Federal Efforts to Promote Shared Services Resulted in Some Cost Savings and Efficiency Gains, but Challenges Impeded More Widespread Adoption

		Efforts to Promote Shared Services for HR Activities Contributed to Cost Savings and Cost Avoidance

OMB’s efforts to promote HR shared services resulted in cost savings,  cost avoidance, and more consistent service delivery. This resulted in an estimated savings and cost  avoidance of more than $1 billion between fiscal years 2002 and 2015. Second,  the efforts have also experienced marketplace challenges, which involve  difficulty obtaining funding to invest in shared services, demand  uncertainty among providers, and limited choices for customers. Limited interagency collaboration. GSA also developed guidance for selecting and migrating to a shared  services provider. OMB and GSA Introduced a New Shared Services Marketplace Model, but Could Strengthen Their Implementation Approach

In fiscal year 2018, OMB and GSA introduced a new marketplace model  for shared services that seeks to better meet the needs of customers and  providers by offering more choices for purchasing shared services. Specifically, we found OMB and  GSA do not have a plan to monitor the implementation of an initiative  designed to determine how well the new marketplace model works as  intended. To ensure that agencies are adhering to the standards developed by the  Business Standards Council and to provide greater oversight and  accountability for shared services migrations, OMB and GSA are working  on plans to create Task Order Review Boards (Review Boards) for  different types of services, such as payroll or accounting. Adopting key change management practices can also help  managers recognize and address agency cultural factors that can inhibit  reform efforts. A monitoring plan could help OMB and GSA avoid gaps in service or costly delays as agencies  transition to the new model for obtaining payroll and work management  services. In their  action plan, OMB and GSA included performance measures for goals  such as customer satisfaction. However, new legislation  intended to promote IT modernization efforts may address these  challenges. OMB’s Shared Services Policy Officer should work with GSA to finalize a  plan for monitoring the implementation of NewPay. OMB staff did not  agree or disagree with our recommendations. Appendix I: Objectives, Scope, and Methodology

This report: (1) identifies the progress and challenges associated with  federal shared services initiatives for selected human resources (HR) and  financial management activities, and (2) assesses the Office of  Management and Budget’s (OMB) and the General Service  Administration’s (GSA) actions to address those challenges. We reviewed planning and performance documents and we interviewed  officials from (1) OMB and GSA, the agencies that oversee shared  services policy and guidance, and (2) the Office of Personnel  Management (OPM) and the Office of Financial Innovation and  Transformation (FIT) within the Department of the Treasury (Treasury),  agencies that oversaw past shared services initiatives and continue to  play a key role developing government-wide policy for HR and financial  management shared services. We also interviewed subject-matter experts who were involved in public  and private shared services migrations as customers, providers, or  consultants.
Why GAO Did This Study

The federal government can reduce duplicative efforts and free up resources for mission-critical activities by consolidating mission-support services that multiple agencies need—such as payroll or travel—within a smaller number of providers so they can be shared among agencies. However, migrating to a shared services provider has not consistently increased cost savings, efficiencies, or customer satisfaction, according to OMB and others who have observed these migrations.
GAO was asked to review previous shared services initiatives. This report: (1) identifies the progress and challenges associated with federal shared services initiatives for selected HR and financial management activities and (2) assesses OMB and GSA's actions to address those challenges. GAO analyzed planning and performance documents and interviewed officials from selected customer and provider agencies and from agencies involved with shared services policy and guidance. GAO also interviewed subject-matter experts familiar with shared services. GAO reviewed steps OMB and GSA are taking to identify and address challenges from past migrations to improve shared services performance.

What GAO Found

Efforts to promote greater use of shared services for human resources (HR) and financial management activities resulted in some cost savings and efficiency gains, but challenges impeded more widespread adoption. For example, the Office of Personnel Management estimates that shared services for HR, including payroll resulted in more than $1 billion in government-wide cost-savings and cost avoidance between fiscal years 2002 and 2015. However, challenges include limited oversight, demand uncertainty among providers, and limited choices for customers. To address these challenges, the Office of Management and Budget (OMB) and the General Services Administration (GSA), as the shared services initiative leaders, introduced a new marketplace model in 2018 meant to better meet the needs of customers and service providers by offering more choices for purchasing shared services (see figure). They are also working on plans to create Service Management Offices and Task Order Review Boards to work with agencies to adopt standards for common management activities.
GAO found that OMB and GSA were following some key change management practices such as improving interagency collaboration in their design of the marketplace model. However, implementation weaknesses may limit their success. For example, OMB and GSA do not have a plan to monitor the implementation of NewPay, a 2018 payroll shared services initiative designed to determine how well the new model works. A monitoring plan which includes performance goals and milestones could help OMB and GSA avoid gaps in service or costly delays as agencies transition to the new model for obtaining shared services.

What GAO Recommends

GAO is making four recommendations to OMB including to work with GSA to finalize a plan for monitoring the implementation of NewPay, among other actions. OMB staff did not comment on GAO's recommendations, but noted that OMB may update its shared services policy in the future.