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Monday, July 03, 2006

Rules for competition in IT consolidation called too restrictive

"Legislative restrictions on the government's ability to contract out jobs performed by civil servants could hinder a governmentwide attempt to streamline financial management computer systems, an industry representative told lawmakers earlier this week.

The Office of Management and Budget's lines of business effort asks agencies to consolidate information technology systems that support rote tasks in common functions such as financial management and human resources, to a handful of public or private sector service providers. OMB said the effort will save money through centralization.

In draft guidance released in late May, OMB said that once agencies determine that they're ready to replace their in-house financial management operations in favor of a shared service center, they must hold a competition that includes bids from the private sector.

In February 2005, OMB officially selected four federal agencies as financial management service providers. Agencies seeking to convert their IT operations would issue a request for proposals and evaluate bids submitted by these OMB-designated federal service centers as well as by private sector companies.

But language in a fiscal 2006 appropriations law requires agencies to rule out private sector bids that do not guarantee savings of at least $10 million or 10 percent of labor costs. That restriction does not apply to public sector bids and, consequently, the rules would put the private sector at a competitive disadvantage, Stan Soloway, president of the Professional Services Council, said Wednesday at a House hearing. "

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