TOPICS
TOPICS
Research service suggests test runs for financial system consolidation
The Bush administration's plan to consolidate agency financial management systems into shared service centers might enjoy a greater chance of success if first tested using pilot projects, the Congressional Research Service recommended in a recent report.
The report, written by CRS analyst Garrett L. Hatch, stated that the debate over financial management streamlining focuses on when, not if, the consolidation should take place. As part of the so-called lines of business effort, the Office of Management and Budget is requiring agencies to move to one of several centralized financial systems run by the government and the private sector, once their existing systems need upgrades. But critics argue that these transitions should not happen until risks are adequately addressed, the report stated.
Hatch, who works in the Government Organization and Management section of CRS' Government and Finance division, suggested that agencies address this by undertaking pilot projects before making transitions to shared service providers. This would allow officials to analyze and discuss the results of a potential move in a controlled environment.
But Karen Evans, OMB administrator of e-government and information technology, said the problem with pilot projects in government is that they "never go away."
"You have never seen it happen in practice," Evans said. "For me, it is either an initial implementation ... or you run it like a real project with a start and a stop date. I have just never seen [a successful pilot project] happen in practice."
All agencies are scheduled to move to shared financial management service providers by 2015, and OMB officials have said consolidating financial management and human resources systems will save $5 billion over 10 years.
Hatch cited concerns that, given the scope and complexity of financial management systems, the project is moving forward too quickly. But the administration has not shown signs of slowing the drive toward consolidation.
For example, in a recent development, the Environmental Protection Agency awarded a 10-year, $84 million contract to CGI Federal Inc., an IT services company based in Fairfax, Va., to serve as its shared service provider for financial management. The award, made Feb. 13, was the first large-scale procurement under the initiative and marked the first time public and private sector shared service centers completed a competition for a large agency's business under the initiative.
The CRS report stated surveys have shown that agency officials' greatest fears are investing millions of dollars into moving to a shared service provider, only to have the provider fail to furnish the promised services. In several cases, OMB-designated shared service providers have failed to comply with financial regulations, the report stated.
A lack of regulations governing the agency-run centers has caused some to doubt that any large agency will successfully allow another shop to run its financial management systems. Several smaller agencies have moved to shared service providers. The current agency-run shared service centers are at the Bureau of Public Debt, the Interior Department's National Business Center, the Transportation Department and the General Services Administration.
In November, the Office of Personnel Management's much touted effort to move its back-end financial management operations to the Bureau of Public Debt's Administrative Resource Center collapsed. OPM officials have said they will conduct a public-private competition in the fourth quarter of fiscal 2007 to determine who will host their financial systems.
The CRS report also suggested that plans to develop performance metrics for financial management, standardize business processes across agencies and establish a governmentwide accounting code could provide the earliest opportunity to realize the benefits of improved agency financial management.
OMB has sent signals that may indicate it is backing away from the concept of consolidating agencies' IT systems around shared centers.
The agency is pursuing the adoption of uniform governmentwide standards rather than shared centers in three of the newest areas it is hoping to streamline: budget formulation and evaluation systems, geospatial information systems and IT infrastructure.
But OMB also identified in the fiscal 2008 budget proposal five agencies to serve as shared service providers for the IT security line of business, suggesting the administration hasn't completely abandoned that approach.
COMMENTS
- Dear Taxpayer, We obviously have very different philosophies. What you call “caving in” to the employee I call “good customer service” -- and what you call “submitting all the proper paperwork correctly,” in my experience I call “mindless, bureaucratic red tape,” which our federal government does so well. But your approach for centralization and mindless policies layered one on top of another is the approach our society likes. And the Peter Principal will apply until this entire federal government edifice comes crashing down and maybe we can rebuild it with fewer layers of stupidity. Just to give you a clue: I was giving workshop presentations, saved the taxpayers a lot of money, and stayed for the rest of the conference to get some additional training for myself. A company paid for my travel and expenses on the days I was presenting-- the government was going to cover for an additional day. What was my reward to being so frugal? The government could not deal with this mixed bag because I wasn't asking for five days of M&IE, only one day. The paperwork involved in dealing with this silly little problem would choke an elephant. You enjoy living in a world where the federal government chokes elephants with paper- OK, fine. I don't and have better things to do with my life than mindlessly enable this lunacy. Just don't get hurt on the job and have to apply for OWCP-- that paper would choke two elephants. HR Specialist GovExec.com reader Posted February 27, 2007 8:11 AM
- HR person, I do not know the particulars of your travel problem nor can I understand the problems with OPM on retirement. I would bet that the problems with centralized retirement are no where near what they would be if every agency was allowed to do its own thing. I never had a problem with the centralized retirement system when working with my relatives that retired. I find that if you follow the proper procedures you have few if any problems. Of course if you do not do what is proper, you have plenty of problems. I see everyday, management override of internal controls concerning financial transactions. I see everyday incompetent people in financial management that refuse to follow proper accounting policies and processes ad get away with it because they are in charge of the process. I see everyday operations management that will agree with anything an auditor says simply to get rid of the auditor and then will spend millions to comply with ridiculous things the auditors suggest because "that’s the way it is done". In my organization, your travel problem would have been solved easily and quickly because no one would have cared. And your constant trouble would have been dealt with by paying you off - even if you didn't deserve it. I see employees and managers on a daily basis take the easy way out of various situations - for example, everyone cannot take anything from a contractor, so put up your money for donuts at a conference! This is done simply because it is easier than thinking - the FAR allows a maximum gift amount per item and per year. Rather than learn that the easy way out is to take nothing and cause everyone trouble and humiliation. I also point out that I see a lot of misinformation spread around by HR people because they always seem to think that no one is FERs and they have no clue about what vesting is or how it works. I bet in a centralized program at OPM this problem would decrease in size and impact. taxpayer Posted February 26, 2007 7:38 AM
- Dear taxpayer, What is ridiculous is centralizing everything in one location operated by people who could care less about you, your program, or your problem. What is ridiculous is contracting out all administrative functions in the federal government. I had a travel problem once and our centralized Business agent 2,000 miles away asked me to fill out a 30 page form to recover one day of M&IE. No thank you. It is bad enough I give a free loan to the Treasury Department every year through my taxes and have to spend hours filling out lots of forms to get it back every year-- I won't do it twice for a measly thirty dollars. This is the service everyone will be getting by huge, bureaucratic, centralized finance, payroll and HR offices. Just ask any government retiree how much they enjoy dealing with OPM and NFC or DFAS on a retirement issue! You want better service and save money-- decentralize and bring this contractor work back into the government. HR Specialist GovExec.com reader Posted February 23, 2007 10:04 AM
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