OMB to put private sector in play on Lines of Business

When the Office of Personnel Management went looking for a financial management services provider, officials reviewed offers from three federal centers of excellence before choosing the Treasury Department’s Bureau of the Public Debt earlier this month. What they didn’t have is the opportunity to look at possible private-sector providers.

By the fall, other agencies will have that option. The Office of Management and Budget is preparing guidance on competing financial management and human resource management services with the private sector.

Karen Evans, OMB’s administrator for e-government and IT, said the guidance will “emphasize the use of competition between the Centers of Excellence and private-sector providers.”

OMB ironed out some of the details of the guidance last week during a Lines of Business Consolidation initiative meeting in Washington.

Since the administration kicked off the LOB effort in the fiscal 2005 budget submission and released a request for information last summer, officials said private-sector providers would have the opportunity to participate. But the details have been slow to materialize.

The upcoming guidance will address how agencies should ensure the federal Centers of Excellence and the private sector provide proposals on a “level playing field,” Evans said.

“The agency governance boards are determining what core functionality will be required in the standard product offerings,” she added.

In addition to financial and human resources, the Lines of Business initiatives also include Grants Management, Federal Health Architecture, Case Management, Information Sharing and Cy- bersecurity. The last two were added this year. OMB also is considering new lines of businesses for next year, including geospatial, procurement, records management and IT infrastructure, tele- communications and desktop systems.

Most agencies will move to a new financial or HR system from a shared-service provider when their current systems become antiquated and they cannot justify to OMB why they should upgrade or develop a new system.

“Competition will drive both private and public providers to make their best offers and will also serve as an incentive for winning sources to perform their best, since agencies will have options over the longer term if service is not satisfactory,” Evans said.

OPM’s decision to move to a new financial system came after deciding against upgrading its current one. The agency is using Momentum 3.72 from American Management Systems Inc. of Fairfax, Va.

“AMS indicated that they would stop supporting our version of Momentum and we needed to make some changes because the older package didn’t support all of our needs,” said OPM chief financial officer Clarence Crawford. “At the very beginning, we were leaning toward upgrading that system, but we did an analysis and due diligence and concluded that that did not make a lot of sense.”

OPM became the first large agency to jump to a shared-service provider. The Bureau of the Public Debt’s Administrative Resource Center is one of four financial management centers of ex- cellence named by OMB in the 2006 budget request. The others are the General Services Ad-ministration, the Interior Department’s National Business Center and the Transportation Department.

The bureau already provides financial services for 30 Treasury and small external agencies, including the Office of Government Ethics and the Merit Systems Protection Board.

“OPM is one of our largest agencies, and with an organization of OPM’s size, we understand their needs,” Fred Phillips, ARC’s deputy executive director, said. “The system they are using is one we are familiar with, and we have experience with conversions in the past.”

OPM will transfer its data and integrate its feeder systems into ARC’s Oracle Federal Financial System 11i. Phillips said OPM will begin implementing the new system after Jan. 1 and will be fully integrated by Oct. 1, 2006.

Crawford would not comment on how much the move to the bureau’s system would save OPM, but did say it would “cost us more to implement our own system than to move to a cross-service provider.”

He said OPM evaluated three agency responses before choosing ARC.

“The amount of work is less for us because of what we will be doing,” Crawford said. “Bureau of the Public Debt was a better fit for us than the other agencies.”

OPM also will use ARC’s procurement system, Prism from Compusearch Software Systems Inc. of Dulles, Va. It will replace OPM’s AMS system and integrate easily with ARC’s Oracle financial system, Crawford said.

The chosen few

Under the Financial Management Line of Business, these agencies are making the jump to a shared-service provider:

  • National Gallery of Art
  • Federal Housing Finance Board
  • The Institute of Museum and Library Sciences
  • Office of Personnel Management.

Source: OMB

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