Ten years after Phoenix, PIPSC warns damages remain and lessons are unlearned

OTTAWA, ON, Feb. 23, 2026 /CNW/ - Ten years after the launch of the Phoenix pay system, the Professional Institute of the Public Service of Canada (PIPSC) is warning that the crisis is not over and that similar failures could occur again if the federal government does not rebuild internal expertise.

Today, PIPSC released its report Phoenix: 10 Years of Failure, examining why the system failed, why serious problems persist, and what the experience reveals about how complex government systems are delivered.

"Ten years after the launch of Phoenix, it is still failing on a regular basis to deliver public servants' paycheques correctly," said Sean O'Reilly, President of PIPSC. "This means taxpayers are funding stabilization efforts while also paying to build a replacement."

The report also warns that workforce adjustment (WFA) measures, including early retirement, alternation, and layoffs, are expected to significantly increase the volume and complexity of pay transactions.

"Without additional stabilization and resourcing, the surge of WFAs risks generating new errors and expanding the backlog exponentially" said O'Reilly.

Since 2017, the federal government has spent nearly $5 billion responding to Phoenix-related failures. As of December 2025, approximately 238,000 pay errors or changes remain outstanding, nearly half more than one year old. The system continues to receive roughly 117,000 new transactions per month, more than three-quarters requiring manual processing.

IBM, the system's original developer, has received more than $650 million in total payments, stemming from an initial $5.7 million contract that was repeatedly amended and expanded.

Concerns about staffing capacity, system readiness, and implementation pace were raised before Phoenix went live. The Auditor General later confirmed those warnings were not heeded.

"Before Phoenix was launched, more than 1,200 experienced pay advisors were eliminated, services were centralized, oversight was weakened, and documented risks were ignored," said O'Reilly. "When the system began to fail, the expertise needed to fix it was no longer there."

PIPSC is raising similar concerns about broader trends across government. As departments reduce internal staffing through workforce adjustment, reliance on external contractors continues to grow. Government spending on professional services is expected to reach $26.1 billion this year, nearly double pre-pandemic levels. The shift from in-house expertise to outsourcing mirrors the conditions that contributed to the Phoenix failure.

"Phoenix showed what happens when internal capacity is weakened and complex systems are delivered without sufficient in-house expertise," said O'Reilly. "When payroll failed, the damage was largely contained within the public service. If similar failures occur in systems that deliver pensions or benefits, the consequences would affect millions of Canadians."

PIPSC is calling on the federal government to:

• Sign a renewed damages agreement for employees affected since March 31, 2020
• Fully resource the Miramichi Pay Centre before workforce adjustment pressures intensify
• Retain internal pay and IT expertise until replacement systems demonstrate sustained stability
• Reduce reliance on outsourcing and rebuild in-house capacity

"Modernization requires expertise," O'Reilly said. "You cannot hollow out the people who understand the system and expect it to function. It takes experts to run a country."

PIPSC represents over 85,000 public-sector professionals across the country, most of them employed by the federal government. Follow us on Facebook, on X (formerly known as Twitter) and on Instagram.

SOURCE Professional Institute of the Public Service of Canada (PIPSC)

For more information: Johanne Fillion, 613-883-4900 (mobile), [email protected]; Justin Vossenberg, 613-612-8313 (mobile), [email protected]