A federal agency needs services like payroll and travel to support its work, but it can save money by sharing those services with other agencies. For example, agencies sharing payroll services across government saved more than $1 billion over 10 years, according to a federal estimate.
The Office of Management and Budget and the General Services Administration are promoting human resources and financial management shared services, among others, and trying to address the reasons why agencies don't participate more. We suggested ways to improve their approach to increasing participation.
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What GAO Found
Efforts to promote greater use of shared services for human resources (HR) and financial management activities resulted in some cost savings and efficiency gains, but challenges impeded more widespread adoption. For example, the Office of Personnel Management estimates that shared services for HR, including payroll resulted in more than $1 billion in government-wide cost-savings and cost avoidance between fiscal years 2002 and 2015. However, challenges include limited oversight, demand uncertainty among providers, and limited choices for customers. To address these challenges, the Office of Management and Budget (OMB) and the General Services Administration (GSA), as the shared services initiative leaders, introduced a new marketplace model in 2018 meant to better meet the needs of customers and service providers by offering more choices for purchasing shared services (see figure). They are also working on plans to create Service Management Offices and Task Order Review Boards to work with agencies to adopt standards for common management activities.
OMB and GSA’s Proposed New Marketplace Model
GAO found that OMB and GSA were following some key change management practices such as improving interagency collaboration in their design of the marketplace model. However, implementation weaknesses may limit their success. For example, OMB and GSA do not have a plan to monitor the implementation of NewPay, a 2018 payroll shared services initiative designed to determine how well the new model works. A monitoring plan which includes performance goals and milestones could help OMB and GSA avoid gaps in service or costly delays as agencies transition to the new model for obtaining shared services.
Why GAO Did This Study
The federal government can reduce duplicative efforts and free up resources for mission-critical activities by consolidating mission-support services that multiple agencies need—such as payroll or travel—within a smaller number of providers so they can be shared among agencies. However, migrating to a shared services provider has not consistently increased cost savings, efficiencies, or customer satisfaction, according to OMB and others who have observed these migrations.
GAO was asked to review previous shared services initiatives. This report: (1) identifies the progress and challenges associated with federal shared services initiatives for selected HR and financial management activities and (2) assesses OMB and GSA's actions to address those challenges. GAO analyzed planning and performance documents and interviewed officials from selected customer and provider agencies and from agencies involved with shared services policy and guidance. GAO also interviewed subject-matter experts familiar with shared services. GAO reviewed steps OMB and GSA are taking to identify and address challenges from past migrations to improve shared services performance.
GAO is making four recommendations to OMB including to work with GSA to finalize a plan for monitoring the implementation of NewPay, among other actions. OMB staff did not comment on GAO's recommendations, but noted that OMB may update its shared services policy in the future.
Recommendations for Executive Action
|Office of Management and Budget||OMB's Shared Services Policy Officer should work with GSA to finalize a plan for monitoring the implementation of NewPay. The plan should include: <br>• implementation goals, a timeline, and milestones for agencies to transition from one provider to another; <br>• transparent reporting mechanisms on key milestones; and <br>• a process for capturing and communicating lessons learned. <br>(Recommendation 1)||
|Office of Management and Budget||OMB's Shared Services Policy Officer should work with GSA to document key roles and responsibilities, including which agency will be the NewPay Service Management Offices (SMO), who will be assigned to the NewPay Task Order Review Board, how the SMO, the Review Board, and other key stakeholders will work together, and which agency will be responsible for interpreting payroll rules and regulations. (Recommendation 2)||
|Office of Management and Budget||OMB's Shared Services Policy Officer should work with GSA to update provider information on services offered, pricing, and performance and share that information with prospective customers. (Recommendation 3)||
|Office of Management and Budget||OMB's Shared Services Policy Officer should work with GSA to implement a process for collecting and tracking cost-savings data that would allow them to assess progress toward the shared services cost-savings goal of an estimated $2 billion over 10 years. (Recommendation 4)||