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FCW : November 15, 2013
Commentary | LISA KAZOR Imagine you wake up and are now required by law to use only the U.S. Postal Service for your mail-delivery needs. You are prohibited from using commercial providers such as FedEx or UPS or even your local courier, which is a small business. That is the effect of a new law that has noble goals: to generate cost savings and ef ciencies by maximizing federal investments in establishing and re ning the infrastructure for providing mail- delivery services. The government has decided the best way to make the most of those investments is to remove commercial options and mandate the use of government-run solutions. As draconian as that might sound, it is exactly what the world of federal nancial systems mod- ernization is about to become. That niche industry provides both systems and support to federal agencies --- to the tune of $8 bil- lion to $10 billion a year. When an agency modernizes and implements a new system, it can cost hundreds of millions of dollars, and an agency would normally shop around between federal and commercial providers to get the best deal. Under the Of ce of Management and Budget s M-13-08 memo, how- ever, that will change dramatically. The memo s goal is to help the government save money and oper- ate more ef ciently by using shared services and capitalizing on invest- ments in existing federal providers. The memo suggests, reasonably enough, that new agency propos- als for improving nancial systems must consider the use of federal shared service providers (FSSPs) rather than be limited to an evalua- tion of commercial shared service providers. But that is not about to happen. Based on OMB s and the Trea- sury Department s interpretation and implementation of M-13-08, agencies seeking new solutions must go to Treasury s Of ce of Financial Innovation and Transfor- mation (FIT) to determine a match between the potential federal cus- tomer and existing federal provid- ers. The customer is assigned to a federal provider to perform due dili- gence on whether the FSSP can ful- ll the requirements; if not, another federal provider may be assigned. If there is still no match, commercial providers may be approached as a last resort. That process essentially elimi- nates participation by and competi- tion from commercial providers. How can an agency determine its best-value option if it cannot compare options from all viable offerors, whether commercial or federal? Nowhere in the memo does it state that federal agencies should consider "federal rst" or have an inherent preference for federal providers at the risk of eliminating commercial competition. On the contrary, the memo was an attempt to remedy the opposite situation by requiring that a federal agency consider options from federal and commercial providers and use "best value" as its guiding principle. So far, a number of federal agencies that need to modernize their nancial systems have been assigned federal providers by FIT, including the Coast Guard and the departments of Commerce and Housing and Urban Development. To date, none of those agencies has gone through a rigorous open competition to see which provider --- federal or commercial --- could have provided the best value to the agency, as M-13-08 explicitly identi- es as the preferred approach. Competition is a major driver of cost savings and increased ef cien- cies, and a free market is what America is all about. As OMB and FIT hammer out the details of this process, I urge them to make sure the nal strategy focuses on the best value for the customer, as the memo originally intended. ■ A world without competition OMB s guidance for nancial systems shortchanges commercial providers --- and could deny agencies a full range of choices How can an agency determine its best- value option if it cannot compare options from all viable offerors, whether commercial or federal? LISA KAZOR is founder and CEO of Savantage Solutions. November 15, 2013 FCW.COM 13
October 30, 2013
November 30, 2013