Private sector may be invited to join in human resources consolidation

As part of a project to consolidate human resources systems across government, the Office of Personnel Management is in the process of creating an avenue for the private sector to vie against existing federal shared service centers for agencies' business.

Norman Enger, OPM's director of the human resources line of business program management office, said a request for proposals is expected this summer.

The Office of Management and Budget-led lines of business initiative is an effort to centralize and consolidate federal information technology systems, including those for human resources, as well as other back-office functions such as financial management and cybersecurity. The goal is for agencies to use one of a limited number of approved service providers.

OPM is the managing partner of the human resources consolidation project, which was launched in April 2004. OPM, along with OMB, works with 22 other agencies in implementing the initiative.

Service providers must offer three core functions: payroll processing capabilities, benefits management systems and personnel action processing systems, in order to compete for agency business.

Five agencies have been selected as shared service providers: the Agriculture Department's National Finance Center, the Interior Department's National Business Center and the departments of Defense, Health and Human Services and Treasury. In addition, the Finance and Business centers, Defense and the General Services Administration have been approved as payroll providers.

About 1.5 million of the 1.8 million employees in the federal workforce receive services through the shared service centers, Enger said.

Several significant agency migrations have driven this consolidation: the Housing and Urban Development Department's move to Treasury's human resources system; the Coast Guard and the Transportation Security Administration's move to the National Finance Center human resources and payroll system; and the Transportation Department's shift to the National Business Center's human resources and payroll system.

Federal payroll processing has been reduced 30 percent with the consolidation of 26 separate agency processes into the four providers, Enger said.

All human resources service providers must conform to a document known as the business reference model (BRM), which provides a governmentwide framework for human resources management. A second version of this document, representing the work of nearly 50 people from 14 agencies, was finalized in January and released earlier this month.

"The BRM really becomes the guiding document relative to what federal HR systems should be doing," Enger said.

He said changes to the revised document are not radical, but significant. Among them is the consolidation of three compensation management processes into one.

By September, parts of the document will be fleshed out in greater detail so private sector vendors developing solutions for the shared service centers will know how to comply with governmentwide requirements, Enger said.

While solid budget estimates are not available at this point, he said an OMB-commissioned study by a private sector group estimated in January 2005 that $1.1 billion could be saved over 10 years as agencies shut down old human resources systems and migrate to the shared service centers.