STREAMLINING 

GOVERNMENT

OMB and GSA 

Could Strengthen 

Their Approach to 

Implementing a New 

Shared Services Plan

Report to Congressional Requesters

March 2019

GAO-19-94

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-19-94, a report to 

congressional requesters

March 2019

STREAMLINING GOVERNMENT

OMB and GSA Could Strengthen Their Approach to 

Implementing a New Shared Services Plan

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 costsavings 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. 

OMB and GSA’s Proposed New Marketplace Model

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.

View GAO-19-94. For more information, 

contact Tranchau (Kris) T. Nguyen at (202) 

512-2660 or Nguyentt@gao.gov.

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 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. 
Page i GAO-19-94 Streamlining Government

Letter 1

Background 3

Federal Efforts to Promote Shared Services Resulted in Some 

Cost Savings and Efficiency Gains, but Challenges Impeded 

More Widespread Adoption 7

OMB and GSA Have Taken Actions to Address Governance and 

Marketplace Challenges, but Could Strengthen Their 

Implementation Approach 18

Conclusions 28

Recommendations for Executive Action 30

Agency Comments 30

Appendix I Objectives, Scope, and Methodology 33

Appendix II GAO Contact and Staff Acknowledgments 37

Table

Table 1: Selected Agencies and Their Roles in Shared Services 

Initiatives 6

Figures

Figure 1: Timeline of Key Congressional and Executive Actions to 

Promote Shared Services 5

Figure 2: Description of Entities Involved with Developing Shared 

Services Strategy, Policy, and Standards 21

Figure 3: Office of Management and Budget and General Service 

Administration’s New Model for the Shared Services 

Marketplace 22

Contents
Page ii GAO-19-94 Streamlining Government

Abbreviations

AGA Association of Government Accountants

ARC Administrative Resource Center

CAP Cross-Agency Priority

CFO Chief Financial Officer

DHS Department of Homeland Security

Education Department of Education

ESC Enterprise Service Center

FIT Office of Financial Innovation and Transformation

FSIO Financial Systems Integration Office

FSSP federal shared services provider

GSA General Services Administration

HR human resources

HUD Department of Housing and Urban Development

IBC Interior Business Center

IT information technology

Justice Department of Justice

MGT Modernizing Government Technology Act

NFC National Finance Center

OMB Office of Management and Budget

OPM Office of Personnel Management 

SMO Service Management Offices 

Treasury Department of the Treasury

USDA U.S. Department of Agriculture

USSM Unified Shared Services Management

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Page 1 GAO-19-94 Streamlining Government

441 G St. N.W.

Washington, DC 20548

March 7, 2019

Congressional Requesters

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.1

Over the past 15 years, the federal government has undertaken efforts 

that have saved money and increased efficiency through shared services 

solutions. The federal government could potentially save billions more 

and reduce overlap and duplication by migrating additional services to 

shared services solutions.2

The Office of Management and Budget (OMB) and the General Services 

Administration (GSA) are responsible for overseeing a strategic, 

government-wide framework for improving the effectiveness and 

efficiency of shared services. To date, the federal government has made 

significant efforts to promote shared services in several areas such as 

human resources (HR) and financial management. However, according to 

OMB and others who have observed shared services migrations, 

migrating these services from individual agencies to a shared services 

provider has not consistently resulted in cost savings, greater efficiencies, 

or improved customer satisfaction.

You asked us to review previous shared services initiatives for HR and 

financial management activities. 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.

 1

GAO, Revolving Funds: Additional Pricing and Performance Information for FAA and 

Treasury Funds Could Enhance Agency Decisions on Shared Services, GAO-16-477 

(Washington, D.C.: May 10, 2016).

2

We publish a body of work on opportunities to reduce fragmentation, overlap, and 

duplication in federal programs. Overlap occurs when multiple agencies or programs have 

similar goals, engage in similar activities or strategies to achieve them, or target similar 

beneficiaries. Duplication occurs when two or more agencies or programs are engaged in 

the same activities or provide the same services to the same beneficiaries. See GAO,

2018 Annual Report: Additional Opportunities to Reduce Fragmentation, Overlap, and 

Duplication and Achieve Other Financial Benefits, GAO-18-371SP (Washington, D.C.: 

Apr. 26, 2018).

