickly to changing circumstances.

The technology that contact centres are built on continues to evolve rapidly, as do industry business models. I'm also proud to note that the contact centres are stable and reliable, without a major outage since 2021. It is important to note that while SSC is responsible for administering a contract and for providing the IT infrastructure for contact centres, our partners decide what features to enable, which may result in higher costs. The Auditor General's report examined a contract awarded over a decade ago, in 2015, long before modern cloud services existed.

I would like to take the opportunity to clarify the contract currently in place. The $50-million minimum is not, and never was, an estimated contract value. This is a mis-characterization and paints an inaccurate picture. A minimum commitment allows for vendor assurance that they would recoup their initial set-up investment. At the request of the government, the vendor set up multiple data centres and ensured redundancy to meet the requirements of SSC's two primary partners, the CRA and ESDC. This competitive contract is within budget.

As of June 2025, the total cost for the first 10 years of this contract is $190 million, while our total procurement authorities for this contract were actually $300 million. The contract's performance was regularly reviewed and monitored internally and by departments. Amendments that increased the overall value of the contract reflected increased usage by our partners, features that were added to support agents, and other business requirements for our partners. We have in place a well-established process to validate invoices, as well as rigorous internal reviews by our chief financial officer branch.

We are transparent and collaborative with our partners about billing. In short, the government has paid about $20 million per year to operate the eight largest contact centres in the Government of Canada. SSC now supports 13 contact centres on this contract. These are some of the largest and most complex contact centres. Mr. Chair, SSC is also using this service for its own help desk, and from our perspective, I can assure you that we have received very good value for our money. The Auditor General has also mentioned that she will be auditing this contract.

We welcome this opportunity to work with her and her team. I am confident that we will demonstrate sound management and comprehensive reporting and monitoring. SSC has actively worked with industry and our partners—including, of course, the CRA—to apply lessons learned in awarding a replacement contract in July 2025. The new contract addresses the Auditor General's key findings pertaining to SSC with three key features. First, it includes stronger financial oversight and clearly defined roles for SSC and the CRA. The new contact centre replaces custom requirements with standard commercial services.

Government discounts are applied to the vendor's public catalogue, which both simplifies financial management and improves our transparency. [ Translation ] Second, the OAG report noted that SSC could not clearly define CRA’s individual usage on CRA's bill. SSC had been receiving a single invoice for the GC’s total consumption. With the new services, this will significantly improve. SSC has established a separate contract for CRA, which will result in CRA having improved usage reporting and cost tracking.

Finally, while the old contract defined the specific features of the service when it was signed, the new contract gives CRA access to the full range of current and future commercial features offered by the vendor, and more autonomy to deploy and manage features as their needs evolve without reopening the contract. These improvements are important, and reflect the model by which SSC works iteratively with partners like CRA to refine service offerings to fit the service and stewardship objectives of the government. (1550) [ English ] There are many other benefits with this new contract.

It provides a commercial solution to manage client interactions across multiple channels, including phone, email and chat, which helps serve Canadians when and how they wish. The existing contract uses what we call “on-premise” technology, which means the vendor purchased hardware that is hosted within a data centre and is dedicated to the Government of Canada's use. When we want to add capacity, new features or contact centres, or procure additional space in the data centre, that might mean that we need to procure more hardware or work with the vendor to do that.

This takes time and makes it cumbersome to pivot after surges—for example, during tax season. The new contact centre uses a modern cloud platform. That means capacity can be switched on or off rapidly. It is elastic and adaptable to the needs of the CRA. This new solution will help improve the services that the CRA provides to Canadians. [ Translation ] Reports from the Auditor General are an important tool to hold us accountable and assure Canadians that the government is properly run.

SSC is committed to this and will continue to drive efficiencies across government, creating savings and value for taxpayers. [ English ] We will, of course, also collaborate with the OAG on the audit of this contract. Thank you for your attention, and I look forward to answering your questions.

The Chair :

Thank you very much, Mr. Jones. Up next, we have Mr. Pagé for around five minutes. If you go over, that's okay.

[ Translation ]

Hugo Pagé (Assistant Commissioner and Chief Financial Officer, Finance and Administration Branch, Canada Revenue Agency) :

Mr. Chair, thank you for the opportunity to present the Canada Revenue Agency’s actions in response to the Auditor General’s observations noted in the audit related to contracting and financial management practices. I appreciate the opportunity to outline the steps we have taken—working closely with Shared Services Canada—to strengthen governance, clarify accountabilities and ensure robust financial oversight in this area.

Under the existing contract for the hosted contact centre service, or HCCS, Shared Services Canada serves as both the contracting and technical authority, while the CRA manages the day-to-day operations of the call centres. The CRA is responsible for defining business requirements in support of Shared Services Canada’s contracting responsibilities. The CRA manages day-to-day operations, and works closely with Shared Services Canada to ensure the system supports our service delivery objectives.

The audit made important observations and the CRA agrees with the Auditor General’s recommendations regarding contract oversight and accountability. The CRA remains committed to supporting Shared Services Canada with the implementation of corrective measures. [ English ] In response to the audit, the CRA has been working very closely with Shared Services Canada to strengthen the framework governing this partnership and has been applying lessons learned to the new contract recently awarded for contact centres.

Specifically, the CRA is supporting Shared Services Canada in developing a contract operations and partnership structure agreement. This framework provides a clear delineation of roles and responsibilities across the contract life cycle, from service delivery and performance monitoring to financial certification under the Financial Administration Act. Lessons learned from the hosted contact centre service contract have informed the procurement of the new contact centre as a service solution with the new vendor.

Under this new contract, the CRA will assume the role of technical authority, in addition to its business responsibilities. This shift provides the agency with better line of sight over service performance, technical delivery and billing, strengthening financial controls and operational accountability. With the new contract, the CRA will play a more active role in the identification and deployment of new functionalities, which will assist in ensuring that the new solution meets operational requirements.

Also under the new contract, the CRA will directly receive detailed invoices from the vendor, which will reduce the complexity of the current certification process. These measures will further clarify accountability and provide greater assurance that spending of public funds is aligned with service outcomes. The agency's management action plan supports Shared Services Canada's response to the Auditor General's recommendations, and progress is well under way. These measures reflect our shared commitment to sound financial stewardship, enhanced accountability and improved service delivery to Canadians.

In conclusion, we are confident that the measures under our management action plan will address the Auditor General's recommendations and support more transparent, effective and client-focused operations. (1555) [ Translation ] I would be pleased to respond to the committee’s questions. Thank you very much.

The Chair :

Thank you, Mr. Pagé. Mr. Hayes, you're next and you have five minutes.

[ English ]

Andrew Hayes (Deputy Auditor General, Office of the Auditor General) :

Mr. Chair, thank you for this opportunity to discuss our report on the Canada Revenue Agency's contact centres. I want to begin by acknowledging that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinabe people. Joining me today is Lucie Després, the director who led the audit team. [ Translation ] Since we appeared before this committee last week, I won't reread the Auditor General's statement. I understand that the statement has been distributed to committee members. In order to best support the committee's work, I cede the rest of my five minutes for questions. We would be pleased to respond to the committee's questions.

The Chair :

Thank you very much, Mr. Hayes. [ English ] We will begin our first round, which consists of three members with six minutes each. Ms. Kusie, you have the floor for six minutes.

Stephanie Kusie (Calgary Midnapore, CPC) :

Thank you. I'm interested in digging deeper into the telephony contract, to which SSC was the primary signatory. In 2015, the contract was signed at a cost of $50 million over 10 years. Now, a decade later, it has been tagged at $190 million, with an additional $24 million to be added through 2027. Mr. Jones, as president of Shared Services Canada, when you or your predecessor became aware of the massive contract increases through the 18 contract amendments, what would the process have been for informing and/or receiving approval from the minister, please?

Scott Jones :

Thank you for the question. I think this actually gives an opportunity to clarify. When the contract was put out for competition, the Government of Canada put in a number of very specific custom requirements—for example, building infrastructure, data centres, etc.—so the $50 million that was talked about was never the base of the contract and the total cost: It was the minimum revenue that the company needed to make the investments. The contract value in 2017 was given to one of my predecessors. It was $190 million. That's what we expected, and that's where we're running at today.

The additional money that's being asked for is to extend the service beyond what its planned life was. There is a termination date of the contract, and it was extended beyond that. In general, the way this happens is that when we put a contract in place, it goes to the market. We put our requirements out there. A number of bidders come in. Because of the requirement, they will come in and they will say, “This is what needs to be done.” This was not the government buying equipment to put in our data centres, so we don't pay an upfront hardware cost; they spread that over the life of the contract.

I don't know if either of my colleagues would like to provide more details.

Stephanie Kusie :

That's fine, Mr. Jones. Thank you very much. I guess what I'm really trying to get to the core of here is a contract that has more than quadrupled in size, is costing Canadians hundreds of millions of dollars and, according to the Auditor General's report, hasn't met the CRA's objectives. It received scrutiny and final approval from whom, please?

Scott Jones :

The authorities that were granted for this contract were actually up to $300 million, of which we are currently planning on the $190 million. That was the projection in 2017. The $50 million was the investment, the minimum revenue that the vendor needed to recoup for their physical investment. That was in the original submission, and it is on track for the original contract submission.

Stephanie Kusie :

Thank you. It does unnerve me a little that you talk about how the $300 million was not utilized. I don't think we can make light of an expenditure of $190 million, especially when there were so many significant contract amendments—specifically, 18. The Auditor General spoke to cases of system outages impacting callers and noted that the contract signed by SSC didn't even consider whether performance penalties would apply to IBM. Why would that be?

(1600) Scott Jones :

That's actually one of the most important lessons learned. Because the government put in unique requirements, it meant that the standard commercial clauses were not what was being measured, so we put in unique measures for these things, and that made it very difficult to hold the vendor to account. I can tell you that at the beginning of the contract, the vendor took responding to the performance issues very seriously, but because of the way....

We learned a hard lesson on this, which was to put in commercial standard terms and conditions that allow you to hold vendors to account, not government-specific terms and conditions or government-specific requirements. These make it very hard to hold the vendor to account, because they muddy the waters. That's actually one of the biggest lessons that were applied, not only in the subsequent contact centre contracts but also in many of our other contracts, where we use standard terms and conditions that are used in the commercial world so that we can compare apples to apples.

