OMB to call for shared finance and HR apps

The Bush administration is crafting a plan to outsource the government’s financial and human resources processing to vendors and federal service centers.

Under the lines-of-business consolidation effort, two task forces have submitted business cases recommending that agencies consolidate redundant systems in a shared-services environment. The Office of Management and Budget will fine-tune them during the next few months for inclusion in the fiscal 2006 budget proposal.

“We are talking about IT hosting services at a minimum and the different functions across the lines of business for a fee as this concept evolves,” Tim Young, OMB’s associate administrator for e-government and IT, said this month at the 2004 Interagency Resources Management Conference in Cambridge, Md.

“The E-Payroll project was the proof of concept for the lines of business, and it shows we can consolidate to a shared-services environment,” he said.

Once the budget is approved, Young said, there would be a competitive process to determine the service providers for financial and HR services.

In a shared-services environment, agencies own the data but not the technology, members of a panel at the conference said. E-Payroll is a cross-agency initiative to share payroll processing and have service providers handle payroll functions for a fee.

Agencies would save money on hardware and software, as well as management and maintenance support, while retaining control and accountability for financial and HR data.

The task forces estimate that at least six service providers will be needed to support financial management and six to process HR data governmentwide.

The Interior Department’s National Business Center is one of several federal groups that provide processing services to agencies.

Tim Vigotsky, the center’s director, said his organization submitted two business cases to OMB last week outlining its funding needs to provide financial and HR services. The center is also one of the four providers for E-Payroll.

“All of this gives us the opportunity to improve and standardize business practices across the federal government,” Vigotsky said. “This is where the most significant gains can be made.”

Other large cross-serving centers that will likely seek to participate in the HR and financial shared-services program are the Agriculture Department’s National Finance Center and the Treasury Department’s Bureau of Public Debt. Some possible vendors are BearingPoint Inc. of McLean, Va., Oracle Corp. and PeopleSoft Inc. of Pleasanton, Calif.

The National Business Center processes financial data for 25 agencies and HR records for a few small agencies.

Vigotsky said the center typically signs blanket purchasing agreements with vendors for software. “We have the data on a secure network that the vendor does not have access to,” he said. “The agency customer can get to its data through a secure Internet site or a dedicated line.”

The center uses an in-house system for HR services. Expanding its HR work for a broad, shared-services environment is still undefined, Vigotsky said.

“We are looking to get E-Payroll into a steady state and then wait for OMB and Office of Personnel Management guidance,” he said. “We also have to see if there is a large-scale successful enterprise resource planning implementation that could be used for the government.”

Young said to assess HR software, the administration would create a Joint HR Management Improvement Program, similar to the Joint Financial Management Improvement Program that reviews and approves financial systems for government use.

As with other e-gov efforts, OMB will not require agencies to migrate to the service providers immediately. John Sindelar, OMB’s lines-of-business program manager, said agencies would buy shared services when their current systems need upgrades or replacing, though they could join the program sooner.

Young added that OMB expects most agencies to move to shared environments eventually. If an agency wants to continue a standalone approach, it will need OMB’s OK, he said.

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