Competition for HR services could heat up in fiscal 2008

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The Office of Personnel Management and General Services Administration will award vendors a place on the Federal Supply schedule for human resources services by the end of the calendar year, and companies will begin competing to provide HR services to agencies shortly after that. At least five federal agencies have announced their intentions to outsource HR operations in the next 12 months.

GSA and OPM would make the schedule awards under the governmentwide Human Resources Line of Business (HR LOB) initiative, which encourages agencies to outsource their human resources operations to a federal or commercial provider.

OPM announced that the Institute of Museum and Library Services, the Labor Department and the Office of Thrift Supervision are committed to having a shared-services provider manage their HR operations. The Homeland Security Department and Transportation Security Administration will upgrade some of their HR information systems before GSA awards the schedule contract.

Iindustry officials say they anticipate a great deal of competition for HR services in 2008.

“We are getting a lot of inquiries from organizations wanting to know what is out there for HR,” said an industry official who was not approved to speak for the company and therefore requested anonymity. “This is the first LOB that stands a good chance of taking off because it is a pure public/private competition.”

For the past three years, OPM has been preparing for the day when companies compete head-to-head with federal HR services providers under the HR LOB program. The Office of Management and Budget named five shared-services providers in 2005: the Treasury, Defense, and Health and Human Services departments; the Interior Department’s National Business Center; and the Agriculture Department’s National Finance Center.

Since then, however, few large agencies have signed on with those providers. Labor, one of the largest, held a public/private competition this summer, and in August, it awarded a contract for HR services to Interior’s National Business Center.

Ed Hugler, Labor’s deputy assistant secretary for operations in the Office of the Assistant Secretary for Administration and Management, said the center beat four other providers — two federal and two commercial. The center will provide payroll and HR services to Labor, potentially reducing the agency’s annual recurring costs by more than 50 percent, he said.

“We are just developing our migration plan with NBC now,” Hugler said. “Our target date to finish migration is Sept. 1, 2009.”
The center will assist Labor in converting and moving its HR and payroll data to its information systems and data warehouse, said Donald Swain, the center’s chief of staff and acting director.

The Office of Thrift Supervision signed a deal with Treasury to use the department’s HR Connect system. Wayne Leiss, Treasury’s chief financial and chief information officer, said the move to HR Connect from a Cobol-based mainframe that is more than 20 years old will save the agency about $100,000 a year. The move should be complete in August 2008, he said.

Meanwhile, DHS issued a request for quotations for HR services through OPM’s Training and Management Assistance multiple-award contract. Industry officials said they expect DHS to award a contract sometime this winter and begin moving its HR operations to a private-sector provider.

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