Stephanie Kusie :

I appreciate that, because my next question was going to be this. IBM ensured that guarantees were built into the contract. It's why the contract, as you have indicated, was signed with a minimum work guarantee of $50 million. Did you not think it would be wise to include assurance measures within this contract? Did your agency expect the contract to rise above $50 million over the 10-year period?

Scott Jones :

Yes. In—

Stephanie Kusie :

If so, by how much?

Scott Jones :

In 2017, the projection was that the contract, which was given to one of my predecessors, would be a total of $190 million over the course of its life. It is right on track for $190 million. That was in 2017, and in 2025, we're at that moment. What is now the growth is an extension of that contract to give time to migrate to the new contact centre solution.

Stephanie Kusie :

Can you provide to the committee the documents behind that, please, Mr. Jones?

Scott Jones :

We can.

Stephanie Kusie :

Thank you. Your organizational structure denotes a “chief audit and evaluation executive”. However, the Auditor General found “limited validation of vendor invoices by both Shared Services Canada and the Canada Revenue Agency.” The report also states, “When we asked, neither Shared Services Canada nor the Canada Revenue Agency could confirm whether the invoiced levels of activity, which were the basis for charges invoiced to the agency, were accurate.” What is the purpose of a specific audit and evaluation executive if contracts and expenses aren't being properly evaluated?

Scott Jones :

Perhaps I can turn to Scott Davis to talk about the work that was done. My chief audit and evaluation executive needs to cover the entire organization. It is complementary to the work of the Auditor General, but it's for the internal management of the organization. What we do is that we actually have a.... In our chief financial officer branch, we go through and verify. Maybe Scott can provide some details.

The Chair :

Go ahead, please.

Scott Davis (Assistant Deputy Minister, Chief Financial Officer, Shared Services Canada) :

Yes. If I may, this audit focused on the service to Canadians by the CRA. I look forward to the Auditor General coming back and doing the investigation that has been highlighted. You referred to those 18 amendments. Within them, there were over 150 service orders, which are our control points. We received a full consolidated invoice, and we split it between the CRA and the other departments that are on this solution. That's how we did our validation. The validation that was verified was at the CRA level, but I'm looking forward to working with the OAG and our internal audit team to actually provide that transparency to this committee and to Canadians.

Stephanie Kusie :

Thank you.

The Chair :

Thank you very much. Up next is Mr. Osborne for six minutes.

Tom Osborne (Cape Spear, Lib.) :

Thank you, Mr. Chair. Mr. Jones, going back to the figure of $50 million versus $190 million, with the spending availability of up to $300 million, this is quite normal, really, for contracts within government departments, and even within private enterprise. Can you explain to us again how the $190 million was reached, and the initial figure that was outlined, the $50 million?

Scott Jones :

Absolutely. Thank you. I think it's important. The $50 million is the investment that the vendor needed to recoup because they had to purchase, lease, buy or build out data centre infrastructure—physical buildings and infrastructure. We had security requirements that meant it needed to be ours, not shared.

We required redundancy between two different sites that were physically separated to ensure service availability for Canadians: two data centres, two complete sets of infrastructure that were duplicates of each other, to make sure that no single failure in either of those pillars could bring down the service that was there. It was a custom-built service, built for the Government of Canada by a vendor, and only for the Government of Canada. It could not be shared. That was the $50-million minimum revenue. If we had decided to cancel this contract the day it went into service, they wanted to recoup their minimum.

That's a pretty standard thing when you're asking for a completely custom set of infrastructure. The $190 million was what we knew our consumption was going to be as we grew, as call centre agents came on board, as we expanded the number of people who were going to be using the service and as we turned on other features that were added with those service orders that Scott Davis was mentioning. That was the number that we knew was going to be reached as we went through that. The $300 million is the maximum value that we could go to if service suddenly started to surge.

We'd need to go back and seek approval if we were extending beyond that. What this equates to is approximately a cost of 33¢ per phone call. That includes the recording and everything that needs to be done. That's the sum total of the contract.

(1605) Tom Osborne :

Thank you. Mr. Jones and Mr. Pagé, you both talked about lessons learned. Could I ask each of you to expand on lessons learned? I know there was a 100-day plan put in place. Based on the lessons learned, what are both organizations doing to overcome the findings of the Auditor General's report and make improvements?

Scott Jones :

Thank you for that question. I think there are a few. I mentioned a few. Number one is that we need to align to commercial terms and conditions that are used in industry and to the standard terms and not redefine things. That makes it very complicated to hold a vendor accountable, but also, we need the comparators with what's happening in the commercial.... We're not the only people who use data contact centres. Aligning to those terms and conditions is one of the most fundamental things.

The second piece is a recognition that as we build more custom solutions for the Government of Canada, if we don't align to where industry is going, it means we're asking for things that don't exist or things that require customization. That makes it more complex, and it makes it more risky. Some of the challenges the vendor had were that we were asking for things that weren't available commercially at that time. They're available now. That is one of the pieces where we need to be very careful.

The third piece is that this procurement was put in place under the assumption that it's for the Government of Canada, so the billing was not broken out, because it was a Government of Canada contract to provide services for the Government of Canada. At the time, in 2015, that was.... This really started in 2013, with the creation of Shared Services Canada. There was a big push for centralization: Maybe there would be only one call centre; maybe we needed one technology. The goal was Government of Canada. Now, I think we've learned that we need to be able to break that out.

Treating the Canada Revenue Agency the same as Employment and Social Development Canada doesn't make a lot of sense. There are different surges. There are different requirements. There are different consequences to meeting with.... Making sure we have the flexibility to add the features that are needed per partner is really important. Lastly, I think there are some positive lessons learned. Those are the things that we've corrected, but the positive lessons learned are that when we paid attention, the vendors stepped up, and we've had a very reliable service.

For something that is custom-built, unique and the only one in Canada—or two, actually, physically separated—the vendor stepped up, and we held them to account. When I first moved to Shared Services Canada, I had biweekly meetings with the vendor, going over the performance and all the data. My predecessors did the same thing. Early in the contract, it was weekly, with the president, to walk through this to make sure they were meeting our requirements and were able to meet things. That did hold the vendor to account. They took it seriously too. Those are some of the basic pieces.

Hugo Pagé :

If I could add to that.... I think Mr. Jones covered it well. I would say that one of the biggest benefits for the agency is that now we will be the sole client under the contract, which means we'll have more flexibility when it comes to adjusting the services to our needs. I would also add that the fact that we'll have one bill will make it easier for certification. The last point I would add is that the contract operation and partnership structure we're developing with Shared Services Canada will also help clarify roles and responsibilities, which will make the certification process easier down the road.

(1610) The Chair :

Thank you. That is the time. [ Translation ] Mr. Lemire for six minutes.

Sébastien Lemire (Abitibi—Témiscamingue, BQ) :

Thank you, Mr. Chair. Mr. Jones, thank you for joining us with your team today. You say you're confident. However, that confidence was clearly shaken by the Auditor General's report. I want to talk to you about IBM, which has secured numerous contracts that have exceeded the government's planned budget. The Phoenix contract went from $274 million to $5.7 billion, including the new Dayforce software. The benefits payment modernization contract has grown from $1.75 billion to $4.4 billion, and it's not over yet.

The contract for the Canada Revenue Agency's contact centres has gone from $50 million in 2015 to $150 million in 2025. Is this because IBM doesn't do an initial project cost assessment, as it should? How can we justify the fact that the government is unable to have a clear idea of how much its IT projects will cost? In Quebec, we had the SAAQclic affair, which led to a public inquiry. Is that what it would take to shed light on federal contracts?

Scott Jones :

The contact centres contract value has remained within the limits established at the beginning of the contract. The value increased as requirements were added during the contract, but the value of the services remained the same. Regarding the other contracts you mentioned, there's a lesson to be learned. The government has set out unique requirements that don't correspond to existing standard commercial products. When you ask someone to modify software in order to customize it extensively to meet unique requirements, it's expensive. That's one of the most important lessons to be learned from these contracts.

Sébastien Lemire :

That's why it could be useful to set limits for these parts of the contract. In addition, on November 22, 2017, Shared Services Canada signed a $500 million contract with IBM until 2021, without any competitive bidding. This contract consolidated four contracts set to expire in 2017 and 2018, covering software maintenance and support in six departments. Have these contracts been renewed? If so, when and for how much? Was there any competitive bidding?

Scott Davis :

I'm not sure what contracts you're referring to.

Sébastien Lemire :

I already have the answer. A $750 million contract was signed in 2021, once again without any competitive bidding. This shows that, ultimately, the public often loses out. I'll provide some more examples. Between 2017 and 2022, the government spent $20 billion on information technology services. Of these contracts, 40% were awarded to 13 companies and mainly to 3 companies, including IBM, which received almost $2 billion in contracts per year. Could you give the committee the list of your department's 10 biggest service providers, with the costs for each one? This would help me understand the dynamics. It seems that some limits are necessary, but we need an overview of the situation.

Scott Davis :

Yes. Absolutely. I just want to clarify one thing. The $50 million figure was a base amount. Our president explained this a bit. When we sign a contract with a provider, we aren't buying a service or a subscription. It's really about the provider investing in us. Of course, the providers must also make a contribution. They need to work with us to make this happen. There's some confusion about this. However, once you look at the details, it makes the discussion easier.

(1615) Sébastien Lemire :

I understand. However, it seems that proceeding without any competitive bidding also opens the door to a great deal of abuse and excess spending. Initially, a small amount is agreed upon by mutual consent. Then, once you become dependent on a provider, costs skyrocket. That's obvious to me. Another project that went off track is the assessment and revenue management system for the Canada Border Services Agency, or CBSA. Its cost rose from $408 million in 2019 to $706 million in 2024.

Naturally, the Auditor General announced an investigation into this other information technology modernization contract that went off the rails. In short, something doesn't add up. We can see that spending on specialized professional services rose from $386 million in 2020‑21 to $436 million in 2023‑24. That's a huge increase. Why not develop this expertise within the government itself?

Scott Jones :

In general, we award contracts without competitive bidding for two reasons. First, the Government of Canada has a great deal of old infrastructure and many legacy systems. We can't change certain technologies because they're integrated into the current systems and doing so would cause service interruptions. This is a major challenge for us at Shared Services Canada. We use an online benchmarking service to determine whether we're getting good value for money for the Government of Canada. The Auditor General noted in her report that 67% of the systems weren't working well. We're looking at this issue.

