The Office of Management and Budget is telling agencies to stop building costly, agency-specific systems when they modernize their financial management systems. Instead, going forward, agencies must use a federal shared-services provider when updating their accounting systems, according to a new memo from OMB Controller Danny Werfel.

“The traditional approach to agency-specific, large-scale financial systems modernization projects in the federal government has often led to poor results in terms of cost, quality, performance, and reporting,” Werfel wrote in the memo, dated March 25. “In many cases, these projects — designed to meet agency-specific business processes and system requirements — have resulted in substantial cost overruns, systems that are so large and complex that they cannot be easily updated and lengthy delays in planned deployments or needed improvements.”

The new policy, which has been in the works for the past few months, will be to leverage existing investments in federal shared-service providers (FSSPs), made up of common systems and platforms.

Use of FSSPs for all new agency proposals will help combat the fragmentary, scattershot approach common to agency financial-management systems, Werfel wrote. Using shared services will also reduce the time it takes to implement systems and improve data quality.

Perhaps most important, use of shared services “will also allow agencies to focus on their core missions,” Werfel wrote.

The memo tasks OMB and the Treasury Department with surveying the existing framework of federal shared-service providers to assess current capabilities and gaps.

“We recognize that, to be able to meet agency needs, the FSSPs will need to enhance service offerings, expand technology and transaction processing capabilities, and have a strong governance structure,” Werfel wrote.

But agencies will also have to do their part, by adjusting and adopting to standardized processes.

Treasury’s Office of Financial Innovation and Transformation will evaluate agencies’ steps to comply with the new directive.

Werfel said OMB’s guiding principle in pushing for federal shared services is to ensure the best value for the government. However, OMB will consider funding commercial shared services if agencies can prove a commercial provider would be more cost-effective.

In the next few months, OMB will issue additional guidance on the technology and business requirements for agency financial systems.

Overall, the memo aims to codify the use of shared services in the financial-management sphere, which has long been an uphill battle.

Agency chief financial officers have frequently expressed skepticism about moving to shared-service providers for their accounting systems. In an October 2012 survey, most agency CFOs said moving to shared services for financial-management platforms was not among their top priorities.

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