The Office of Management and Budget sent a memorandum on Monday calling for federal agencies to use a shared service solution for financial management systems.
The memo, written by OMB Comptroller Danny Werfel, said that traditional agency-specific, large-scale financial systems have led to poor results in terms of cost, quality, performance and reporting.
“In many cases, these projects – designed to meet agency-specific business processes and system requirements – have resulted in substantial cost overruns, systems that are so large and complex that they cannot be easily updated and lengthy delays in planned deployments or needed improvements,” Werfel wrote. “In addition, the highly fragmented nature of financial management systems across Federal agencies has contributed to inconsistencies in financial data, making it challenging to provide transparency into Federal finances.”
The memo directs all executive agencies to use, with limited exceptions, a shared service solution for future modernizations of core accounting or mixed systems going forward.
By using shared services, Werfel said the federal government will benefit in many ways:
- better enable the Government to strategically source software providers, hosting, and (potentially) transaction processing,
- reduce system implementation risks and timelines, and
- improve data quality and provide greater transparency into Federal finances, including through the production of auditable fmancial statements at the government-wide level.
OMB and the Department of Treasury will analyze the landscape of existing shared services to identify capability caps, evaluate various agencies’ financial and related mixed system needs, identify the need for new systems to be shared and develop a blueprint for a strategy to implement them.
There will be a designated federal shared service provider for each core financial management system that will fully interface with subsidiary systems, such as payroll, travel and procurement, as well as Treasury’s payment, collection and central reporting systems, the memo says.
The FSSP will offer these subsidiary systems either directly or through a subcontract with other SSPs or agency systems. In limited cases, if a common solution is not available, FSSPs may propose to create new interfaces with existing agency solutions, the memo says.
“Agencies with near-term financial systems modernization needs should begin planning to adopt a shared-services approach, consistent with this guidance, that will provide the agency with future financial systems infrastructure, application, or transactional processing services,” Werfel wrote. “OMB and Treasury will begin working with these agencies immediately to develop plans consistent with this guidance.”