We're unable to modernize certain applications because we can't change the current infrastructure. This leads to contracts being awarded without competitive bidding. Second, modernization projects are generally quite complex. We try to use most of the basic technologies and adapt our practices to current commercial services, rather than adapting commercial software to Government of Canada systems. This is a major challenge for the government, especially since it provides services that don't exist anywhere else.

For example, the government can't purchase software called “Microsoft Immigration” because this software doesn't exist. The government must create its own system for this. However, we could use much more basic commercial software. We've learned this lesson.

The Chair :

Thank you.

Sébastien Lemire :

Thank you for your response.

[ English ]

The Chair :

We'll begin our second round, which will consist of five members and various times. [ Translation ] Mr. Deltell, you have the floor for five minutes.

Gérard Deltell (Louis-Saint-Laurent—Akiawenhrahk, CPC) :

Thank you, Mr. Chair. I would like to extend my greetings to my colleagues. I want to welcome everyone from the Canada Revenue Agency. Mr. Jones, thank you for speaking such good French. There has recently been a great deal of discussion regarding the Auditor General's report. For example, we've heard that the wait time for a response to a call has doubled over the past year and that, four times out of five, the information provided is incorrect. In addition, the employee assessment focuses more on adherence to the

schedule than on the quality of the information. We thought that we had seen it all, but no. A few days ago, CBC/Radio‑Canada's The Fifth Estate and journalist Daniel Leblanc reported that the Canada Revenue Agency issued a refund cheque for $4,997,433.72 to a small company worth $380,000. It took TD Bank receiving the cheque and realizing that it didn't make sense for any action to be taken. The bank informed the agency, which conducted an investigation and found the error. The agency is now taking legal action against the company to recover the money. Mr. Jones and Mr.

Pagé, can you confirm whether, as reported by CBC/Radio‑Canada, an officer reviews only refunds over $5 million, and that otherwise the process is automated?

(1620) Hugo Pagé :

Mr. Chair, we understand the concerns that committee members or Canadians may have when reading newspaper articles. Unfortunately, as you know, the Canada Revenue Agency doesn't discuss specific cases involving taxpayers. We can say that the agency takes both internal and external security and cybersecurity very seriously. The agency has also implemented a number of measures, including preventive controls, to obtain a good overview of the various risks in the environment. We also have controls in place that help us detect transactions when fraudsters try—

Gérard Deltell :

Clearly, these controls didn't work because the $4,997,433.72 is $2,566.28 less than $5 million. I'll ask you the question again. Do you have an internal standard whereby refunds of $5 million or more are carefully reviewed by someone, but lower amounts are processed automatically? Is the answer yes or no?

Hugo Pagé :

Mr. Chair, I can't answer that question.

Gérard Deltell :

Mr. Pagé, with all due respect, you're currently in federal court for this case. You noticed that I didn't name the company. I'm not interested in this aspect. I'm interested in how you operate. I'll ask you the question again. Is it true that refunds of $5 million or more are reviewed by an officer, but refunds of less than $5 million are processed automatically? Yes or no.

Hugo Pagé :

I'll have to give the same answer.

Gérard Deltell :

How many similar cases are currently before the courts?

Hugo Pagé :

Are you talking about active cases?

Gérard Deltell :

I'm talking about cheques for $4.9 million being disputed because you didn't do your due diligence.

Hugo Pagé :

I'm not aware of any others. However, we're certainly looking into cases of fraud.

Gérard Deltell :

CBC/Radio‑Canada claims that a standard exists whereby refunds exceeding $5 million are reviewed by an officer, but refunds under $5 million are processed automatically. This apparently led to the error. If you can't discuss this case, that's your prerogative. Since you were informed of this refund of $4,997,433.72—an amount that I can't emphasize enough because it brings to mind the $5 million standard—has the agency changed the rules to ensure that an officer, rather than an automated system, reviews amounts under $4 million, under $3 million or under $2 million at least? Canadians have a right to know. Please answer yes or no.

Hugo Pagé :

Absolutely. When weak controls are identified, immediate action is taken to address them.

Gérard Deltell :

If your threshold is no longer $5 million, what is it now? Is it $4 million, $3 million, $2 million or $1 million?

Hugo Pagé :

Again, I can't disclose that information.

Gérard Deltell :

Why did it take someone from TD Bank to open your eyes?

Hugo Pagé :

The Canada Revenue Agency works closely with its partners—

Gérard Deltell :

Fortunately, your partners work better than you do.

Hugo Pagé :

—including financial institutions.

Gérard Deltell :

Fortunately, someone at TD Bank took notice. Otherwise, Canadians would have been cheated out of almost $5 million. What do you have to say to Canadians who are footing the bill for this?

Hugo Pagé :

I would repeat what I said at the start of the meeting. The agency has a number of controls in place to prevent fraud. Preventive controls provide an overview of the various cybersecurity trends—

Gérard Deltell :

You know that some people are forced to pay back $1,200 and that they consider this a terrible blow. Meanwhile, courtesy of CBC/Radio‑Canada, we now know that you didn't do your due diligence before issuing a refund of almost $5 million to a company. What do you have to say to taxpayers and Canada Revenue Agency employees who want to see things done the right way? What do you have to say to your employees who showed up ready to do their jobs correctly, but who were unfortunately replaced by a machine that failed to do its job properly?

Hugo Pagé :

I would tell them the same thing. We have control mechanisms in place to detect fraud. We have preventive audit mechanisms and detection mechanisms. In situations such as the one that you described, these mechanisms help us recover the money.

Gérard Deltell :

Thank you, Mr. Pagé.

The Chair :

Thank you, Mr. Deltell. [ English ] Ms. Yip, you have the floor for approximately five minutes.

Jean Yip (Scarborough—Agincourt, Lib.) :

Thank you. Thank you to the witnesses for coming today. Mr. Jones, the Auditor General found that there were “cases of telephony system outages that impacted callers and agents.” In your opening statement, you mentioned that outages are “stable”. How can this be predicted?

(1625) Scott Jones :

Since 2021, the system has been up, reliable and stable, according to what our contract requirements are. Prior to that, there were outages. That was one of the major points we had with the vendor: to make sure those were prevented. Every outage prevents our partners from being able to do their business, and it's unacceptable, especially for a system that we had specified to be highly redundant. That is something the vendor did address. There were a number of vulnerabilities. Perhaps Kristin could provide more detail on that. She was certainly following these exceptionally closely.

Kristin Brunner (Assistant Deputy Minister, Digital Services, Shared Services Canada) :

Yes. We have established service level targets in a number of areas around the availability of the telephony platform, the availability of the helpdesk and how quickly the vendor responds when there are reported incidents. All of these service levels are monitored and reported on, and we have a very strong and collaborative working relationship with the vendor on this contract. That has enabled us to focus on platform improvements and identifying root causes and corrective actions when issues arise.

When incidents do arise, SSC has a very robust and mature process to report, monitor and communicate the vendor's progress in responding. Once it is resolved, we work on those corrective actions. As President Jones just mentioned, we've had no critical outages since 2021, so it's a highly reliable platform.

Jean Yip :

That's good to hear. In the cases the Auditor General looked at, did Shared Services Canada offer any service credits or performance penalties for the impacted callers?

Kristin Brunner :

We have evaluated on several occasions whether or not service credits could apply, and we have evidence of that. However, the outage must meet certain criteria as specified in the contract. This was one of those lessons learned that President Jones referred to and that we now apply to the new cloud contract, where we're accepting commercial terms and conditions. Under the current contract, it was determined that we were unable to apply credits, because we weren't able to attribute sole accountability to the vendor.

That was due to how complex and integrated the solution is with our telephony service provider and the other services that Shared Services delivers. However, despite our being unable to apply service credits, the technology has not had a critical outage since 2021, and we've applied those lessons learned to the new cloud contract.

Jean Yip :

Thank you. Was it the best possible option to spend money on a contract with other vendors to do the centres, or could it have been done in-house?

Scott Jones :

It's always a debate: Should we insource or outsource the work? In this case, the commercial market is moving very quickly, and we want to take advantage of the most available commercial features. I think this is one of those areas where it's best to ride the wave of commercial innovation. Every organization that uses a contact centre is investing in the new solutions that we have. If I could turn back time and go back to 2013 or 2014—I wasn't working at SSC—I think the piece I would have argued for is to leverage more commercial standard technology rather than a custom-built infrastructure.

This is one of those areas where commercial innovation in this space is going to outpace it very quickly, with the addition of artificial intelligence and the augmentation tools for our call centre agents, which will help the Canada Revenue Agency but also all the other partners. Those are things that are running very quickly, frankly, on the commercial side. Industry is demanding these, and they're holding them to account, so the more we stick to standard commercial terms and conditions, the more we can adapt and adopt technology when it's available and has been proven. That's what a commercial contract gives.

It's taking standard commercial contracts versus building something custom, where everything would be a change order and a unique build for us. We would fall behind. Those are typically what we decide, but in this case I think it's best to leverage the industry and what we can get from them, so that we can keep up with CRA and our partners' demands to deploy the cutting edge.

(1630) The Chair :

Thank you very much. [ Translation ] Mr. Lemire, you have the floor for two and a half minutes.

Sébastien Lemire :

Thank you, Mr. Chair. Mr. Pagé, I'll continue along the same lines as my colleague, Mr. Deltell. I think that the question is probably worth asking. For five months, fraudsters used trust income to cheat the government out of $100 million. Fake companies gained access to tax credits. All this was uncovered by journalists and banks. Why is the Canada Revenue Agency unable to detect changes to a direct deposit system that, for a given taxpayer, has remained the same for a number of years?

For example, why doesn't a change of address trigger an alert that could protect people before a transaction takes place or many changes are made to previous years' tax returns? How much can we trust you to protect this information?

Hugo Pagé :

I'll briefly refer to my earlier response. I would say that the agency has control measures in place, in particular to detect the changes that you mentioned, which are sometimes suspicious. We regularly review these and other measures in light of the environment and the changes that we see in terms of fraud.

Sébastien Lemire :

Mr. Skinner, I would like you to talk about the use of artificial intelligence. Obviously, it's worrying to see that artificial intelligence produces so many errors when it comes to providing reliable answers to people's tax questions. Could you explain how the agency ensures that its chatbot provides accurate responses tailored to complex situations? How does the agency measure the effectiveness and reliability of its tool?

Denis Skinner (Deputy Assistant Commissioner, Information Technology Branch, Canada Revenue Agency) :

The agency uses a quality assurance and verification process. We have a program to verify and test information with experts and accountants, who ask questions and validate the answers. This is a continuous improvement process. Our generative artificial intelligence platform on the Internet is a beta version. We're currently testing this version with users. Instead of doing everything behind the scenes, we're developing this platform directly with users, in this case Canadians. That way, they can provide feedback on how the platform works, which will help us improve it over time.

