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Monday, September 25, 2006

Financial line of business still too murky

"Federal officials have released the final version of guidance for the Financial Management Line of Business initiative, but some of the policy-makers and analysts who are expected to interpret and use it say it contains too many gray areas.

“The federal landscape is littered with examples of great technological and business solutions that failed to deliver the expected and promised results because the government requirements process itself was unclear and/or constantly shifting,” said Stan Soloway, president of the Professional Services Council, at a hearing on the initiative.

The Office of Management and Budget and the General Services Administration’s Financial Systems Integration Office (FSIO) issued the guidance Sept. 18. The Financial Management Line of Business Migration Planning Guidance is designed to help agencies as they move their financial management systems to shared service providers. A draft version was released March 15.

“The migration planning guidance is an important step toward establishing increased transparency that will foster efficiencies in federal financial systems and operations,” said Daniel Werfel, OMB’s deputy comptroller.

The initiative aims to reduce duplicative financial programs. Some agencies will be designated shared service providers and will handle financial management for other agencies. Some agencies may choose to contract with private-sector companies instead.

The intent is to allow most agencies to dispense with the details of running the systems so they can dedicate their resources to pursuing their core missions.

The guidance describes in detail various aspects of the migration, such as the elements of a service-level agreement and the requirements that all shared service providers must follow.

It gives an overview of how to measure performance and offers best practices for managing the changes within an organization as it shifts to a shared provider.

The guidance directs agencies that plan to move their operations to hold a competition for the work that complies with OMB Circular A-76.

The agency also must track the performance of the chosen provider, according to the document.
But some elements are missing. For example, the guidance states that details on the reporting requirements for the performance measures will appear in a future version.

The guidance further states that future versions will include, among other things, rules on evaluating shared service providers and arbitrating disputes over bids and contracts.
Later versions also will address principles for developing federal shared service provider and commercial partnership agreements, according to the document.

Rep. Todd Platts (R-Pa.), chairman of the House Government Reform Committee’s Government Management, Finance and Accountability Subcommittee, said he is pleased that OMB is addressing issues about the initiative. His subcommittee has held several hearings on the topic.
Platts said agencies will benefit from OMB’s clarifications on A-76 rules, especially regarding Most Efficient Organizations joining the competition with private-sector providers.

He also said the guide’s details about service-level agreements were necessary, because agencies are already moving forward on them. Several agencies have signed agreements to send their financial management work to the private sector.

“We do have a long way to go, however, and some of the key stumbling blocks have yet to be addressed,” Platts said.

Agencies are modernizing their financial management systems now, and although they should be moving the work to shared service providers, they are not, as the subcommittee learned at its June hearing.

The Small Business Administration and the Labor Department have outsourced their financial management duties to private companies — Corio and Oracle, respectively.

However, Linda Combs, controller of OMB’s Federal Financial Management Office, said neither company has been deemed an official shared service provider.

Combs said the initiative is evolving, and OMB is ironing out the details. In a memo accompanying the guide, she wrote that officials are still evaluating the policies."

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