The question of where industry fits into the Office of Management and Budget’s renewed shared services initiative continues to be a hot topic across the community.

OMB and the Treasury Department have said industry’s role will be one of support to the federal shared services centers.

But is there room for industry to be a shared service provider? Or has that ship passed because of poor past performances?

A long-standing challenge of the Homeland Security Department’s plan to move to the Interior Business Center could be industry’s last gasp or a sign of things to come for financial management shared services.

Savantage Financial Services filed a complaint to the Court of Federal Claims over DHS’ decision to go to Interior.

Savantage claims DHS violated the Competition in Contracting Act, because it decided to go directly to Interior without competing the services as well not following the Federal Acquisition Regulations that require agencies to justify and provide public notice if they decide not to go through a full-and-open competition and didn’t make a determination of analysis that going to a shared service provider was the best approach for the agency. The company also claims “DHS components acted arbitrarily, capriciously, with an abuse of discretion, and contrary to law.”

The court ruled Aug. 28 that Savantage’s protest should be dismissed on jurisdictional and justiciability grounds because the “plaintiff’s surviving claims lack merit, and that neither supplementation of the administrative record nor another amended complaint is warranted.”

But Savantage appealed the decision to the Court of Appeals for the Federal Circuit, and docketing, or background, statements are due Nov. 30, and Savantage’s brief is due Dec. 29.

“For Savantage it’s a fight for its very survival,” said one industry source who follows federal shared services closely and requested anonymity in order to speak candidly about a potential industry competitor. “OMB and Treasury’s Financial Innovation and Transformation’s push to federal shared service providers means that agencies are not able to compete for new financial management systems at this time. Hence there is no possibility of new business. Meanwhile the existing user base is being encouraged to move to an FSSP, and none of the FSSPs use Savantage’s Altimate [software] as the basis of their respective financial management lines of business. And this happens without competition or visibility from the contractor community.”

The source said Savantage isn’t the only vendor in a similar situation. There are other financial and procurement services providers who are struggling under OMB’s policy, the lack of clarity of industry’s role and the need for the federal providers to offer more than just Oracle and SAP financial software instances.

Another industry source said OMB isn’t following its own policy that calls for commercial alternatives to be evaluated as part of an agency’s alternative analysis when deciding on its next financial management provider.

“OMB hasn’t implemented it this way. It just says go to the five shared services providers,” the second source said. “But where there is an alternative analysis, industry can see them and make sure government decisions are made properly to save money and create efficiencies.”

That memo the source is referring to is from  March 2013 and OMB told agencies they should conduct an analysis of commercial SSPs and federal ones “as part of a robust market research process. As part of their market research, agencies may find that FSSPs have a good track record of successfully servicing federal agencies and can provide many of the advantages of commercial SPPs through their existing partnerships with private vendors. To determine the best value source, each agency is expected to develop an appropriately detailed alternatives analysis of SSP solutions based on their needs, risk performance and cost.”

The source said OMB and Treasury need to consider some sort of on-ramp system for vendors, especially those who bring innovations to the market.

“Vendors feel locked out of this government sponsored monopoly,” the source said.

Savantage CEO Lisa Kazor declined to comment because the case is ongoing.

DHS referred all requests for comment to the Justice Department. A DoJ spokeswoman declined to comment as well because the case is pending litigation.

An email to OMB requesting comments about industry’s role and how it plans to define it in the future was not returned.

Savantage has been waging a battle against the federal shared services initiative for almost two years. According to court documents, the company filed an initial bid protest in April 2014 over DHS’s Office of Health Affairs’ plan to obtain a new financial management system from a federal provider and not put it out for competition.

The court ruled in favor of Savantage, but  DHS filed for corrective action making the complaint moot. Savantage amended its complaint in March 2015 and the court finally ruled in August for DHS, thus leaving Savantage at the appeals stage.

At the same time, Congress now is showing an interest in DHS’ shared service efforts. The fiscal 2016 Homeland Security appropriations bill specifically calls out concerns about the move to shared services.

“The department’s current financial system modernization efforts are based on an OMB directive to transition to a federal shared services provider. Improving financial accountability and financial reporting is essential, but questions persist about the costs of the current approach and the capacity of federal shared service providers to manage the transition,” House lawmakers wrote in the committee’s report. “Therefore, the committee directs the Government Accountability Office to assess the risks of utilizing the Department of Interior’s Business Center, whether the IBC is capable of expanding its services to additional federal agencies, and a comparison of the services and capabilities of federal and commercial shared service providers. In addition, the committee directs the CFO to update the lifecycle cost estimate to reflect all contract awards and projected overall costs, including those for every component that plans to migrate to a federal shared service provider.”

The Senate Appropriations Committee’s report didn’t include similar language, but it did express concerns about the delays in DHS’ modernization efforts. Senators requested DHS to provide “frequent communications” on the department’s financial management improvement plans, including total funding and timeline to implement “discrete milestones.”

The committee also called out the Immigration and Customs Enforcement’s plan to upgrade its financial systems. The Senate approved $5 million and required ICE to “provide a briefing on the progress with Consolidated ICE Financial Solution (CIFS), including details on the capacity of potential service providers to meet ICE’s requirements, not later than 180 days after the date of enactment of this act.”

Underlying all of this is the fact that DHS has tried two separate times to move to a commercial financial management system and withdrew its efforts each time because it wasn’t realistic. So instead of the big bang approach, DHS began looking at the moving components to new systems under the OMB umbrella and not considering private sector providers.

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