This is a common digital practice around the world. Once the platform has reached a certain level of quality, we can say that this version is trustworthy.

Sébastien Lemire :

Do people know that they're asking a robot questions and that there could be many errors? Do they know that it's a beta version, which makes it unreliable and potentially risky? How far could we go in putting people in tricky situations by using them as guinea pigs?

Denis Skinner :

The screen clearly states that it's a beta version of an artificial intelligence platform. We have another service in the form of a chat box with agents. The distinction is clear on the web page. You can see whether you're talking to a person or a machine.

Sébastien Lemire :

Thank you, Mr. Skinner.

The Chair :

Thank you. [ English ] We'll move now to Mr. Kuruc. You have the floor for five minutes.

Ned Kuruc (Hamilton East—Stoney Creek, CPC) :

Thank you, everybody, for coming today. I'd like to turn to the issue of vendor invoices, which my colleague touched upon briefly. I find it extremely concerning for our taxpayers. The Auditor General stated that invoices were paid with little or no validation. I'd like to know why. I'd like to start with Mr. Pagé from the CRA and then move to Mr. Davis to answer that question.

Hugo Pagé :

Maybe just to clarify roles and responsibilities in the process, at the CRA we do not approve the invoices that come from the vendor. This is done by our colleagues at SSC, who then distribute the cost across the partnering departments. Our process internally is to look at the invoice. We have experts who have looked at the forecast and compared it to the invoice to make sure that it's feasible and also to ensure that the amounts that have been included in the SSC invoice are reflective of the amount that we had planned to spend.

There is collaboration between our IT team and the clients, as well as our financial teams, to make sure these invoices are looked at, but we're looking at the SSC invoice and not necessarily the invoice coming from the vendor.

(1635) Ned Kuruc :

When you look at the invoice, are you comparing what they bill to how many agents were actually used, in the details of the invoice? Is that one of your responsibilities?

Hugo Pagé :

What we get in terms of information is mostly looking at forecasting volumes—looking at the forecast, at the number of agents as part of that forecast—but there are multiple lines of expenditures on the invoice.

Ned Kuruc :

Would it be your job to add up hours consumed or just to add that the contractee, IBM, did its job, ignoring the price of it and verifying what was done, on the invoice? Would that be your job, for clarification?

Hugo Pagé :

Shared Services Canada gets the detailed invoice, which includes those details.

Ned Kuruc :

Do you validate them? Is that part of the job or not?

Hugo Pagé :

We don't see the IBM invoice. We see the invoice from Shared Services Canada.

Ned Kuruc :

Okay. Then I guess the same question would go to Mr. Davis, please.

Scott Davis :

Just to give some clarity, we get a consolidated invoice. We brought together 13 contact centres—I'm sorry to bore you for a second—in a single invoice. We get a detailed invoice by line item. There are several line items on which a department can come in. In this example, it's the Canada Revenue Agency. For the last four.... I won't bore you with all of that. There are five or six or seven components within a contract. They provide us a forecast on how they're going to consume the number of agents, the number of screen captures, etc. There is a whole series of items.

That's why I'm looking forward to the Auditor General coming back and going through this level of detail. I don't believe they did so in the first one, but we'll work with them to provide that detail. We take the forecast that they provide us, and then we get the invoice from the vendor and do a post-payment verification. We get the

section 32.... I'm sorry. I told you I was going to bore you.

Ned Kuruc :

We have an accountant here and you're not boring him—maybe me.

Scott Davis :

We use the Financial Administration Act. We have the verification by the partner: in this case, the Canada Revenue Agency. They confirm that this is what they asked for. We take that confirmation from them, size it against what they've asked for and add it up with the other partners, including ourselves. As President Jones mentioned, we use this service. That's the validation we do. Then we make the payment to the vendor. We have a fairly controlled framework. I want to just reassure you that we do.

Ned Kuruc :

Would you then not agree with the AG's report on that?

Scott Davis :

I think the focus of the audit was on the Canada Revenue Agency and how they provide services to Canadians and accurate information. I think that for the next audit that the Auditor General said they would like to come in and do, we'll be able to provide evidence and come back to this committee, parliamentarians and Canadians to explain that we do safeguard Canadians' tax dollars.

Ned Kuruc :

Thank you. I would like to now turn to the $50 million that is projected to be $214 million. We've heard an explanation of that. One thing I haven't heard—or I haven't heard today—is about addressing the atrocious service mentioned in the AG's findings. Whether it's $50 million or $214 million, some would say that it ain't worth $50,000. The service was very bad. It's Canadians' tax dollars. They're very upset. My question, Mr. Pagé, is this: What's going to change?

Melanie Serjak (Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency) :

Thank you for the question. Perhaps I'll attempt to answer it. The platform that was provided through the IBM contract, the HCCS, allowed the agency to move the yardstick forward a great deal with regard to providing service to Canadians, because it finally allowed us to implement features that we didn't have before, such as call recording, which we mentioned last week, call routing, agent profiles, scaling and so on.

There is some functionality in that contract that we did add on, and then there's other functionality that the agency chose not to implement, for a variety of different reasons, mostly because it didn't quite meet the business needs or the outcomes we were seeking for Canadians. What's different with the new contract and working with Bell is that it's really an outcome-based contract, which means we will be able to define, pilot and experiment with features and functionalities to determine whether they best serve Canadians in the way we want without having to turn them on completely.

The Chair :

Thank you. I'm afraid that's your time, Mr. Kuruc.

Ned Kuruc :

Thank you.

The Chair :

We'll come back to you, I'm sure. Next is Ms. Tesser Derksen. You have the floor for five minutes, please.

(1640) Kristina Tesser Derksen (Milton East—Halton Hills South, Lib.) :

Thank you, Mr. Chair. Thanks, everyone, for attending today. Welcome back to those who were here last week, and welcome to those who are new—not new but new today. I want to touch a little bit on the 100-day service improvement plan. I know that it has been recently launched, and it's focusing on increasing contact centre capacity, expanding online self-service options and tackling the root cause of service issues. I understanding that there is a new call-scheduling pilot that's being run as part of that plan. Is that correct? Ms. Serjak or Mr. Skinner, maybe I'll ask you what the impact of that call-scheduling pilot has been on the service levels that we're seeing now.

Melanie Serjak :

Absolutely, I'm happy to take that. That is part of the “accelerating service modernization” pillar of our 100-day plan. It gives us the opportunity to experiment with features that we believe would be most impactful for Canadians. With regard to the call-scheduling one, there are two things that I want to mention there. One is that we have put in place the ability for a Canadian to

schedule a callback from the CRA on a topic that is very popular, the disability tax credit. It's a very specific area of focus that will allow us to test whether or not it is serving Canadians' needs, in order to determine whether we want to roll that out to a broader base of topics. The other thing I will mention is that there's a new functionality through the My Account portal called “Manage balance”; it was launched last Monday. That particular functionality allows a Canadian to

schedule a callback related to payments that they may need to make to the CRA. That has been hugely popular since its launch last week. I believe we have received over 10,000 requests for scheduled callbacks. We are monitoring that very closely to help inform, from a business intelligence standpoint, what this could mean to other potential callback topics at the agency.

Kristina Tesser Derksen :

Okay. You have received 10,000 requests for callbacks. Do you have a measure of whether the callbacks are happening and how quickly those are being dealt with?

Melanie Serjak :

The callback is related to the disability tax credit, which is the first that I mentioned. The idea is to call back the Canadian in two business days. It's not a precise time or day or schedule. It's within two business days. Those are happening. I believe that since that was launched at the beginning of September—I don't want to lead you astray—we've had maybe close to a thousand requests for a scheduled callback. What we're seeing is that Canadians are calling because they want faster resolution of their file.

We are offering the callback service to assist them from an eligibility standpoint and from a how-to-apply standpoint. However, it's certainly not necessarily resolving their cases more quickly, which is why we're also making great efforts to tackle root causes, as you mentioned in your question.

Kristina Tesser Derksen :

Thanks for that. It's good news. It sounds like there are still some restrictions and obstacles to quick service and customer satisfaction. One example I came across when I was working with corporate clients is that small businesses would need company keys. They would get that from a different agency; I don't think it was the CRA. It would be mailed, for example, so if they had changed their business address, they wouldn't get the company key mailed to them, and it would cause a whole kerfuffle and a lot of wasted time. Can you identify anything like that in your department that is on the board to be dealt with from a digital transformation perspective?

Melanie Serjak :

Absolutely. There are two things that I can speak to that have eliminated the need for a Canadian to call to get a particular code to create their online account in My Account or to have it sent through the mail. It's something called a digital identity validation service, which we launched approximately one year ago to assist Canadians with creating online credentials without having the need to call or receive a code in the mail, and that is leveraging cutting-edge, industry standard artificial intelligence.

Last Monday, we also launched the ability to use that same type of service for Canadians who have been locked out of their account, which was another significant call driver and a very big pain point for Canadians. The whole idea is to resolve those issues as quickly as possible so that Canadians can continue to self-serve online and won't need to call. Since we launched that service on Monday of last week, we have resolved just over 5,500 lockout requests. Every single one of those could have resulted in a phone call that takes about 10 to 15 minutes for an agent to resolve. It's a very promising feature.

Clearly, we're answering the needs of Canadians by deploying that.

Kristina Tesser Derksen :

Okay, that's certainly good to hear. It sounds like there are lots of improvements being made in a very short amount of time. Just to play devil's advocate, I presume that the reason you would mail things to an address would be for concerns surrounding fraud, maybe, and that sort of thing. Do you foresee any detrimental effects from these changes, and if so, how are you addressing them and planning for them?

(1645) Melanie Serjak :

Fraud is around us at all times, with whatever service channel we choose to utilize. Even with mailing something to someone's address, mail can get lost, or there can be postal disruptions. That is also a vulnerability when we mail secure information to Canadians. When utilizing online digital tools and leveraging industry standard artificial intelligence, the amount of testing done and the controls that are in place are so that we can detect and also prevent, and then remedy when necessary. It stands to show that there are fraud vectors coming at us all the time in our ecosystem, so we have very solid controls and frameworks in place to deal with that.

The Chair :

Thank you. I see that is the time. We will come back to you later on. We are beginning our third round, which will again consist of five members and various times. We will go to Mr. Stevenson now for five minutes, please.

