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Thursday, March 27, 2008

Agencies still resist outsourcing financial management, expert says

This March marks the third anniversary of an Office of Management and Budget program to consolidate financial management systems across government, but some agencies still are resisting the move, according to an industry expert.

Under OMB's financial management line of business, agencies are asked to outsource their operations to shared service centers, which are run by an agency that has set itself up as a centralized clearinghouse for those services. By outsourcing the operations, agencies can reduce the IT infrastructure needed to support billing and accounting systems such as servers, software, data warehousing and support personnel.

For fiscal 2008 and in fiscal 2009 budget requests, agencies collectively have set aside more than $1.75 billion to comply with the financial management line of business, according to a report released March 26 by INPUT, a federal consulting firm based in Reston, Va.

Some Cabinet-level agencies have resisted outsourcing to a shared service center because they already are consolidating many IT operations and because of the common fear that they will lose control of their financial operations.

Smaller agencies have adapted to the shared services model faster than larger agencies, according to the INPUT report. To date, 70 small and independent agencies have signed up with a shared service center.

Four agencies offer financial management services to agencies: the General Services Administration and the departments of Transportation, Interior and Treasury. GSA should award the contract for the commercial shared service centers in fiscal 2008, but the program appears to be on hold.

-Gautham Nagesh, GovExec.com

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