OMB to open service centers

Cross-agency service centers handling information technology infrastructure for three federal lines of business — financial management, human resources management and grants management — could become operational in fiscal 2006.

Consolidating services enables agencies to take advantage of economies of scale that they could never achieve individually. Consolidation in these three areas makes perfect sense, Bush administration officials said.

"You don't have to have 26 payroll systems; you don't have to have 52 human resource solutions," said Tim Young, the Office of Management and Budget's associate administrator for e-government and IT.

OMB officials started a governmentwide analysis of five business lines in March as the next step in expanding e-government and eliminating duplicate IT investments.

Agency officials have already reviewed business cases for common service centers for financial and human resources management. The grants management business case is about to undergo its agency review and comment, said John Sindelar, a General Services Administration deputy associate administrator. Sindelar spoke Sept. 8 during a panel discussion at the Interagency Resources Management Conference.

Federal agencies will not be forced to adopt common service centers, he said.

"We're going to phase this in over time," Sindelar said. "If you have a steady state and don't want to move to the common solution, we will not make you."

Agencies that do adopt to a common service center will continue to manage their data and individual business processes.

The service centers will allow for individual agency idiosyncrasies, said Mark Carney, deputy chief financial officer at the Education Department. "There is not an issue with interoperability along the seams," he said. "We've just got to make sure we govern it correctly."

Ninety percent of the challenge comes from change management rather than from the technology, Sindelar said.

"Through the budget process, there'll be some decisions made as to what are good candidates for becoming a service center," he said, adding that a competition would be open to commercial vendors.

One possibility is that a private-sector firm invests the upfront costs and earns the money back through fee-for-service charges.

Each business function will have about half-a-dozen service centers, Sindelar said. "You don't want to put all of your eggs in one basket," he said. "Competition keeps potential providers sharp."

Some agencies already outsource common business functions. The Interior Department's National Business Center, for example, offers payroll, accounting, inventory and other services on a cost-recovery basis. "Agencies can certainly decide to enter the service center business and do that through a business case

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David Perera is a special contributor to Defense Systems.

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