Financial Line of Business questioned

Formal guidance says too little for critics

The first formal guidance for the Financial Management Line of Business offers too little help for agencies and contractors trying to plan for the program, some analysts say.

The guidance came from the Financial Systems Integration Office — part of the General Services Administration — with assistance from the Office of Management and Budget. Issued in May, it was a draft document. A final version is expected soon.

Input released a report earlier this month stating that the guidance relies heavily on the standard A-76 process to govern competitions under the line of business, in effect telling officials little they did not already know.

“We were expecting, along with the rest of the vendor community, more in the way of actual guidance,” said James Krouse, acting director of public-sector market analysis at Input. “To fall back and say that in a lot of cases A-76’s standing rules will apply, that’s fine, but you could have told us that a year ago. What’s new?”

The line of business initiative is an OMB effort to consolidate financial management systems, using some agencies as service providers. As agencies upgrade their financial management systems, they should seek to become a shared service provider, migrate their financial management systems to an agency that already has that status or contract with a qualified vendor. The A-76 provisions kick in when agencies go outside their organizations for the services.

The use of A-76 suggests that agencies would have an advantage. Under normal A-76 rules, private-sector competitors must show they can save 10 percent or $10 million to unseat an agency’s employees.

If the competition involves another agency that does not have to show those savings, companies are at a decided disadvantage, according to the Input analysis.

The guidance makes it feasible for agencies to take as long as a decade to determine if they will migrate their operations, making the potential market for a shared service provider unpredictable, according to Input.

In the long term, Krouse said, it is unclear whether the lines of business initiatives will amount to much. The 10-year time frame is a long period for a political initiative, he said.

“You’re talking about two or possibly three election cycles,” he said. “This whole idea of lines of business is not fully cooked now, and we haven’t seen Congress embrace this with any degree of enthusiasm.”

The guidance does give contractors and agencies some starting points, Krouse added, but not enough to comfortably lock in strategies.

“Any plan you make, be prepared to change,” he said. “The entrenched contractors have a marked advantage because they have the ability to strengthen relationships with the agencies that are going to be their partners going forward.”

Other industry observers question the wisdom of the shared services approach, which they see as overly prescriptive.

“If I get together the best minds around financial management in the government, you can create a set of general standards that anybody can meet in the government, or any institution,” said one industry insider who spoke on condition of anonymity.

The government should set common metrics and standards, the insider said, but agencies can meet such requirements without OMB mandating that they take a certain approach.

Larry Allen, executive vice president of the Coalition for Government Procurement, said he does not believe there is much enthusiasm for the initiative outside OMB.

“It’s an administration initiative that is closely linked to A-76, and everybody knows that’s been this administration’s primary mover,” he said. “If it was something everybody wanted to be on the front burner, it would be dressed up to catch everybody’s attention.”

The Coalition for Government Procurement has not established a formal position on the lines of business, but “we generally have a wary eye,” Allen said, adding that government solutions should be less prescribed.

“Agencies need to consider how best to meet the objective of good, sound financial management practices to meet the agencies’ mission needs and priorities,” said an OMB spokeswoman in response to the critique. “OMB’s guidance and framework provide the agencies the information they need to access the process that will help them meet their goals.”

Shared servicesFinancial management shared service providers must offer, at a minimum:

  • Technology hosting and administration.

  • Application management services.

  • Business process services.

  • System implementation services.

  • Source: Input

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