OPM launches new HR shared service center for agencies

Agencies have a new opportunity to partner with the Office of Personnel Management to get help with modernizing and consolidating their HR functions — for a fee.

A new “HR shared service center” OPM launched on Tuesday gives agencies the option to enter into an interagency agreement with OPM to receive access to a suite of “vetted” IT tools meant to streamline human capital management capabilities.

In a memo obtained by Federal News Network, OPM said its new shared service effort folds into President Donald Trump’s larger plans of eliminating inefficiencies and duplications in federal services.

“For decades, a decentralized approach to HR service delivery in the federal government has led to suboptimal service, costly and duplicative systems, and inconsistent application of policies,” OPM Director Scott Kupor wrote in the March 17 memo.

Agencies can access the new HR shared service center on a voluntary, fee-for-service basis. OPM said the HR center will include options for managing employees’ benefits, onboarding, payroll and performance, as well as provide more “strategic” offerings in areas such as workforce planning and human capital strategy.

OPM anticipates it will take six months to fully migrate participating agencies into the HR shared service center. A handful of agencies and components, including the Department of Housing and Urban Development, the Department of Veterans Affairs’ Office of Inspector General and the Office of Government Ethics, have already agreed to be part of the center’s initial launch.

“By leveraging shared services, agencies can reduce fragmentation, enhance compliance and shift administrative workload away from program staff — allowing greater focus on mission execution while achieving consistency, cost-effectiveness and improved HR outcomes across the federal enterprise,” the OPM memo states.

OPM’s launch this week, however, is far from the first time the government has offered consolidated tools and services to agencies in an effort to streamline federal HR systems. In 2007, for instance, the Bush administration’s OPM partnered with the General Services Administration to work on a shared service center focused on HR services. OPM also awarded contracts to four private sector firms in 2008, offering HR shared services to agencies under the HR Line of Business (HRLOB) initiative.

And in 2019, during Trump’s first term, his administration launched several Quality Service Management Offices (QSMOs), focused on HR, cybersecurity, financial management and grants management. Each QSMO, managed by a different agency, offers a marketplace of shared services to participating agencies, attempting to help them modernize and streamline their “back-office” capabilities.

As recently as 2023, OPM was working on enhancing agencies’ human capital functions through its HR QSMO.

The National Finance Center, Interior Business Center and Defense Finance and Accounting Service — all of which are agency payroll providers — similarly offer HR shared services to agencies.

One industry expert, speaking to Federal News Network on the condition of anonymity to be able to speak about a pre-decisional memo, called OPM’s launch of the new HR shared service center “sensible,” especially considering the “brain drain” of federal human resources staffing in 2025. Nearly 7,600 federal HR managers have separated from their jobs, either voluntarily or by force, since Trump took office, according to data from OPM.

Taking into account those workforce reductions, the industry expert said shared service centers are “the right places” to consolidate whatever HR expertise remains in the federal government.

“Having said that, this also raises some obvious questions,” the industry expert said. “What will happen to existing shared service operations at places like the National Finance Center and Interior Business Center? And can OPM staff and operationalize this new shared service center effectively and in a reasonable timeframe? I’m sure that OPM has thought through these questions and more. The sooner they can be transparent about how they intend to approach these topics, the better.”

The launch of the new HR shared service center is part of the Trump administration’s “Federal HR 2.0” initiative, which OPM announced last year. The broader effort intends to streamline and consolidate HR services and IT platforms governmentwide.

“This shared service center is a milestone in our effort to streamline operations, reduce duplication and deliver high-quality service across government,” Kupor said Tuesday. “With the expertise and modern HR technology we have at OPM, we are well-positioned to make that vision a reality.”

For decades, agencies have used disparate systems to manage various HR services, such as payroll, benefits and retirement. Governmentwide, there are currently 119 different IT platforms in use for managing agencies’ HR functions.

A related part of the Trump administration’s “Federal HR 2.0” effort aims to consolidate those 119 systems into one — another long-time goal for the federal government. In a step toward making that consolidated HR platform a reality, OPM last year issued a new request for proposals (RFP), seeking a 10-year contract that could be worth more than $1 billion.

Despite its aggressive target launch date set for 2027, OPM’s HR consolidation effort recently hit a significant obstacle. Two major technology companies filed bid protests, after being cut prior to the final award phase of the OPM contract — something that will likely slow down the planned timeline.

A second industry expert, also speaking anonymously, said that taken with the context of the HR shared service center launch this week, “this is just how OPM signals to industry that there will be demand for whomever gets that award.”

If you would like to contact this reporter about recent changes in the federal government, please email drew.friedman@federalnewsnetwork.com or reach out on Signal at drewfriedman.11

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