Lines of Business consolidation may limit small agencies’ choices

The Lines of Business consolidation e-government initiatives may affect small agencies in more ways than simply prompting them to outsource their financial management or human resources functions.

David Ostermeyer, deputy chief financial officer at the Agency for International Development, said small agencies such as his have little leverage over shared service providers.

“If we reduce the number of service providers and our new service provider does not meet our needs, where will we go?” Ostermeyer asked yesterday at a panel discussion on interagency agreements in Falls Church, Va., sponsored by the Industry Advisory Council of Fairfax, Va. “I would like to see more private-sector alternatives.”

Ostermeyer said the Office of Management and Budget’s insistence that AID and the State Department merge financial systems and work on other IT systems together also could yield similar problems.

“Trying to get a structure to handle both agencies on a single platform is virtually impossible, at least at this stage,” Ostermeyer said. “We settled on a condition where State will host our systems, and we are now trying to figure out how the cooperation is going to work.

“For the most part, State has not been responsive to their customer’s needs. What they’ve said is ‘We will take care of it our way, you pay us the money and you should be satisfied with that.’ We have had a great deal of battle with them, particularly on the [financial system] front, and we are being forced into other areas of cooperation on administrative services. We are making some progress, but it is not coming together as well as everyone had hoped.”

Michael Carelton, the General Services Administration’s CIO, compared the situation to an arranged marriage vs. a romantic marriage, saying sometimes the arranged ones need a little more work.

“Organizations like the National Finance Center are trying to serve two masters,” Ostermeyer said. “They have their own agencies and their customers. NFC said at one time, they do not want more customers because Agriculture was asking for too much.”

OMB officials have said it would ask the private sector to provide financial management and human resources management services, but they did not put a timetable on when the contractors would be brought on board.

"The smallest agencies have the most to win with these arrangements," an administration official said. "They will get good service at a lower cost and use a modernized system. They can put the money they would spend on a new system into their core mission."

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