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OMB Rolls Out Plan for Governance Body to Boost Shared Services

GSA will host centralized push for interagency financial management, payroll and IT tasks.

The Obama administration’s management agenda entered a new phase on Thursday when a key White House official unveiled plans to create a central governance board to steer agencies toward a greater use of shared services.

David Mader, the acting deputy director for management at the Office of Management and Budget, said six months of interagency steering committee meetings have produced “an incredibly aggressive plan for 2016” to “bring all shared services elements together” in a central strategic body, which would steer tasks to be executed by a unit housed at the General Services Administration.

Shared services is an approach long used in the private sector in which specialized agency units perform human resources, financial management or acquisition tasks under contract with other agencies. Expanding its use to save money has been one of the administration’s cross-agency policy goals; OMB established a Strategic Sourcing Leadership Council in December 2012.

Under the new plan announced to an audience of 250 at the nonprofit Partnership for Public Service, a more visible governance body will begin meeting in mid- to late-November. It will consist of 16 representatives from agency service providers, customers, and policy agencies—the Office of Personnel Management, the Treasury Department and GSA. A sub-organization called the United Shared Services Management Organization will be tasked with executing the governance board’s strategy.

In unveiling the organizational chart, Mader cited as a “major milestone” this week’s announcement that the Housing and Urban Development Department on Oct. 1 became the first Cabinet-level agency to move core financial systems to a Federal Shared Service Provider. HUD’s financial management and procurement operations are now being performed by Treasury’s Administrative Resource Center.  “This transition will enable HUD to focus its 7,500-plus workforce on serving the nation’s housing and community development needs by reducing employees’ administrative burden,” said Joe Hungate, HUD’s acting chief financial officer, in a release. “Furthermore, it will provide the framework for HUD to comply with federal financial management regulations.”

The new broader effort to “sync up people in different departments” on strategies and service-level agreements, Mader said, will be a “big leap, an organizational and cultural change.” Many will ask, “Why trust these other people to pay our organization,” he said. But the new attitude should be “Let them do that and the rest of us focus on the core mission.” The goal is not only to drive a consistent level of services, but to do it “at a price point so that they can actually take dollars and move them to the core mission.”

Such a massive change can be made only “incrementally, when you can prove what can do,” added Mader, who disparaged the term “overhead” in favor of “mission support functions.” He predicted agencies will move beyond sharing financial management, acquisition and travel services and eventually tackle the growing problem of cyber-threats and the government’s massive grants program, which he called a “major” opportunity.

“This is good government, not policy--it’s not R’s and D’s,” Mader said. “We need to be at a place when the new administration comes in and we can we can hand off a strategy they can embrace.” OMB also plans to use shared services strategies in proposing funding hikes and legislative changes to modernize the systems when it prepares the president’s fiscal 2017 budget in the next few months.

“We have to take this now or it’s not sustainable,” he warned. “We can get through 2016 but not afterward.” He announced OMB’s intention to move the entire government to electronic payments by 2018.

Mader credited the George W. Bush administration’s 2002 “lines of business” effort as an antecedent to the new shared services push, while also acknowledging guidance from the National Academy of Public Administration, the Partnership for Public Service, ACT-IAC, the Association of Government Accountants and private accounting firms.

GSA chief Denise Turner Roth appeared with Mader to stress her agency’s full commitment to boosting shared services. “It’s important that we not only host the office but that we have accountability for its success,” she said. “It’s an opportunity for GSA to really own” shared services as part of its mission as an administrative services office.

Ellen Herbst, chief financial officer at the Commerce Department, which has been implementing shared services for a year, said it is important to create a “healthy ecosystem of capability and capacity” for providers and a healthy demand side. “The path we’re on now is not sustainable without shared services,” she said, praising the “increasing maturity of the discussion.”

Dave Lebryk, the fiscal assistant Treasury secretary working with OMB on the new governance approach, said the board “will help define what collaboration will be like, with best practices.”

Angela Bailey, chief operating officer of the Office of Personnel Management, called the governance structure “long overdue. The process shows there’s a logistical tail to these policies,” which is why the chief officer councils will be involved in providing diverse perspectives on required technical changes.

Several private-sector specialists were on hand to comment on the administration’s shared services push. John Marshall, founder and CEO of the Shared Services Leadership Coalition, said in a statement, “What Dave Mader announced today is a milestone for shared services, and it’s directly in line with the future vision that’s captured the imagination of the industry and good government communities. He’s putting in place fundamental building blocks of a solid foundation for long-term modernization.” New legislation, however, is essential, Marshall added. “We can seize the moment if stakeholders can keep pulling together and convince Congress that good government is good politics.”    

Bill Beyer, a principal with Deloitte Consulting LLP, said OMB’s “first steps” should go further. ““For this structure to be effective, OMB should consider a shift from a focus on governance and technology services sharing to a commercial model,” he said. This model should include “updated business processes, consolidation, flexibility for capital investments for Federal Shared Services Providers, emphasis on multifunctional shared services, and incentives and penalties to push agencies into considering shared services,” he added.

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