William Stevenson (Yellowhead, CPC) :

Thank you. Five minutes isn't going to do it for me, but I'll see what I can do here. As a CPA in public practice for over 26 years, I've seen a lot of changes in the CRA and have seen how it has dealt with fraud, both for taxpayers and tax preparers. I have a few questions here. I'm going to jump all over the board, just because of some of the questions you've answered. On the last one, you talked about changes with “manage balance”, which is a new feature, and about callbacks. They have had callbacks for corporate questions for quite a long time.

I'm not sure why that has not been a feature as much on general tax in the call centre. Can you tell me who makes that decision and why that's never been a choice before?

Melanie Serjak :

On the general inquiries line, there is the opportunity—and there has been for quite some time—to request a callback. That happens when we have enough capacity and availability to respond to Canadians on the same day.

William Stevenson :

If you don't have the capacity, though, they get hung up on. They were.

Melanie Serjak :

That, I can't confirm, if someone was hung up on—

William Stevenson :

I've had it happen several times, where you call in and hear, “We're too busy, sorry. Call back later”, versus staying on hold. I'll go back to the question. Last week, you talked about how part of that was probably because they didn't want taxpayers sitting on hold for a long time. This may not be your answer, either, but who is responsible? Is it CRA, or is it with Shared Services, on determining...? We've talked a lot about the requirements. Who's responsible to say that if it's 30 minutes, that's too long, and they should have more people?

If it's 30 minutes for them to wait on hold, or hours, which it was in the past, who's responsible to say that they need more agents online? Was that in the contract for Shared Services, or is that for CRA to say that they need to improve the service levels? Who is seeing those levels? It sounds like Shared Services is seeing the service levels, but CRA is the one saying that they need more people. It seems to me that you guys need to talk together a little more. Who's responsible for those?

Scott Jones :

Our responsibility, for Shared Services, is to ensure that the service is available, no matter how many call centre agents are there. Whoever is the consumer of the service is responsible for staffing that. In our case, we use this contract for our helpdesk service. It's our job to make sure that Shared Services has the people to answer the helpdesk calls that we have, to meet our service standards. In the case of CRA, I'll turn it over to CRA.

William Stevenson :

CRA, then, is telling you what the service level is, and you're responsible for the number of agents to meet that service level.

Scott Jones :

No, we just provide the base. We make sure that the base service is there, according to the contract, and then it's in CRA's hands.

William Stevenson :

Okay, then I'll do one extension from that. If the service quality is not up, then it's back to CRA to say that the answers are not being.... It has nothing to do with Shared Services. They're not the ones making the determination as to whether the answers are correct, either. It's all up to CRA, then, to make those determinations. I think it was Mr. Jones who said that there were improvements in the contract. Can we have a detailed definition, as to the new contract, of what is improved in the new contract versus the old one?

It is probably best for us to get that in writing, because you said there were multiple changes. For us to find a bunch of those, it's difficult on that part. Did you want to respond as to whether you can get that for us?

(1650) Scott Jones :

We absolutely can.

William Stevenson :

Okay. It's better to have it verbally than just a head nod.

The Chair :

So that will come in writing, then. Is that right? You kind of left us hanging there for a second, Mr. Stevenson. Does that work for you and your team, Mr. Jones?

Scott Jones :

Yes, absolutely.

The Chair :

Thank you. It's back to you, Mr. Stevenson. You have just over 30 seconds.

William Stevenson :

I guess I'll take a bit of a selfish stab at one here. To me, in the process of trying to prevent fraud, the systems that have changed have limited tax preparers' situations. How do you see them fitting in to help you as a tool for CRA? It doesn't appear that you've considered them a lot,

whereas taxpayers often rely on their accountants and whoever else is helping them. You've limited them significantly in terms of how they can get new people in to help them.

Melanie Serjak :

We are constantly working with our partners and stakeholders to find the right balance between service and ensuring security for our taxpayers and taxpayer information and so on. We have made some significant changes to certain processes and procedures to ensure that we are keeping up and are one step ahead, where possible, of potential new fraud vectors or schemes or whatnot. That is where the friction comes into some of the service.

Based on the knowledge and information we have, we certainly have to make some changes in processes where we believe there could be vulnerabilities, but we do work in lockstep with industry associations and stakeholders to ensure that those changes are well communicated in advance so that we can prepare the taxpayer to adjust—

William Stevenson :

So—

The Chair :

Mr. Stevenson, your time is up. I'll let you finish up, Ms. Serjak, if you have any concluding words.

Melanie Serjak :

No, that concluded. Thank you.

The Chair :

All right. I appreciate that. We'll go now to Mr. Housefather for five minutes, please.

[ Translation ]

Anthony Housefather (Mount Royal, Lib.) :

Thank you, Mr. Chair. I would like to ask the Shared Services Canada officials for some clarification regarding the call centres contract. [ English ] I'm going to fire questions at you, Scott and Scott. Whichever one of you wants to answer, that's fine with me. Some people have been trying to imply that $50 million was at one point the estimated value of this contract. It would be wrong to say that $50 million was ever estimated by anybody to be the total value of the contract. Is that right?

Scott Davis :

That is correct.

Anthony Housefather :

So $50 million was never the value; $50 million was the amount you would need to reimburse the vendor if, in the life of the contract, you hadn't spent at least $50 million under the contract. Is that correct?

Scott Davis :

That is correct.

Anthony Housefather :

Basically, because the vendor was doing customization work to build out its solution for Shared Services Canada, that customized the vendor's product. They made sure they had warehouses available and security available and other things that the Government of Canada needed in the tender that the vendor otherwise wouldn't have had off the shelf. Is that correct?

Scott Davis :

That's correct, but I would add, if I may, that the vendor made a capital investment, which also meant they put.... They built a warehouse. They built out capabilities. They made an investment. They had expectations that the government—

Anthony Housefather :

Right, and that led the government to make a business decision that in the event.... The term of the contract was 10 years. Is that correct?

Scott Davis :

That's correct.

Anthony Housefather :

Basically, the government made a decision that rather than create our own internal product, it would cost less, over the life of this contract, to contract with the vendor. Because we were sure, I would assume, or relatively sure, that we would spend at least $50 million in fees under the contract over that 10-year life, we committed that we would reimburse $50 million in the event that we terminated the contract and nothing had been spent, or, had we spent less than $50 million, we would owe the balance to the vendor. Is that correct?

Scott Davis :

That's correct. It's common that we do that and give safeguards for the vendor as much as for ourselves, because if they weren't able to produce, we would be able to step away.

Anthony Housefather :

Okay. Now let me come back to some other elements of the contract. I know that you've offered to provide some written submissions, which I think is good. The more you can inform us of the contract and the terms of the contract, the better. What was the pricing under the contract? How did we pay? What price did we pay? Was it per call? Was it per hour that the service worked? Tell us that.

(1655) Scott Davis :

As I said earlier, each line item of the requirements from each one of the partners has a different amount, and it is defined in the contract. Using IVR or screen capture as examples, each of them has a different amount. The partner organization would tell us what they wanted from the contract. We already had a predefined price.

Anthony Housefather :

Was it by month? You used interactive voice response as an example. How did we pay for IVR? Did we pay for the number of times the IVR was used? I don't know how you would possibly quantify that. Did we pay x for every month we used the system when the IVR was working properly? How did it work?

Scott Davis :

The consumption was billed by month.

Anthony Housefather :

The consumption was billed by month. In some cases, it was a fixed rate, and in others it was a per call rate.

Scott Davis :

Depending on the line item in the contract, that is correct.

Anthony Housefather :

You talked about how we didn't use standard terms. What does that mean? The Government of Canada has a standard template contract. Did we start from the standard template contract of the Government of Canada, or did we use IBM's standard template contract to start?

Scott Davis :

We competitively awarded this contract. We got into the final terms and conditions—

Anthony Housefather :

Did we start from ours or IBM's?

Scott Davis :

We started from ours.

Anthony Housefather :

IBM negotiated changes to ours.

Scott Davis :

That's correct. It's common.

Anthony Housefather :

It's very common. It's normal. What was the issue in setting service levels and penalties under the contract? Where did we go wrong?

Scott Jones :

If I could jump in here, one of the things we did was customize our technical work requirements, which they built to, according to our specification. This meant we had no commercial equivalent. In that contract, we defined our own terminology. We also did things like embedding certain government services that needed to be used. For example, we have a contract for a 1-800 service. We said they must use that contract. As soon as we did that, we took away the accountability of the vendor because we put the government in the middle.

Anthony Housefather :

What you're saying is that when we negotiated the contracts, we left open questions of whether or not penalties were owed in the breakdown of certain services, because the vendor could argue that it wasn't their fault since they were forced to use one of our services.

Scott Jones :

Yes.

Anthony Housefather :

That's where we went wrong, and that's what you're fixing in the current contract. Is that correct?

Scott Jones :

Yes.

Anthony Housefather :

Now it will be easier to impute blame to the vendor when there's an outage, for example, because the vendor will be solely responsible for certain parts of the contract. Is that correct?

Scott Jones :

That's correct. We're also using standard commercial terms and conditions so there is no ambiguity in what they mean. There's no government definition or vendor definition. There is one definition, and it's commercial.

Anthony Housefather :

Do I have any time left, Mr. Chair?

The Chair :

Take another 30 seconds. You're on a roll.

Anthony Housefather :

This is the last question, I promise. I am confused by that, and you said it a couple of times. I want to try to get precision out of this. In the contract—whether it was our standard terms or the vendor's standard terms, whatever—there would be clear legal language to set that out. What do you mean in this case when you're talking about ambiguity? Whether it was our standard or their standard.... I understand that the standards were mixed up in such a way that it was difficult to impute blame to the vendor, but what else do you mean by what you're saying?

Scott Jones :

We created ambiguity in the definition. By using our definition, we created ambiguity in the

interpretation when the vendor came in. That's our issue, and we will never do that again.

Anthony Housefather :

I understand. Thank you very much.

The Chair :

Thank you all very much. [ Translation ] Mr. Lemire has the floor again for two and a half minutes.

Sébastien Lemire :

Thank you, Mr. Chair. Mr. Jones, my questions are a bit specific, so you can provide written answers. Can you provide us with the list of contracts Shared Services Canada has signed with IBM since 2015, the estimated value of those contracts at the time, the actual costs of the contracts, and the reasons for the cost overruns, which we now know there were? Can you also provide us with the list of sole-source contracts Shared Services Canada currently has, so we can do a proper comparison?

