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Monday, August 13, 2007

Small in a big world

A tiny federal agency that provides grants to African enterprises and community organizations pays a shared-services provider to manage its financial transactions. The African Development Foundation has so few transactions that it could track them on a spreadsheet. Nevertheless, the micro-agency must comply with the same requirements for using certified financial management systems and internal controls as its super-sized siblings — the Defense and Homeland Security departments, for example.

The small foundation is among dozens of agencies that operate with staffs and budgets a fraction of those of the largest federal agencies. Think of them as the mom and pop stores of the federal government. Their size makes it difficult for them to meet the voluminous reporting and governance requirements established by Congress and the Office of Management and Budget, but they must play by the big boys’ rules.

Just as legislation affects all agencies regardless of size, the same is true when OMB issues a new policy. Small agencies must toe the line. Small-agency CIOs must be able to show OMB that their information technology spending produces the intended results and improves agency performance. They must produce documentation to show that their systems and data are secure, said Andrea Wuebker, an OMB spokeswoman.

Likewise, small-agency chief financial officers must accurately account for their resources and use internal controls to minimize waste and abuse.

To handle complex administrative functions and mandatory financial reporting requirements, many small agencies rely on shared-services providers, such as the Interior Department’s National Business Center, the Agriculture Department’s National Finance Center and the General Services Administration. Small agencies are ahead of big agencies in using shared-service providers because they can’t afford a big infrastructure, Forman said.

Shared-services providers offer small agencies the benefits of standardization in human resources, payroll and financial management transactions. That’s a major theme of OMB’s Financial Management Line of Business. OMB wants all agencies to move to public or private shared-services providers when they upgrade or acquire new financial systems.

For small agencies, however, shared-services also have a downside, Westfield said.

Small agencies have experienced continuous fee increases and added costs for system upgrades at the same time more agencies are using shared-services providers, he said.

Small agencies do share a common concern about IT governance as OMB presses forward with its Financial Management Line of Business, said Anton Porter, deputy CFO at the Federal Energy Regulatory Commission. Porter is also the small-agency liaison to the CFO Council.

Many small agencies that have already outsourced their financial management operations to public shared-services providers are in a quandary about how they would go about conducting competitions among public and private shared-services providers, Porter said. To prepare for the type of competitions that OMB and the General Services Administration require under the Line of Business rules, an agency would be in the awkward position of having to depend on its current shared-services provider to compile a list of requirements that would satisfy the agency’s business needs

-Mary Mosquera, FCW.com

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