Letter
Page 2 GAO-19-94 Streamlining Government

To address our objectives, we conducted a literature review of GAO’s 

work and other relevant publications from the past 15 years on HR and 

financial management shared services, such as reports by the 

Partnership for Public Service and the Association of Government 

Accountants (AGA).3 We also reviewed our reports that focused on 

specific agency migrations.4 We reviewed planning and performance 

documents and interviewed officials from (1) OMB and GSA—the 

agencies that currently 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), both of which oversaw past shared services 

initiatives and continue to play a key role developing government-wide 

HR and financial management shared services policy.

Further, we reviewed guidance, planning, and performance documents 

and interviewed agency officials at four agencies engaged in the shared 

services process. We selected two federal shared services providers 

(FSSPs), federal agencies that provide shared services to other agencies: 

the National Finance Center (NFC) housed within the U.S. Department of 

Agriculture (USDA) and the Administrative Resource Center (ARC) 

housed within Treasury. We also selected two customer agencies: the 

Departments of Justice (Justice) and Education (Education) involved in 

different phases of shared services migrations. We made our selection 

based on a number of factors. To capture a range of experiences and 

perspectives, we selected a mix of customer and provider agencies. We 

selected one HR and one financial management systems migration to 

review, as well as one migration in an earlier phase and one in a later 

phase. To capture an in-depth perspective of a migration, we selected 

one customer and provider working together on a migration. To capture 

perspectives on OMB and GSA’s efforts to address shared services 

challenges and improve outcomes, we selected provider and customer 

 3

The Partnership for Public Service is a nonprofit organization that conducts research and 

advocates for practices intended to make the federal government more effective. The 

Association of Government Accountants is a member organization for government 

financial management professionals.

4

GAO, DHS Financial Management: Better Use of Best Practices Could Help Manage 

System Modernization Project Risks, GAO-17-799 (Washington, D.C.: Sept. 26, 2017); 

Financial Management Systems: HUD Needs to Address Management and Governance 

Weaknesses That Jeopardize Its Modernization Efforts, GAO-16-656 (Washington, D.C.: 

July 28, 2016) and Financial Management Systems: Experience with Prior Migration and 

Modernization Efforts Provides Lessons Learned for New Approach, GAO-10-808

(Washington, D.C.: Sept. 8, 2010).
Page 3 GAO-19-94 Streamlining Government

agencies that were meeting regularly with GSA in 2016 or 2017 on their 

shared services migration. Our selection of agencies is non-generalizable 

and their experiences and outcomes may not reflect all migrations. We 

also interviewed subject-matter experts who were involved in public and 

private shared services migrations as customers, providers, or 

consultants.

To address the second objective, we reviewed OMB and GSA’s efforts to 

identify and address challenges and lessons learned from past 

migrations, including the new shared services action plan OMB released 

in spring 2018.5 We assessed the extent to which OMB and GSA’s plan 

and guidance are designed to facilitate better shared services outcomes 

using criteria such as standards for internal control in the federal 

government, principles identified in our previous work related to 

addressing major management challenges, and the AGA criteria for 

effective marketplaces.6 Additional details on our objectives, scope, and 

methodology are in appendix I.

We conducted this performance audit from June 2017 to March 2019 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

According to OMB, the federal government spends more than $25 billion 

annually for core mission support services, such as HR and financial 

 5

General Services Administration and the Office of Management and Budget, Sharing 

Quality Services: Improving Efficiency and Effectiveness of Administrative Services across 

Government, President’s Management Agenda and Cross Agency Priority (CAP) Goal 

Action Plan, accessed March 22, 2018. 

https://www.performance.gov/CAP/CAP_goal_5.html.

6

GAO, Government Reorganization: Key Questions to Assess Agency Reform Efforts, 

GAO-18-427 (Washington, D.C.: June 13, 2018); Standards for Internal Control in the 

Federal Government, GAO-14-704G (Washington, D.C.: Sept. 10, 2014); Streamlining 

Government: Questions to Consider When Evaluating Proposals to Consolidate Physical 

Infrastructure and Management Functions, GAO-12-542 (Washington, D.C.: May 23, 

2012); and Association of Government Accountants, Annual CIO Survey: Study of Shared 

Services, The Pursuit of Government Efficiency: Opportunities to Advance Federal Shared 

Services (Alexandria, VA: January 2015).