Lastly, can you provide us with the estimated cost of the digital platform modernization project at Immigration, Refugees and Citizenship Canada, IRCC? I'm especially interested in that, specifically the initial estimate and the actual cost for phase 1, as well as the estimates for the subsequent phases.

Scott Jones :

We can certainly provide you with a written list of Shared Services Canada's contracts. The information is also available on the Open Government website, but we can of course provide you with the list. As for IRCC's digital platform modernization project, I don't have access to the details you're asking about.

(1700) Sébastien Lemire :

I see.

Scott Jones :

That would be a question for IRCC officials.

Sébastien Lemire :

We'll have the chance to revisit that. I thought the information flowed through your department. Mr. Hayes, just so you don't get too bored, I'd like to ask you a question. How many audits of IT contracts have you done in the past decade, and are any others under way?

Andrew Hayes :

We've done many audits on technical services contracts, software contracts. We have other audits planned as well. For example, we announced that we would be examining current and future contracts in connection with this audit. I will say that, in many of our audits, we identified the same challenges around contract design, but also issues with implementing the terms of the contract. What we try to do is identify the root causes of the challenges in an effort to improve government contracts.

Sébastien Lemire :

I appreciate your doing that.

The Chair :

Thank you. We now go to Mr. Deltell for five minutes.

Gérard Deltell :

Thank you, Mr. Chair. I think many of us have been thinking the same thing for the past week, knowing that the CRA is facing serious problems. I think about the agency's thousands of workers and agents who go to work wanting to provide the best possible information to their clients on the line. Unfortunately, the Auditor General found that, four out of five times, the information agents gave callers was not accurate. It's not their fault, though; they weren't trained properly. The agency issued a $4.9‑million refund to a business that was not entitled to it and the matter is now before the courts.

When I see something so appalling happening, I think about those senior officials at the agency who want to do something, who have the knowledge and training to do something, but whose work the agency would prefer be done by machines. That is where things at the CRA stand right now. The workers aren't the problem. The managers and the rules they have to follow are the problem. Mr. Pagé, I'm going to ask you the question again. It's a technical question, one that has nothing to do with policy or the court case.

What is the amount, the threshold, at which a transaction is no longer subject to automated review and has to be reviewed by a human?

Hugo Pagé :

Unfortunately, I'm going to give you the same answer.

Gérard Deltell :

That's very disappointing, Mr. Pagé. That's ridiculous. I didn't even mention the company's name, and we are going to let the courts deal with the matter. By the way, according to CBC/Radio-Canada, your agency's lawyers are arguing in court that the company in question was not entitled to the refund and that its tactics were questionable, if not fraudulent. That is what's happening in court. Here in Parliament, our job is to find out how things at the agency work, but it is clear that they aren't working. Therefore, I'm going to give you another chance to explain this to me—but above all, to Canadians.

What is the amount or threshold at which an automated review is no longer permitted and a manual review is required? I'm talking about a review conducted by a CRA worker, someone who cares whether Canadians get their money's worth.

Hugo Pagé :

The threshold varies depending on the risk. The risk level determines the threshold. Unfortunately, I can't reveal the thresholds, so as not to put everything out there for potential fraudsters.

Gérard Deltell :

Have it your way, but the matter is being discussed right now in court, on national television and in Parliament. Is the threshold really $5 million, or just about, because in this case, the transaction was $2,566.28 short of the threshold? Did you become aware of the situation because of that threshold? I'm going to ask you the question I asked you earlier. Did you adjust the thresholds when you realized that $4.9 million was an outrageous amount?

Hugo Pagé :

I'm going to give you the same answer. Whenever we identify an instance of fraud, whenever we see that our controls can be tightened up, we adjust the thresholds; we adjust the level of control to reflect the risk.

(1705) Gérard Deltell :

In the same CBC article, reporter Daniel LeBlanc wrote that sources close to the CRA think “the government needs to hire outside experts to examine the agency’s security measures” and that, according to one source, “the agency cannot police itself”. Mr. Pagé, you just proved that again. My question to you is very simple: What is the threshold at which a transaction is no longer subject to automated review, triggering a manual review by an agent, someone who wants to do something and who, in one tenth of a second, would have realized that issuing a $4,997,433.72 refund to a business that had $380,000 in revenue was wrong?

Hugo Pagé :

I'm going to ask my colleague whether he has anything to add.

Denis Skinner :

There is no world where agents, agency staff, cannot obtain the authorization to access the tools they need. As for the risk of fraud, highly advanced IT systems provide warnings to employees. A number of factors come into play.

Gérard Deltell :

Are you serious, Mr. Skinner? You're talking about IT systems that are so highly advanced you didn't even see the red flag go up when a $4,997,433.72 refund was issued. Someone at TD Bank saw the red flag. The people at the CRA want to serve Canadians. Canadians pay taxes in exchange for real services. Luckily, TD Bank caught it, otherwise this fellow would have gotten away with almost five million dollars, as if nothing were wrong. If your IT systems are as highly advanced as you say, how did you get swindled?

Denis Skinner :

I hope I've understood your question. Yes, I do consider our systems to be advanced, and they are constantly evolving. We work with hundreds of thousands of business rules within a fairly complex tax system. The benefits management system also has hundreds of thousands of rules. That means numerous variables inform the risk management system that employees can use to determine whether a payment should be issued or not. In certain cases, the process is automated.

The Chair :

Thank you, Mr. Deltell. Sorry, but your time is up. You'll have a chance to ask more questions in the next round. Next is Mr. Osborne, who will have five minutes. [ English ] I'll turn the floor over to you, sir.

Tom Osborne :

Thank you. Up to now, we have focused on the more technical aspects of the Canada Revenue Agency and Shared Services Canada. I want to focus a little bit on the other side of the coin. That's probably what matters even more to John and Jane Public: the service they get. What plans have you put in place to improve the completeness and accuracy of responses by agents?

Melanie Serjak :

There are two parts to the answer. One is to share that before an agent gets on the telephone, they go through in-classroom training, anywhere from two weeks to 13 weeks. That's followed by weeks of live training on the phone, which we call “nesting”, and then by gating. The nesting piece is when they're with a more senior agent, a more knowledgeable agent, who gets to listen to their phone calls, and the agent who is nesting gets to ask questions of this senior agent in order to ensure that the completeness, accuracy and quality of their responses are up to par.

As part of our service modernization efforts, what we're doing next is actually looking at artificial intelligence and other technology tools that will assist the agents in providing complete and accurate responses. We are currently working with our vendor in that space to pilot an experiment on which tools would have the highest return on investment for our agents in terms of productivity and also in terms of assisting them in providing the most complete and accurate responses possible.

We are also working with Bell in the context of the new contract to ensure that we can accelerate any of those tools as we onboard to the new platform next year. I hope that's helpful.

Tom Osborne :

It is. Thank you. Building on that, with regard to the quality review process, I know that the findings of your own evaluation were different from what the Auditor General found. The Auditor General's numbers on accuracy were lower than the agency's numbers. What is being put in place to measure more accurately the quality review process to ensure that Canadians are getting the answers they deserve?

(1710) Melanie Serjak :

I can say that the officer of the Auditor General did validate the method that we use to measure accuracy and completeness, and they agreed with the methodology that we use. I'll just remind the table that for the account-specific phone calls, our levels of accuracy are just over 90% at this point in time. We monitor them weekly. That was based on a sample of about 130,000 phone call recordings that we review per year. With regard to moving forward, we are changing and modifying the training and quality evaluation framework and curriculum.

From a training perspective, we are looking at rolling out a more senior and standardized level of trainer who is also coached in adult-style learning to ensure that the training is received in the most optimal way possible. Then, as I mentioned earlier, we are looking at implementing, in the very near future, some automation around our quality review process to make it even more efficient and more effective for our quality evaluators—to assist them in the quality review process as well.

Tom Osborne :

One of the responses to the Auditor General was, “by September 2026 the Canada Revenue Agency will complete the review of the overall evaluation framework”. Has this process started? Can you give us an update?

Melanie Serjak :

The process has begun. Some of the examples I just gave in my previous answer are part of that year-long review. We chose September 2026 because we intend to be able to leverage the capabilities of the new telephony platform to assist even more in our quality evaluation process and the training for our agents. I think I'll leave it there. Does that answer your question?

Tom Osborne :

I think so.

Melanie Serjak :

Okay.

Tom Osborne :

My guess is that the older demographic will rely more on speaking to a live agent. The younger demographics will probably rely more on the chatbot or other forms of communication. The chatbot has not been very accurate either. We've had some responses about how it is improving, the introduction of AI and so on. What measures have been put in place for the self-service tools to ensure that they're more user-friendly and more accurate so that people have confidence when they're making contact?

Melanie Serjak :

All of the self-service options we offer digitally to Canadians are followed with measurable key performance indicators, which we track regularly. That's not just to monitor usage, but also to monitor quality. With regard to the GenAI chatbot, what was raised in the Office of the Auditor General's report was interesting. The GenAI chatbot was not part of the scope of the audit, although they chose to include it, which is fair. I believe the OAG asked the GenAI chatbot six questions. We have had over a million chats with Canadians since we launched the GenAI chatbot.

Denis referenced earlier the testing that went on before the launch. Our target is a 90% accuracy rate. That is what we strive to achieve through internal testing and testing with Canadians. If it doesn't achieve that, changes are made, as it is monitored quite regularly. With regard to the demographics calling our contact centres versus using our online tools, people aged 65 and over are quite active digitally, but there are some who prefer to call, and those are usually our lengthier phone calls. We're seeing a shift.

As people move toward more digital services, the simpler and less complex tax questions get answered through those online tools, which leaves the more complex ones or the ones that take a longer amount of time on the phone. We're constantly adjusting and calibrating our capacity to meet the different service levels needed.

(1715) The Chair :

Thank you very much. That is the time. We are going to begin our final round. Again, there will be five individuals asking questions of various lengths. Ms. Kusie, you'll kick things off for us for five minutes, please.

Stephanie Kusie :

Thank you. I'm going to return to the chief audit and evaluation executive role and the Auditor General's findings of the “limited validation of vendor invoices by both Shared Services Canada and the Canada Revenue Agency.” Mr. Jones, how many millions did your agency and the CRA hand out without verifying work?

