Private sector grows skeptical of IT consolidation efforts

Flaws in the Bush administration's attempt to streamline agency management systems are frustrating potential private sector participants and putting the initiative at risk for derailment, industry representatives said Thursday.

The lines of business effort, backed by the Office of Management and Budget, is an aggressive attempt to consolidate agency information technology systems that support common functions such as financial management and human resources. The goal is to move all agencies to a handful of federal or private sector service providers.

But murky competition guidelines for prospective service providers, congressional skepticism, union opposition and ambiguity surrounding interagency contracting are poised to sink the initiatives, industry representatives said at the FedFocus 2007 conference hosted by the Reston, Va., market research firm INPUT.

Speaking before an audience composed mostly of industry officials, Amy Laderberg O'Sullivan, counsel in the government contracts practice group at Crowell & Moring, a Washington, D.C.-based law firm, said the lines of business initiative has noble intentions but is bogged down in implementation.

OMB has said that public-private competitions under the dictates of Circular A-76, the rule book agencies use when they open federal jobs to bids from the private sector, will be required for federal agencies outsourcing their financial management systems under the lines of business initiative. Private sector competition for agency IT work is an important way of keeping prices low and service satisfactory at cross-agency service centers, OMB has said.

In a competition framework released in late September, OMB said that once agencies determine 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.

Government officials have said that agencies and contractors vying to be selected as providers under the human resources line of business likely will follow the A-76 rules too, but a competition framework has not been released.

In response to questions raised by industry officials, OMB spokeswoman Andrea Wuebker said the government is using established procurement laws, policies and regulations to guide the development of the lines of business.

"As we continue to work through implementation issues, the intent is to take advantage of both private and public competitions in order to ensure we deliver the best services at the best prices in the interest of the American taxpayer," Wuebker said.

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