Human resources consolidation project advances

Agencies and contractors vying to be selected as human resources providers in projects to consolidate systems across government likely will compete following the same rules as those governing the Bush administration's competitive sourcing initiative, an Office of Personnel Management official said Friday.

OPM also announced this week that five agencies have committed four months ahead of schedule to migrate their human resources systems to shared service centers. The Housing and Urban Development Department committed to moving to the Treasury Department's system, the Coast Guard and the Transportation Security Administration will move to the Agriculture Department's National Finance Center, and the Transportation Department and Federal Aviation Administration are shifting to the Interior Department's National Business Center.

The human resources project is part of the Office of Management and Budget-led lines of business initiative, aimed at consolidating and centralizing federal information technology systems in a variety of areas. Service providers, which can offer more than just IT services for human resources, are intended to host several agencies, with the goal of saving money through enhanced efficiency.

While officials at OPM, which is OMB's managing partner for the HR line of business, have signaled that the consolidation will create an avenue for the private sector to compete for federal agency business, details on how that will work have yet to be released.

Norman Enger, OPM's director of the human resources line of business program management office, said he expects a request for proposals from prospective private sector providers to be released in the next two months and awards to be made by the end of the year.

"If you look at the financial management area, they're relying heavily on [OMB's Circular] A-76," Enger said. "At this point in time, [the human resources competitions] will probably be very similar to the financial service line of business competitions."

Private sector companies already have "a very heavy involvement" with the five shared service centers, including providing the software and about half of the staff, Enger said.

The General Services Administration and OMB last month published details on how competitions between the public and private sectors might work for the financial management line of business. But a recent report from the Reston, Va.-based market research firm INPUT took a dim view of the proposed guidelines.

"We are suspicious by the fact that we haven't seen a lot in the way of guidance and transparency into how the process is going to operate," said James Krouse, the report's author and INPUT's director of market analysis. "There are almost as many questions today as there a year ago. How is a vendor supposed to approach the fact that an agency might be a contractor, a contracting area or a partner? How do you manage that relationship?"

GSA did not respond to requests for comment in time for this article and OMB said in a statement that while competition is a "key tool" for helping agencies improve cost effectiveness and performance, it is only one element of the lines of business initiative.

The competition guidelines will be a subset of a larger migration planning document, which will have the "rules of the road," OMB stated. The competition policy will be consistent with congressional expectations and is intended to give agencies and the private sector a consistent set of rules for operating within the initiative, OMB said.

Based on information offered in the draft guidelines, the INPUT report said budget regulations may limit agencies' ability to develop effective long-term proposals that cut across budget cycles.

Private sector vendors could gain an edge by going beyond the minimum core requirements, which include providing an IT infrastructure, application management services, business process services and system implementation services, the report said.

"With no set regulations as to what menu of services have to be offered, this would appear to be an area to gain a competitive advantage … especially in areas that draw greater attention such as information assurance and information security," the report said.

But the fact that the competitions will be governed by rules in OMB's Circular A-76 will limit the private sector's ability to win contracts as agencies' prime service providers because the public-private job contests conducted under those rules have "been more favorable to government participants in the past," the INPUT report stated.

"It's kind of curious, after waiting this long a large part of what we got is that A-76 will prevail," Krouse said. "The guidance that we've seen for financial management is raising as many questions as it's supposed to answer."

John Marshall, vice president at Fairfax, Va.-based CGI Federal, an IT services company that is heavily involved in the financial management line of business as a commercial shared service provider, said while there are issues that need to be sorted out, he strongly supports the federal government's move toward the shared service model.

CGI Federal supports financial management service centers at GSA and the Interior Department's National Business Center. As a commercial shared service provider, it has submitted a bid to provide the Environmental Protection Agency with its financial management services and plans to compete in an Agriculture Department public-private competition for the financial management line of business.

Marshall said CGI Federal could end up competing against an agency it supports, but "like other private entities out there that have multiple partners, we want to support the government with the right combination of services that meet the agencies' needs."

OPM's Enger said it will be "a very interesting situation" if a private sector service provider ends up competing against a federal agency service center that it supports. "I think the private sector firms simply have to make a corporate decision," Enger said.