Scott Jones :

Mr. Davis explained the way we go through and verify. They were verified, and we're looking forward to showing that to the Auditor General. That wasn't the focus. Perhaps we should have been more proactive in providing the Auditor General's team with that information. That is a lesson learned for us, because we certainly have that and we verify it. It was verified as the service was first provided. We verified both their billing and how they were generating this every month. As Mr. Davis explained, there was a verification process that went through. Also, this contract is substantially different from the new one.

There is some fixed infrastructure built in as part of this. There was a verification process, and we look forward to showing it. Mr. Davis can provide more details on all of the steps, if that would be helpful.

Stephanie Kusie :

No, that's fine. Thank you, Mr. Jones. You're saying that there was a verification completed, and yet this information wasn't provided to the Auditor General. You mentioned in your opening statement that there was some inaccurate

interpretation. Why wasn't this documentation provided to the AG, please?

Scott Jones :

The fact is that this has been a 10-year contract, so there is a tremendous amount of.... The way this works is that whatever questions are asked, we respond to. I think it's really important that we are more open with the Auditor General at the beginning of an audit, as the scoping of the audit terms and conditions is done, so that we can be clear about some of the challenges that are being faced and we can make sure we provide that information. Our understanding of the scope, and the way we responded, was very much on the service side, not necessarily on the contract side. But that's a lesson learned.

I'm not asking to put this at the feet of the Auditor General. We need to make sure that we're more proactive in addressing other pieces and perhaps raising a concern if we don't think we're going in a direction that we can definitely demonstrate. I'm also not saying that it was perfect. I think, the way the contract was structured, it was not breaking down the details by individual departments and agencies so that CRA could have very detailed billing. However, that information was there, and that's a lesson we have definitely applied in the new contract.

Stephanie Kusie :

Mr. Hayes, why do you believe this information, this documentation, wasn't submitted to your office? Isn't it an expectation, when an organization is audited, that they will be open? I believe the intent and purpose of the review by the Auditor General is to have access to all documentation and for those entities that are being audited to be completely open with the Auditor General. Do you believe, Mr. Hayes, that the Canada Revenue Agency and Shared Services Canada have the proper resources to verify these contracts?

Andrew Hayes :

In terms of the verification, we looked in both organizations for evidence of validation of the invoices. In particular, we were expecting to see, for example from Canada Revenue Agency, evidence of validating the usage, the number of agents using the system or the availability of telephone lines, both metrics that are contemplated. What is expected when public funds are being spent is a certification that the goods and services have been received according to the contract. We didn't find that evidence when we dealt with the Canada Revenue Agency. I understand Mr.

Jones' statements earlier that perhaps in the context of this audit one area of his organization was responding to the audit questions while another might have had information that was pertinent to the validation that's done on their part. I think what our finding is showing is that it's important for all of these organizations to be able to show exactly what Canadians are paying for. Hopefully, that's what we will be able to shed some more light on when we do our next audit.

(1720) Stephanie Kusie :

Mr. Hayes, the Auditor General has found, through multiple reports now, that contracting and procurement are in a state of disarray and that the rules need only be followed by departments to clean up the mess. As a result of her CRA audit, as she announced at this very committee, she's now conducting a separate investigation on the telephony contract itself, as was brought up earlier in this meeting. The findings of that audit likely will not be known until mid- to late 2026. However, SSC has already selected a new vendor for telephone services to be implemented in 2027, as discussed earlier. Mr.

Jones, can Canadians trust that this new contract will be properly vetted and that work will be properly scrutinized even in advance of the AG's next report? As we've learned today.... Will you submit all of the documentation and be open with the Auditor General?

Scott Jones :

The new contract is applying the lessons learned that I described before. I can repeat those, but I feel like I've probably said that enough today. It is addressing the concerns around standard commercial terms and conditions. There's transparency now. We're using commercial pricing, with discount, not customized bills with customized prices. There's transparency on value for money at the outset, in the way the contract was structured from the beginning. That's something we are applying. The second piece is, how will those be validated?

CRA will now have the detailed billing information on what features it is turning on. CRA will be making those decisions. The contract has been structured so that it will be elastic both in terms of consumption, allowing CRA to tailor its usage, and in terms of turning on features or turning off features when they are not required. That is how the contract has been structured. It was done competitively. It was done in the open market, asking the various bidders to come forward and be able to respond to these types of pieces. On the response to the Auditor General, that is something we're looking at.

This is not typical for us. I'm not going to say that it's not a relationship with tension sometimes, when the Auditor General comes in, but in general my organization has been very open in making sure that no matter what the questions are, the right people are at the table. What happened here is something we're looking at, because it is not acceptable to me. For me, it's about 100% co-operation with the OAG, regardless of what the findings are going to be. We certainly have the documentation, because I've seen it. The Auditor General shared a pre-clearance draft.

I was shocked by what was in it, because I knew the information was there. I asked my team at that time, but at that point it was too late. That is something we are absolutely going to fix, because it is not acceptable.

The Chair :

Thank you very much. Ms. Yip, you have the floor for five minutes, please.

Jean Yip :

Thank you. Ms. Serjak, our hard-working constituency offices are also assisting our constituents with CRA questions. CRA offers a problem resolution service to assist our constituency offices. Have the response time, resolution and ongoing support been improved to support our offices? They also feel frustrated.

Melanie Serjak :

In fact, my colleague Maxime Guenette is responsible for that program. My understanding, though, in answering your question today, is that the standards from a service perspective are back where they need to be with regard to problem resolution. We know this has been a significant pain point. I believe that the standards are back.

Jean Yip :

Mr. Pagé, the government recently announced the automatic tax filing initiative. Will the phone centre be able to handle the additional queries on a timely basis, especially since this will serve a more vulnerable population, and many may not have access to computers or other digital devices?

Hugo Pagé :

I'll ask my colleague, Melanie, to take this question.

Melanie Serjak :

The initiative with regard to automatic tax filing is a significant one. As part of the planning, consultation and stakeholder engagement, there's going to be a very significant effort with regard to communications. You are correct that the target population will benefit, without a doubt, from supportive communications. From a contact centre perspective, we are preparing and have included that in our planning with regard to the possible phone inquiries we may get as a result.

(1725) Jean Yip :

Ms. Brunner, I'm referring now to the management action plan. In response to a recommendation, it says, “To support the future technology needs.... This technical design will be overseen by SSC to ensure a harmonized end-to-end solution with other SSC services.” What other services are involved?

Kristin Brunner :

In support of the new contact centre as a service solution, there are 1-800 numbers. There are services from our telecommunications services provider that we rely on. There are also solutions that SSC delivers to the CRA to support accessibility features like TTY. We support that capability through an external technology called VOCALLS. Of course, there is the network and there are firewalls. There are many services. Basically, the whole breadth and depth of SSC comes to bear, when we support and deliver contact centres for CRA.

Jean Yip :

So, those are more specialized services that you're offering.

Kristin Brunner :

Some of them, like the accessibility support and the TTY that I just mentioned, would be quite specialized, but others, like the network security and firewall-type services, are general services that we provide to all partners across the Government of Canada.

Jean Yip :

Ms. Serjak, the audit looked at 167 calls. How many calls does the CRA look at in terms of accuracy and assessment?

Melanie Serjak :

On a yearly basis, it's just over 130,000 phone calls.

Jean Yip :

That's a lot. What's the accuracy rate for inquiries related to taxpayer files and small business?

Melanie Serjak :

It's just over 90%. I believe it's as high as 94%.

Jean Yip :

What is it for business?

Melanie Serjak :

That's actually a global number that encompasses both our general inquiries line and our business inquiries line. With regard to the specifics, I would probably have to get back to you on the specific accuracy rates for both.

Jean Yip :

Thank you. Training is really important. At these call centres, you're trained. You go through orientation, and it's quite extensive. Then, does it stop, especially with everything that's happened?

Melanie Serjak :

No, absolutely not. It's a continuous process. There's continual refresher training. We have what we call “specialized centres of expertise” within the contact centres that have what I can describe as pods of experts to whom our call centre agents have access on a regular basis. Then they'll have specific topics, especially in light of different times of the calendar year.

As we get ready for the benefits launch in July, as we get ready for the tax season, the individual tax season, the training begins in advance of those on specific topics that we see are trending already or with regard to potential new legislation that's coming down the pipeline that we want to ready our call centre agents for. It is a continual process. It doesn't end as they graduate from their in-class and onboarding training. It continues from there.

The Chair :

Thank you. That is your time. We will come back to your side shortly. [ Translation ] It is now over to Mr. Lemire for two and a half minutes.

Sébastien Lemire :

Thank you, Mr. Chair. Mr. Pagé, we know that the Auditor General's report highlights long wait times at the CRA. Pareto's law encourages us to think about how the agency can be more efficient. I've had numerous discussions with a well-known tax expert in Rouyn‑Noranda, David Poulin, and he's been asking me the same question for years. Why is the threshold to register for and start charging the GST/HST still $30,000? Why hasn't it been indexed since the GST/HST was introduced in the 1990s? If the threshold were raised, would it reduce the processing burden associated with many small businesses?

How would indexing the threshold affect human resources? Obviously, the fact that the threshold hasn't changed means that 80% of the workload of many tax experts in Quebec and Canada is a waste of time. If we look at suppliers in the $30,000 to $100,000 range, how many small files have gone to collections for fines and interest stemming from the GST/HST? I'm sure you would agree that these are people who need every dollar they have to keep their businesses running. If you can't answer the question now, please get back to us with a written answer.

(1730) Hugo Pagé :

We will get back to you in writing, because it's a multi-faceted question. We also need to consult with our colleagues at the finance department, because parts of your question relate more to tax law than to how that tax law is administered.

Sébastien Lemire :

I have another question. It's about the government's IT deficiencies. Do taxpayers and tax professionals still have the option of providing the CRA with hard copies in the event of a system failure? Oftentimes, there is no plan B, and that's what causes problems. How much did you actually save from moving to electronic tax filing, given the risk of information being lost?

Hugo Pagé :

Those who have no other choice or who want to can still paper-file their returns and use paper forms. As for the savings, it's hard to give you a number, because there are many factors to consider. As you know, paper-based communications are more expensive: there are postage costs, document storage costs and mailroom costs. Paper-based correspondence has real costs. It's really tough to answer your question and tell you exactly how much the transition to an electronic system cost.

Sébastien Lemire :

The loss of information is probably what costs the most from a tax expert's standpoint, not to mention the consequences of trying to retrieve that information.

[ English ]

The Chair :

Thank you. Next, we will go back to the official opposition. I understand, Mr. Kuruc, that you're going to split your time with Mr. Stevenson. We'll go over to you.

