In human resources, for example, the Office of Personnel Management awarded contracts to five agencies and four private companies to provide enterprisewide shared services, such as payroll, personnel and benefits management. Instead of implementing or modernizing their own expensive technology platforms, agencies were strongly encouraged to leverage these organizations' technologies and human resources processing capabilities. Done right, this initiative would have led to better human capital management, operational efficiencies, significant cost savings and less capital outlay, and vastly improved customer service. Perhaps, more important, the federal government finally would have had central repositories of information on their entire workforce.
In a revolutionary move, shared services would have for the first time infused something akin to a profit motive into the delivery of a government service. Despite some big plans and lots of rule-making, the LOB initiative stalled. But now the Obama administration has a chance to make things right.
One of the big challenges the Bush administration faced was distrust. Under its human resources LOB plan, agencies were required to pay the service providers out of their own budgets. If they chose not to purchase the services, then funding for new initiatives of their own would have been reduced. Any corporation that has adopted a shared-services model would understand the rationale for such an approach.
But congressional leaders not only balked at the idea of one agency paying another for services, they also took issue with OMB's threat to cut funding if they didn't comply with its edict. These actions were perceived to be a threat to their appropriations authority. When the Democrats took over Congress in 2007, lawmakers' grumbling turned to outright resistance. Now the plan has been largely scratched.
As the first president since John F. Kennedy to move directly from Capitol Hill to the White House, President Obama has a rare opportunity to guide Congress toward this somewhat risky reform without generating fear of an executive power grab or permanent loss of appropriations authority.
The president should educate Congress about the potential for significant cost savings and efficiencies with a shared-services approach and provide assurance that it won't be used to slash congressionally mandated programs. Obama can reassure lawmakers that shared services is a carrot-and-stick approach to reform. Yes, agencies will need funds to transition to shared services, but it's a one-time cost. If ever there were a time for making a small, upfront investment to achieve longer-term savings, it is now. And as the shared-services' economies of scale improve, these costs will go down.
Throughout the campaign and during the transition, Obama promised to go through the budget line by line to find programs that no longer work. To achieve lasting reform and cost savings, he needs to revisit a program that was not implemented but has real-world proof of its success.
Glenn Davidson is managing director of EquaTerra's public sector practice, serving federal, state and local government clients. In the public sector he was chief of staff for Virginia Gov. L. Douglas Wilder and legislative director for former Ohio Congressman Ron Mottl.