USDA outsources its finances

The Agriculture Department could smooth the path for other large agencies to outsource their financial operations with its decision to award Accenture a $102.6 million financial management services contract. USDA announced the decision Sept. 10.

USDA is the first large agency to select a shared-services provider under the Office of Management and Budget’s Financial Management Line of Business (FM LOB) initiative. Many large agencies have been skeptical about whether public or commercial providers can handle agencies’ accounting and transactions, said Danny Harris, deputy chief financial officer at the Education Department and chairman of the CFO Council’s Financial Systems Oversight Team.

One of the biggest hurdles to moving FM LOB forward is not having a real-world success story of a large agency being serviced, Harris said. The USDA contract award will ultimately answer a lot of questions, he said, but it will not create a rush to compete shared-services agreements.

USDA’s contract award “does, however, move us much closer to demonstrating that it’s not only feasible but in some cases desirable,” Harris said.

Under the 10-year contract, Accenture will provide program management, transition and migration support, application and integrator services, and hosting services. Accenture said it is too early to comment on the contract award.

USDA’s financial systems modernization will move the department from an older mainframe system onto SAP integrated financial management system applications, USDA officials said. Officials expect to complete the implementation by mid-2011.

“This software is key to the further success of the department’s ability to support program payment and accountability,” said Chuck Christopherson, USDA’s CFO. “Our ledgers are no longer supported through vendor maintenance.”

Under OMB’s FM LOB initiative, agencies that are planning to buy a new financial management system or significantly upgrade an existing one must justify why they would not use a shared-services provider.

Agencies must compete their financial management systems among
private and federal shared-services providers. Those providers offer information technology hosting, application management and system implementation services, OMB said in a recent competition guidance.

USDA began its financial modernization process before OMB and the General Services Administration set guidelines for using commercial shared-services providers. However, GSA and OMB have worked with USDA and other agencies that wanted to move quickly on their modernization efforts, said Mary Mitchell, GSA’s deputy associate administrator of electronic commerce. Mitchell is also program manager for FM LOB and executive director at GSA’s Financial Systems Integration Office.

USDA has “been leveraging the methods out of FM LOB and been part of the standards-setting process,” Mitchell said. “Out of the box, they’ll be able to implement some of those standards.”

GSA will issue a request for proposals that will create a pool of commercial shared-services providers from which agencies can choose to buy financial-management services.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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