Canada’s Billion-Dollar Phoenix Failure

In 2009, Canada launched a plan to replace its 40-year-old federal payroll system with Phoenix, an automated commercial platform meant to cut labor costs and save about $70 million a year. IBM won the contract in June 2011, and the government rolled the system out across departments in 2016 even after warnings about critical problems and weak testing. Instead of delivering savings, Phoenix triggered years of underpayments, overpayments, missed paychecks, and a massive backlog that hit hundreds of thousands of public servants. As of June 2025, the system had cost the Canadian government more than $5.1 billion.

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