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Thursday, June 08, 2006

Draft guidance requires agencies to compete systems with private public shared-services providers

"The Office of Management and Budget has added an unexpected and somewhat confusing twist to the Financial Management Line of Business initiative, especially for agencies with large, in-house legacy systems.

Agencies or bureaus with 10 or more employees operating financial systems that do not comply with Financial System Integration Office requirements must now compete for, at minimum, the hosting and application management of their financial systems. The competitions would be with public and private-sector shared-services providers under OMB Circular A-76.

In a memo, OMB said that with limited exceptions, an agency can rely on its in-house FM system only if officials can demonstrate that it represents 'best value and lower risk.'

The draft migration guidance issued last month requires agencies to release a single request for proposals for both public and private shared-services providers to respond to, publish it on FedBiz-Opps.gov and follow the Federal Acquisition Regulations as much as possible.

The guidance also includes a competitive framework, template for migration project plan, change management best practices and a menu of services that financial management shared-service providers can deliver. Agencies and vendors have until June 12 to comment.

Agencies with fewer than 10 employees running their financial- management systems or those that already have outsourced their applications to the private sector would go through the normal FAR process.

But the decision to use A-76 has left some shared-services providers unclear. 'We don't know what this means for us,' said one federal SSP manager, who requested anonymity. To date, A-76 competitions primarily have involved head-to-head competitions between agency organizations and vendors. Now, OMB wants to bring in a third player, or more—as shared-services providers—to compete for another agency’s jobs. "

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