Streamlining Government: OMB and GSA Could Strengthen Their Approach to Implementing a New Shared Services Plan
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.
Recommendations
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
| Agency Affected | Recommendation | Status |
|---|---|---|
| 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: • implementation goals, a timeline, and milestones for agencies to transition from one provider to another; • transparent reporting mechanisms on key milestones; and • a process for capturing and communicating lessons learned. (Recommendation 1) |
OMB staff did not agree or disagree with GAO's March 2019 recommendation. As of July 2022, OMB had not addressed this recommendation. According to OMB staff, the Administration is still reviewing and considering the long-term strategy for NewPay. Without a detailed monitoring plan that includes goals, transparent reporting mechanisms on key milestones, and a process for capturing and communicating lessons learned, it will be more difficult for OMB and GSA to provide oversight of the transition and its effects on providers and customers, including whether there are interruptions to delivery of services. Additionally, this information could help OMB and GSA avoid gaps in service or costly delays as agencies transition to the new model for obtaining payroll and work management services.
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| 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) |
OMB staff did not agree or disagree with GAO's March 2019 recommendation. As of July 2022, OMB had taken some steps to address this recommendation. OMB designated GSA as the Quality Service Management Office (QSMO) for NewPay. As QSMO, GSA will be responsible for managing the payroll marketplace. However, OMB has not documented how GSA and other key stakeholders will work together. For example, OMB has not documented which agency will review and approve task orders. According to OMB, as of December 2021, no agency had signed up to leverage the NewPay procurement. Until OMB and GSA clearly identify, communicate, and document key roles and responsibilities, they run the risk of not achieving their objectives. They also risk repeating past problems associated with the delivery of shared services, such as the inconsistent implementation and interpretation of standards and migrations that encounter costly delays should agencies not follow available guidance.
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| 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) |
OMB staff did not agree or disagree with GAO's March 2019 recommendation. As of July 2022, OMB had not addressed this recommendation. Without up-to-date information on providers -- such as the services OMB and GSA plan to offer, their level of performance, and their costs -- it will be time-consuming and difficult for potential customers to compare providers. This lack of information could slow the rate of shared services adoption.
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| 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) |
OMB staff did not agree or disagree with GAO's March 2019 recommendation. As of July 2022, OMB had not addressed this recommendation. According to OMB officials, OMB will collect cost-savings data via the integrated data collection process, which requires agencies to publicly post their cost savings and avoidance data. However, OMB has not demonstrated how it plans to use data from the IT Integrated Data Collection Instrument to track cost savings specifically related to shared services overall and for individual projects. Until OMB and GSA finalize a plan for collecting the needed data and evidence to effectively measure cost-savings goals, it will be difficult to demonstrate progress -- a recurring challenge associated with previous shared services efforts.
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