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Tuesday, July 25, 2006

Labor's deal preceded OMB guidance; Rep Platts questions compliance

"Depending on who you talk to, the Labor Department's decision to tap the private sector for financial-management hosting services is a clear example either of what is right or wrong with the way the White House has pursued the Financial Management Line of Business initiative.

For the agency and the Office of Management and Budget, Labor's deal with Mythics Inc. of Virginia Beach, Va., personifies the crux of the LOB concept: By outsourcing a nongovernmental function, Labor can refocus both money and staff on mission-specific needs.

For critics on Capitol Hill, it's an example of moving too fast, too soon.

Even though Labor signed the deal before OMB finalized its migration guidance, Labor officials said they have no regrets.

'We're glad we selected the approach we did,' said Valerie Harris, Labor's associate deputy CFO for financial systems. 'We did meet the letter of the requirements of what OMB is trying to do.'

But Rep. Todd Platts (R-Pa.), questions whether the administration, and agencies, are prepared to make the switch.

While supportive of the concept, Platts, chairman of the Government Reform Subcommittee on Government Management, Finance and Accountability, has repeatedly raised concerns that OMB is moving too quickly, forcing agencies to assess their financial-management systems and either become a shared-services provider or migrate to one if their systems need an overhaul.

This is problematic, he has said, because OMB has yet to finalize its migration guidelines that spell out specifics on whether and how an agency should move to either a federal SSP or the private sector.

'The situation with Labor was a new wrinkle for this whole thing,' said Mike Hettinger, subcommittee staff director. “Everybody admits that there is merit to consolidating financial management, [but] what we have to do is say look, the guidance is incomplete, but we’re asking agencies to consider migrations.”

OMB’s draft migration memorandum, released in May, stated that, with limited exceptions, an agency only could rely on its in-house financial-management system if officials can demonstrate that it represents the best value and lowest risk.

The draft also requires agencies to release a single request for proposals for both public and private shared-services providers to respond to, publish it on Fedbizopps.gov and follow the Federal Acquisition Regulations as much as possible. If the task is performed by 10 or more agency employees, the competitions must comply with OMB Circular A-76, which details how agencies compete inherently commercial federal positions with the private sector.

But just before OMB issued the memo, Labor awarded Mythics a five-year, $5.3 million contract in March.

The contract raised eyebrows because Mythics has not been designated a shared-services provider, causing Platts to wonder if Labor’s contract would be in compliance with OMB’s migration guidance, when finalized. "

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