Ned Kuruc :

Mr. Pagé, I'd like to go back to this $4.9-million cheque issued. I'd like to continue from what my colleague said. What are the human and computer thresholds to look at an audit? What is the number? Is it $1 million or $5 million?

Hugo Pagé :

What we need to understand is that there are multiple business lines. We have, for instance, individual income tax, corporate income tax, excise tax and so on. The risks are assessed depending on the nature of the business line, and within each of the business lines, they are controlled or adjusted so that we minimize the risk for the taxpayer. Of course, we are not providing the threshold, because that would be giving fraudsters a recipe for trying to defraud the government, and that's why we're reluctant to share that information publicly.

Ned Kuruc :

Yet, they defrauded you of $4.9 million.

Hugo Pagé :

I can't comment on that file.

Ned Kuruc :

Thank you. An

article states, “A source with inside knowledge of the CRA's workings said that returns are routinely processed electronically without human oversight, even in cases where millions are paid out that would later raise red flags.” My question is for Mr. Hayes. You looked into some of these government benefit evaluations during COVID, after hearing that no controls were in place—and now we are hearing that we don't know what those controls are at CRA—to automatically review corporate refunds under $5 million. Should CRA practices be reviewed externally by your office?

Andrew Hayes :

We do review CRA very regularly. I can think of audits over the last number of years that have related to, obviously, the COVID benefits, but we've also looked at tax appeals, collection efforts and the like. I think the question really comes down to how effective the controls are and whether they need to be reviewed by the CRA. Those are questions for the CRA. What we would be able to bring out in an audit is whether they're working effectively. I think the question that's coming up today, which might be frustrating some members, is about details.

I can understand why the CRA does not want to share specific details in an open session like this; however, accountability can be achieved in other ways, and there might be options for the committee to get there.

Ned Kuruc :

Thank you for your answer. I'll cede the rest of my time.

The Chair :

Thank you. That is spot-on. You have two and a half minutes, Mr. Stevenson.

William Stevenson :

Thank you. I have three questions, so I don't know if I'll get through them. As a CPA in public practice, when a new client came in the door, my conversation was always that my job was to prevent them from doing something that would raise red flags. They would all ask what red flags were. Many times, we'd talk. We'd go to some place in a CPA conference, and they'd say that CRA is looking at this and this, so we would always know that. Most of the time, when we got there, it was documentation. CRA said that if you couldn't prove it, you were guilty, unless you could prove otherwise.

Documentation, as the auditor said, is.... I'm sure, Mr. Jones, you are probably correct, and you probably did some of those things, but you didn't have the proof and the documentation; therefore, it didn't exist, as far as the auditor is concerned. That being said, when there are any of these problems, going back, what are the punishments when it comes to human error? What are the corrections when it comes to the digital side? If it was digital, was it a mistake because the computer looked at it?

A lot of times when we looked at these—as I said, they were to avoid red flags—I submitted things electronically, and a person often never saw these, so the computer did it. What corrections do we have there? Who is responsible for that, versus the people who are maybe looking at the paperwork and not submitting because of punishment for letting these fraudulent things go through?

(1735) Hugo Pagé :

I'm assuming the question is for us.

William Stevenson :

Yes, it's for you.

Hugo Pagé :

Okay. What we have to understand is that the risk landscape continuously evolves. What's important for us is that we keep track of what those changes are, how we adjust to those changes and how we adjust our control framework around those risk areas. To your question as to who is accountable when there are situations where perhaps control could have been improved, we look at the lessons learned. We look at what we can learn from that experience and what we can adjust.

William Stevenson :

We've gone back and forth a few times and said that the CRA is responsible for a lot of the criteria and where you're going to be looking for any adjustments. Can you tell me why it took so long? You have, supposedly, now analyzed a lot of the details, but until the 100 days were put in, it seems like a lot of those were ignored. You're showing progress that seemed to not take very long to increase your response times on the phones. Why did it take so long for that to happen? In the past, it was taking hours to get through. The 100-day limit came in, and all of a sudden we can get it under five minutes again.

Can you explain why the 100 days are the only thing that seemed to turn the tide? Is it because the Liberal government—

The Chair :

Thank you, Mr. Stevenson. Your time is up. I'll allow an answer.

Melanie Serjak :

I can answer that question. Before the 100-day plan began on September 2, the CRA had been taking a lot of steps and taking on a lot of initiatives to improve service that may not have reached the level of visibility that they are getting today with regard to the 100-day plan. The 100-day plan is mobilizing the entire agency toward the service situation, and we're treating it with the highest priority possible.

Our call volumes are diminishing naturally, as it is the low-peak season for us, so we are using the opportunity this fall to focus our efforts on utilizing the capacity we have to effect change and pilot an experiment with new things that will move the needle come our high-peak season. That, for us, is in the tax season, which is coming very quickly in February.

The Chair :

Thank you very much. Finally, we'll go to Ms. Tesser Derksen for five minutes.

Kristina Tesser Derksen :

Thanks so much. I'm going to share my time with Mr. Housefather, if that's okay. I have a question for the Auditor General's team. In exhibit 9 in your report, there is a table where you noted how weight was dispersed across performance for an agency evaluation. Do you remember that one? The table shows that 10% of the evaluation was based on agent behaviour; 45% of the evaluation was based on productivity, which was “call handle time” and “adherence to schedule”—that is important for efficiency, I'll grant you; and the remaining 45% was based on the quality of service.

However, in the explanation immediately afterwards—and it took me a second read to catch this—your report notes that only 9% of the quality of service total was based on accuracy. In the way it was written, “45% was tied to

schedule adherence,” while only 9% was “based on accuracy”, when in fact that 9% was part of the broader 45% under “quality of service”. In your experience, what type of weight should have been placed on the quality of service and the accuracy piece? Rationally, if we're going to boost that number, we have to take it from somewhere else. Would you take it from

schedule adherence? I'm looking for some insight into that, because it was something we talked about a lot in the previous meeting.

(1740) Andrew Hayes :

With due respect to the agency, it would not be my place to be prescriptive on this. However, I think the Auditor General's comment is that 9% for the completeness and accuracy of responses—I'll paraphrase that in a different way and say precision in terms of the information being provided—doesn't send the message that there's a strong commitment to quality service. Trade-offs have to be made, whether they're in the adherence to

schedule or another area. That's a question for the agency to sort out. The Auditor General's message was clear, though. To instill a culture of quality.... Effectively, changing behaviour is about what you're measuring, and sending a message that you're interested in the enhanced accuracy of responses would merit a higher score there.

Kristina Tesser Derksen :

Okay. Thank you. Was that my two and a half minutes, Mr. Chair? Okay.

[ Translation ]

The Chair :

Thank you, Ms. Tesser Derksen. We now go to Mr. Housefather.

Anthony Housefather :

Thank you, Mr. Chair. Mr. Pagé, I want to revisit something Mr. Deltell and Mr. Lemire asked the CRA officials.

[ English ]

Hugo Pagé :

What I can say is that in any instance where fraud has been identified, we adjust our practices to reflect the reality in the new environment.

Anthony Housefather :

Was consideration given to having a certain amount of money that a human being would need to verify or refund, regardless of the level of risk assessed, if it was over a certain threshold? Was that part of the overall evaluation that you came to?

Hugo Pagé :

When we have instances of fraud, we look at all the—

Anthony Housefather :

I understand, but you're before a parliamentary committee. You're not before the media now. When we ask a question, you're actually supposed to answer the question. Did you look seriously at the question of whether—even if an assessment found a very low risk in a profile of a refund of $4.9 million, for example—there should be a level of a lesser amount that an agent, a human being, would look at before a refund was processed if it was over that amount, regardless of the threshold of risk?

Hugo Pagé :

We would have to get back to you, because I would not be the one personally involved in making that assessment.

Anthony Housefather :

Okay. I would appreciate it if you could get back to us in writing. Thank you, Mr. Chair.

The Chair :

Thank you very much. Before I excuse everyone and wrap up this meeting, I have a couple of questions for the deputy auditor. The first is broad. The second is specific. You didn't use much of your time at the start. Do you have general comments about today's discussion on the contracts? Is there anything you want to highlight or put a spotlight on for committee members to consider? Number two, I want you to give us your thoughts on the tendency we've noticed where the government has accepted the recommendations while downplaying or questioning the findings, or even indicating that all is now well.

It's a bit like accepting the sentence and promising to go through the remediation, but then saying, “Well, we didn't really do it” or “Everything is okay.” This is difficult, I think, for a lot of people to understand, particularly when we all have cases in our offices where we know the service has been very bad. We're hearing now that your office didn't get documents that might have changed your report, and we're hearing, at the House of Commons, that the 100-day plan is just swimming and now all the information is accurate, which is what I heard today as well, at 90%. What's going on? What do you make of this?

What light can you shed on this for the committee to consider, please?

(1745) Andrew Hayes :

Thank you very much. Those are big questions. With respect to your first question, I think it was about today's hearing and what we heard today. The focus, of course, with Shared Services here was on the contract. As the Auditor General signalled at the beginning of last week, we are going to look at the contract specifically. Of course, when we do any audit, we leave the discretion open for us to look at anything that comes to our attention during our audit. We can go down a road even if it's not specifically set out in the scope of our audit at the outset.

However, with this contract, what's peculiar is the fact that Shared Services is the contracting authority, and it's also a user of these services, along with CRA and ESDC. Not everybody is included in the scope of the work we are doing here when looking at that entire contract. It wouldn't have been practical for us to expand this audit to do a complete audit of the contract—the money spent, how it was conceived, etc. Just to comment on Mr. Jones' statements earlier, I don't believe Shared Services Canada was trying to hide any information or not provide us with information. The track record of Mr.

Jones is nothing short of exemplary in terms of collaboration. I don't think there was anything nefarious there. We will get to the bottom of everything in that next audit. That's one piece of today's testimony. I made some comments earlier about controls and whether there are controls around the way in which CRA is processing the invoices or controls around the use of automated services or thresholds for automation, etc. I think those comments and those questions come from a place where almost every taxpayer comes from: They expect fairness and they expect timely and accurate service from CRA.

Our tax system is one where people are required to self-declare. Speaking in general terms, Canadians want to do that, and they want to do it properly. Our audit was focused on accuracy and timely responses to Canadians. That takes me to your second point. The idea that people might want to distance the current situation from the findings of the audit is completely understandable. There are