OMB: Questions remain in effort to consolidate financial systems

Uncertainties cling to a governmentwide mandatory effort to consolidate information technology systems for financial management, Office of Management and Budget officials acknowledged Wednesday.

"There's a lot of questions out there that we still need to answer," said Karen Evans, OMB administrator of e-government and information technology. She testified at a hearing called by the House Government Reform Subcommittee on Government Management, Finance and Accountability.

OMB spearheads an effort initiated in 2004 to consolidate the government's financial management systems within a handful of agencies, which will charge fees to their client agencies. The General Services Administration and the departments of Interior, Treasury and Transportation have been designated as service providers. Private sector companies also are eligible to compete.

Agencies will move to the selected providers as their systems begin to require major upgrades or replacement. Whether public or private, service centers will at a minimum remotely host financial management hardware or software. At a maximum, agencies can outsource their entire financial management operation to a service center, an option most viable for small agencies. All agencies will remain accountable for their financial processes, however.

Despite years of work behind the effort, Wednesday's hearing made apparent that many questions remain about how the provider and customer relationship will operate. "I think there's a lot of uncertainty, not 'is this a good initiative, a worthy goal,' but just [about] how to do it," said Rep. Todd Platts, R-Pa., the subcommittee chairman.

For example, what happens if an agency is dissatisfied with the service it receives? OMB has said agencies can transition to another service provider and the original service provider will have to cover the costs of the switch.

"We're very concerned [about] that idea," said John Marshall, a vice president of Fairfax, Va.-based CGI Federal, a financial services company. Paying a customer to go away is not a commercial practice, he noted. CGI plans to compete for federal business as a private service provider.

There also are concerns about whether federal providers will operate on a level playing field. Most interagency transactions are covered under the 1932 Economy Act, which permits agencies to recover the costs of providing a service but not to accumulate additional funds. But some federal service providers are governed under legislative language that allows them to keep up to 4 percent of revenues for capital improvements.

Evans said OMB is examining the possibility of using congressionally appropriated money from the e-government fund to pay for capital improvements for the service providers that cannot accumulate funds. However, according to the Government Accountability Office, competitive pressure among service providers prevent agencies that can retain 4 percent of revenue from doing so.

Speaking during a hearing break, Linda Combs, OMB's controller, acknowledged that aspects of the consolidation still need to be worked out. "We're working on something that's not been done before, and we're taking a deliberate look at every step we take," she said.