Treasury hub for financial management services has room to grow, GAO says
A Treasury Department-run financial management system has seen a big uptick in usage over the past few years, though the shared service is still underutilized amid a White House effort to push agencies in its direction, according to a new watchdog report.
In examining Treasury’s Financial Management (FM) Marketplace, the Government Accountability Office found substantial growth in use of the virtual marketplace that provides financial management shared services and solutions to agencies.
That growth — from $3 million in procured services and solutions in fiscal 2023 to more than $183 million from four Chief Financial Officers Act agencies in FY2024 alone — came before a March executive order directing departments to consolidate core financial systems via the FM Marketplace.
The order was issued alongside another EO that together set the stage for the country’s transition away from paper-based payments toward electronic methods. Included in that second order was a callout for all CFO Act agencies to use “standard financial management solutions available through” the FM Marketplace, which is run by Treasury’s Financial Management Quality Service Management Office (FM QSMO).
The GAO, which began its study in October 2024 and completed its work this month, reported that the FM QSMO expects additional surges in procurements through the FM Marketplace — no surprise given the March orders. The Treasury office reported to the watchdog that 38% of CFO Act agencies still host their core financial systems on premises.
The FM QSMO expects more movement toward the FM Marketplace based on the executive orders, that 38% share of late adopters, and estimates that 72% of CFO Act agency financial systems will need “significant modernization by 2035.” Most small and independent agencies are already using federal shared service providers (FSSP) available in the FM Marketplace, the FM QSMO told the GAO.
The Treasury office also reported progress in its efforts to develop and implement baseline standards for marketplace-hosted solutions and services and help agencies with the modernization of core financial systems, the GAO noted.
Despite the apparent momentum toward the marketplace, the GAO asked the FM QSMO for its opinion on the top impediments to agency adoption. The watchdog agreed with four of Treasury’s self-reported challenge areas: securing modernization funding, coordinating across functional areas, migrating systems with changing requirements, and a lack of communication to stakeholders on the goals behind implementing financial management shared solutions.
“While shared services offer potential for optimizing government resources, we have previously reported that past efforts to migrate to shared services have not consistently increased cost savings, efficiencies, or customer satisfaction,” the GAO concluded. “The challenges and lessons learned identified in this report offer important considerations as OMB develops guidance under the March 2025 executive order for the latest initiative. We will continue to monitor these efforts.”
