David Mader came back for a second tour of duty in government to work on some of the most pressing federal financial management issues.
As the Office of Management and Budget’s Controller, Mader’s priorities span more than just finances, but technology and acquisition as well.
But it’s shared services that, he said, drew him back to government after spending the last 11 years at Booz Allen Hamilton. Mader, who retired after more than 30 years at the IRS, took over as controller in July and has been putting some fuel behind the 18-month effort to get agencies to move to financial management shared service providers.
Mader said he’s one of a handful of “zealots” in government who are committed to making shared services work in multiple back-office functional areas.
“I actually introduced the IRS back in the early 1990s to shared services across the that bureau,” Mader said in an exclusive interview with Federal News Radio. “While it’s only a bureau, it’s a large bureau. What I realized in that experience is that whether the budgets are increasing or decreasing, what we really want to do as government executives is to find the most efficient, effective ways to deliver those mission support organizations so that we can actually take those dollars we saved and actually move them to citizen facing operations. What I realized in the IRS and I did this a lot when I was in the private sector, saw for other private sector clients how you could actually effectively deliver shared services across large organizations. That was one of the motivations for coming back into government.”
Additionally, he said over the last two years, the Treasury Department Office of Financial Innovation and Transformation’s (FIT) tremendous progress in developing standards, catalog of services and guidance gives him hope that the time for shared services has finally arrived for the government.
Understanding the new business model
“A lot of departments and agencies have done consolidations. Consolidations are very different than shared services. Shared services is a very different business model in a sense you are creating an environment in which you have buyers and sellers,” he said. “That I think is part of the challenge we’ve had in the past is people understanding this is a different kind of business arrangement between the shared service provider and the agencies they want to attract as their customers.”
Mader said FIT is helping the providers and customers explain and detail what they want from each other. And that’s a big difference than previous attempts to move to shared services, which besides payroll, which OMB mandated in 2003, didn’t take off.
Over the last year, FIT has developed an assortment of documents and acted as a matchmaker of sorts to bring potential customers together with one of the four providers.
Mader said the next two years are critical for the program.
“We also this year are going to be introducing customer satisfaction surveys,” he said. “I think creating the new business model is key to success going forward.”
The Department of Housing and Urban Development is moving to Treasury’s Administrative Resource Center for financial management services. HUD will be the first cabinet-level agency to move to a federal shared service provider.
Mader said HUD already had one successful software release and others are expected later this year.
While HUD is making progress, OMB and agencies continue to fight against a host of challenges. The Commerce Department’s move to the Transportation Department’s Enterprise Services Center (ESC) has struggled over the last six months.
Additionally, the General Services Administration got out of the financial management shared services business altogether, transferring its 30 or so small agency customers to the Agriculture Department’s National Financial Center. NFC will continue to host the same software, CGI’s Momentum Financials application, that GSA offered.
“To promote greater efficiency, the General Services Administration is transitioning shared financial management services to the U.S. Department of Agriculture,” said a GSA spokeswoman by email. “The shift will have no impact on client services or employees’ wages and functions. GSA is committed to working with USDA to ensure that the process is seamless for all parties involved.”
GSA expects the transition to be done by March 22.
But a recent GSA inspector general report says the agency needs to do more planning, including creating a contingency procedure in case the transition takes longer than expected.
“Such plans should include an assessment of the effect a possible transition to SAP would have on GSA’s day-to-day business processes and financial operations, as well as the agency’s ability to access historical financial data,” the IG wrote. “Further, GSA needs to develop plans for how its financial operations and management will function in the future. This includes developing the policies, procedures, and guidance that identify the responsibilities, authorities, and functions of GSA staff and management, as well as those of Agriculture.”
GSA agreed with that recommendation and said they are making progress toward better planning and execution.
But it’s more than just the lifting and shifting of systems, but whether the four shared service providers, which along with Treasury and Transportation includes USDA and the Department of Interior, can handle the growing demand for their services.
Answering the supply vs. demand challenge
OMB in 2010 froze new investments in financial management systems so several agencies are ready for new software.
“We have a demand pipeline that is developing and growing. The question is will those four service providers be able to meet the demand of the additional cabinet level organizations that are going to move over time? That analysis we are undertaking this fiscal year,” Mader said. “So I think at the end of the fiscal year, we will be in a much better position to say, ‘When I look at the pipeline over the next two-to-three years, the supply and the demand, gee, I need to make a change to what I’ve been doing.’ I don’t know if that means expanding existing providers or do we bring in a commercial provider. I just don’t think we know yet and it hasn’t been an impediment to the progress we have been making. But I know it has to be addressed.”
Mader said he expects between six and 10 agencies to move to shared service providers over the next three years.
OMB and FIT also are studying changes needed to how the providers invest in new technology or people under the Economy Act, which doesn’t let provider agencies collect more than the cost of the services from the customer agencies under an interagency agreement.
Mader said there is a structural impediment to the current shared services approach, but the solution isn’t clear.
“Another set of studies that are underway are to look at across the four providers, projecting to the future as the demand begins to grow over the next two years, what will that do to their investments and your ability to make investments? We will study whether there needs to be any structural changes that we could do administratively, or any legislative changes that we would want to work with Congress on,” he said. “We know now what is going to be potential moves in 2015 as well as 2016 and 2017. That’s why we are in position to do this supply-demand analysis and decide whether we need to expand a provider, do we need to bring in another provider whether federal agency or commercial provider. It will not in the short run jeopardize any of the movements, but it’s something we have targeted for completion this year so that we can make adjustments for 2016 and 2017.”
Part of the supply and demand discussion is the role of industry. Mader said he’s heard the concerns that contractors are feeling a bit left out of this effort, but quickly reminds any of those who question the strategy that the four federal providers use commercial software that needs support and upgrades from those vendors.
“I feel very good about the progress that we as a government are making on shared services,” he said. “I think we need to look at besides financial services are there more opportunities in applying this concept to say human capital or to acquisition? We’ve already done it to effect with the move over the last couple years around data center consolidation. I think, regardless of where the budget is, this is good government.”