Watchdog: OMB and GSA Need a Better Plan For Shared Payroll Services

A White House-initiated plan to bring more of a shared services approach to payroll faces risks because agencies haven’t mapped out an implementation plan or communicated potential cost savings to stakeholders, the Government Accountability Office found.

The Office of Management and Budget, as part of its ongoing embrace of shared services as a cross-agency policy goal, has been teaming with the General Services Administration on, among other projects, a new payroll software called NewPay, which would modernize agency technology and economize services to multiple agencies.

In September 2018, “GSA awarded a 10-year, $2.5 billion NewPay agreement to two commercial teams to provide payroll, and work schedule and leave management services using Software-as-a -Service,” GAO noted.  That cloud-based computing model “delivers one or more applications and all the resources—operating system, programming tools, and underlying infrastructure to run them—for use on demand.” 

The problem, GAO auditors said in the report dated March 7 but released on April 8, is that OMB and GSA “have not documented key decision-making roles and responsibilities related to the implementation of NewPay. Until they develop a monitoring plan which includes performance goals and milestones, transparent reporting tools, and a process for capturing lessons learned, and documenting key roles, they risk implementation challenges that could cause gaps in service or costly delays.” 

In addition, there is no process for giving customer agencies information on provider services, pricing and performance, which would ease their transition to the new system, GAO added. And the potential costs savings are not being sufficiently tracked, GAO warned, in a way that would document progress toward OMB’s goal of saving $2 billion over 10 years.

The shared services effort comes at a time when OMB is moving to relieve the Office of Personnel Management of many traditional duties and move them to GSA or the White House.

GAO noted that efficiencies from greater agency sharing of services have been pursued for decades under multiple administrations, including efforts by OPM that began in 2001. The Trump team’s  “proposed marketplace model has the potential to make the marketplace more effective by reducing demand uncertainty among shared services providers and providing more choices for customers,” auditors wrote after reviewing data from June 2017 to March 2019. GAO credited the administration with plans to create Service Management Offices and Task Order Review Boards to work with agencies to adopt standards for common management activities” for sharing payroll services, but noted that OMB and GSA’s plans are still being finalized.

GAO made four recommendations for enhancing chances for producing actual cost savings. They include having OMB’s shared services policy officer work with GSA to finalize a detailed monitoring plan for implementing NewPay, with performance measures and a timeline. Officials should also clarify the roles and responsibilities of agency players in cooperating to interpret payroll rule and regulations. Provider information on available services and prices should be updated and circulated, GAO said, and future cost savings should be better tracked to reassure congressional overseers that the effort is paying off.

OMB read the recommendations but neither accepted nor rejected them, GAO noted, saying only that it may update its shared services policy in the future.