The Department of Housing and Urban Development became the first cabinet agency to migrate its financial management systems to a federal shared services provider. HUD moved two major parts of its financial system to the Treasury Department’s Administrative Resource Center on Oct. 1.
Six or seven Homeland Security Department components are in discussions to move their financial management systems to a federal provider.
The Veterans Affairs Department and three or four other cabinet agencies are interested in following HUD’s lead.
All of this demand has pushed the financial management line of business (FM LOB) over the precipice and is forcing the government to figure out how to better manage, plan and budget for shared services after more than a decade of attempting to figure it out.
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To that end, the Office of Management and Budget announced Oct. 22 a new governance and oversight structure for the financial management shared services initiative.
“The establishment of the governance model, which I do believe, is the first time that we’re actually going to bring together all the different elements, all of the different components of shared services and begin as a government to manage them as an enterprise,” said Dave Mader, the acting deputy director for management at OMB and controller Thursday, at an event hosted by the Partnership for Public Service in Washington. “A vision without a plan is nightmare. We have laid out an incredibly aggressive plan for 2016.”
Mader said it’s not just a matter of creating another governance board to oversee the FM LOB, which has been done several times over the years, including the last time in 2004 with the creation of the Federal Systems Integration Office (FSIO) and again in 2006 with the development of a concept of operations. OMB closed down FSIO in 2010 and opened up the Office of Financial Innovation and Transformation.
But this time OMB is trying to correct its mistakes of the past by creating a new Unified Shared Service Management Team to drive the implementation of shared services across government.
“If you think about how we deliver shared services today and how we are going to deliver shared services in the future, our shared services providers are actually based in other departments, whether it’s Treasury or Interior or Agriculture or Transportation. One of the challenges we wrestled with is how do we create an mechanism to take the strategy and that governmentwide enterprise direction, and actually drive that into shared services providers,” he said.
Mader said the Unified Shared Service Management Team works with the providers, customers and industry to meet the goals detailed by the governance board.
The USSMT is housed at the General Services Administration and led by Beth Angerman, who is on detail from the Treasury Department. Angerman led the Office of Financial Innovation and Transformation for the last two-plus years.
Mader said the Unified Shared Service Management Team kicked off in October and will include 10-to-15 federal employees, who will be supported by contractors.
The governance board is made up of OMB, GSA, the Office of Personnel Management and Treasury as well as the CXO councils; CIO, CFO, chief acquisition officers and chief human capital officer and agency customers.
Mader said the first meeting of the governance board will happen in mid-to-late November.
“This is the group that will set the strategy. This is the group that is going to take the vision and create the roadmap for the next several years,” he said. “It also, and I think this is going to be important going forward, in tight budget times we need to seriously think about where we are making our investments. In the past what happened, quite candidly, since everybody was operating in their own silo, they would make decisions. Maybe when we step back and look at that we only have a finite of funds do we want to spend that fund in financial management or grants management or acquisition or in HR, this body will actually, I believe going forward, much more influence how we set budgets and how we execute budgets going forward.”
John Marshall, the founder and CEO of the Shared Services Leadership Coalition, said OMB is following many of the recommendations developed by the good government community for how to make shared services work.
“It’s the first step in a long journey, and obviously we think more needs to be done,” he said in an interview with Federal News Radio. “They are very inclusive and reaching out to all the stakeholder communities. It’s going to be a challenge to make all of those different constituencies work together, but if they keep their eye on the ball and head to the true north that has got everyone excited, I think we can get there.”
Marshall said the shared services effort has ebbed and flowed over the last three decades, and the key missing ingredient was the lack of a roadmap to sustain the efforts over the long term.
Marshall’s organization is developing a shared services bill, specifically to address some of the long-term challenges around funding.
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“Their current financing mechanisms, whether it’s a working capital fund or a franchise fund, haven’t been updated in at least 20 years with the GMRA legislation that created franchise funds,” he said. “And they all have different authorities and different business practices that they allow, and you have different authorizing committees in Congress changing them, and you have different attorneys interpreting their authorities in the agencies that house shared service providers. We need to standardize those.”
Marshall said the legislation his coalition is developing would create a new federal shared services enterprise fund.
“We would move the providers into the fund. Everyone would be under the same terms, same authorities, same abilities to charge a premium and same ability to modernize through a reserve fund,” he said. “That would allow them to compete, modernize, scale and grow with the market and that is the key missing ingredient.”
Mader continued to address the need to fund the initiative by saying it’s something OMB understands needs to change and his office is working through what that means.
“This is a business and this can’t exist as a big and growing business if we have to use what we have used in the past. The working capital fund and franchise fund, they have served people well to a point,” he said. “But when you step back and think about how large this is starting to be, we know there needs to be a different model.”
Mader said OMB may propose a legislative change as part of the President’s fiscal 2017 budget request.
“It is not a sustainable model going forward,” he said. “We could get through 2016, but we cannot get to where we want to go unless we fix this.”
Marshall said there is a growing interest in Congress for shared services legislation, particularly in the Senate.