OMB clarifies HR line of business

New guidance for Human Resources LOB focuses on the application of A-76 rules

OMB’s HR LOB competition framework

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The Office of Management and Budget repeats the word “competition” almost as often as it uses the word “consolidation” when it advises federal agencies on using shared-services providers. Bush administration officials want agencies to hold public/private competitions to select shared-services providers for human resources and financial-management services.

OMB made competition a central theme of its latest policy on the Human Resources Line of Business initiative. Any deviation from a public/private competition will require administration approval, according to a policy memo released May 18.

“The policy ensures agencies receive the benefits from competition among all qualified parties,” said Clay Johnson, OMB’s deputy director for management, in the memo to agency deputy secretaries.

In the memo, Johnson tried to answer many of the questions that agencies have about the ways OMB Circular A-76 applies to the Human Resources LOB and methods agencies should use to solicit and evaluate competitive bids for HR services. Circular A-76 establishes the rules agencies must follow in public/private competitions,  which determine whether federal employees or contractors can perform certain jobs more efficiently.

As if to further drive home the point, the General Services Administration and the Office of Personnel Management issued a request for proposals May 21 to qualify companies to compete for business under the HR portion of the Federal Supply Schedule.

The administration will take a similar approach when it releases a request for proposals for its financial management LOB initiative in late July or early August, said Dianne Copeland, the director of GSA’s Financial Systems Integration Office, which is helping lead the initiative.
For agencies that have been uncertain about how to proceed, OMB said, the new policy may provide information they were lacking. “The [HR] framework does answer a lot of questions that have been out there,” said Jeff Koch, an OMB portfolio manager, who spoke in Washington at a recent shared-services roundtable sponsored by IBM.

Unlike some other agencies, the Office of Thrift Supervision didn’t wait for clarification from OMB. The Treasury Department bureau will be among the first and largest federal agencies to transfer responsibility for HR services to a shared-services provider. It awarded a contract in late May to the Interior Department’s National Business Center for payroll and HR services, according to government sources.

The Treasury bureau evaluated proposals only from public-sector providers, sources said. Interior’s NBC outbid the Agriculture Department’s National Finance Center, and the agency’s migration of HR services to NBC will begin this summer.

In the future, OMB policy will require agencies to seek public and private bids, a policy that industry officials say they like. “Anytime there is more clarity in the market, and you remove obstacles to modernize, that is good,” said Andrew McLauchlin, an executive consultant at CGI-Federal.

Doug Bourgeois, NBC’s director, said OMB’s policy framework makes shared-services providers accountable for performance metrics. “The framework requires us to do more to compete than we otherwise would have to do.”

Bourgeois said the momentum of OMB’s HR Line of Business initiative would probably remain steady because the migration to shared-services providers is based on agencies’ needs. The biggest drawback for agencies is the lack of standards for HR systems, he said.

However, Koch said he believes standards already exist in OPM’s HR Business Reference Model. “The BRM is agreed upon by the governance body,” he said, “and it is part of what makes this all possible because it defines a set of processes.”
GAO upholds ibm protestThe Government Accountability Office sustained IBM’s protest of the Environmental Protection Agency’s $84 million award to CGI-Federal to upgrade the agency’s financial-management system. The decision remains under protective order, but Mike Golden, GAO’s associate general counsel, said the agency found fault with EPA’s price and cost evaluations.

Golden would not say what recommendations GAO offered EPA to fix the procurement.

EPA has until Aug. 3 to decide how it will proceed.

“We are disappointed by the decision,” said Peter Cutler, a spokesman at CGI Federal. “It is now a part of the procurement process and returns to EPA. We are confident that our proposal will be recognized as the best-value
solution.”

EPA and IBM officials did not return calls or e-mail messages seeking comment.

— Jason Miller

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