Background
Page 4 GAO-19-94 Streamlining Government

management that are common across agencies.7 These services are 

generally supported by a wide range of activities. For example, the HR 

employee life cycle functions represent hiring to retirement and include 

activities such as payroll and other compensation and benefits 

management. The financial management function includes core financial 

activities such as making and receiving payments for goods or services.8

As shown in figure 1, for more than two decades, the federal government 

has taken actions aimed at increasing agencies’ use of shared services. 

Key congressional actions included new laws to create uniform standards 

for financial reporting, promote agency use of information technology (IT) 

to deliver core mission support services, and establish funding 

mechanisms for agencies to modernize IT systems. Presidential 

administrations have made it a priority to promote the use of shared 

services for HR and financial management activities for many years. For 

example, in 2014 and again in 2018, OMB established a cross-agency 

priority (CAP) goal of improving the use, quality, and availability of 

administrative shared services.9 Complementing the goal, the Digital 

Accountability and Transparency Act of 2014 is intended to standardize 

and increase the transparency of agencies’ spending data.10

 7

According to OMB, this estimate includes employee costs, contracts, and information 

technology. See White House, President’s Management Agenda (Washington, D.C.: Mar. 

19, 2018).

8

GAO, Financial Management: Persistent Financial Management Systems Issues Remain 

for Many CFO Act Agencies, GAO-08-1018 (Washington, D.C.: Sept. 30, 2008).

9

The GPRA Modernization Act of 2010 requires OMB to coordinate with agencies to 

develop CAP goals, which are 4-year outcome-oriented goals covering a number of 

complex or high-risk management and mission issues.

10Pub. L. No. 113-101, 128 Stat. 1146 (May 9, 2014). The Digital Accountability and 

Transparency Act of 2014 (DATA Act) amended the Federal Funding Accountability and 

Transparency Act of 2006 (FFATA). Pub. L. No. 109-282, 120 Stat. 1186 (Sept. 26, 2006), 

codified at 31 U.S.C. § 6101 note. Prior to the implementation of the DATA Act, the Fiscal 

Assistant Secretary of Treasury testified that the use of data standards can reduce costs 

by facilitating agency movement toward greater use of shared services throughout 

government. For more information on GAO’s findings related to the implementation of the 

DATA Act, see GAO, DATA Act: OMB, Treasury, and Agencies Need to Improve 

Completeness and Accuracy of Spending Data and Disclose Limitations GAO-18-138 

(Washington, D.C.: Nov. 8, 2017).
Page 5 GAO-19-94 Streamlining Government

Figure 1: Timeline of Key Congressional and Executive Actions to Promote Shared Services
Page 6 GAO-19-94 Streamlining Government

At present, OMB has responsibility and authority to develop and 

implement government-wide shared services policy. OMB is working with 

GSA to develop shared services strategy, policies, and guidance, with 

OPM and Treasury also having important roles (see table 1). Table 1 also 

describes the agencies we selected and their roles in the shared services 

initiatives.

Table 1: Selected Agencies and Their Roles in Shared Services Initiatives

Agency Role

Agencies overseeing shared services initiatives

Office of Management 

and Budget (OMB)

OMB designates the Shared Services Policy Officer, who has responsibility and authority to develop and 

implement government-wide shared services policy. This officer is within OMB. Since 2014, OMB has also 

been a co-leader for the cross-agency priority (CAP) goal of expanding shared services.

General Services 

Administration (GSA)

Different offices within GSA have been involved with shared services initiatives over the years.

• The Financial Systems Integration Office (FSIO) oversaw shared services initiatives for financial 

management activities from 2004 until 2010. In 2010, OMB announced the creation of the Office of 

Financial Innovation and Transformation (FIT) within Treasury and later designated it as the managing 

partner of the Financial Management Line of Business.

• In 2016, OMB tasked the Unified Shared Services Management (USSM) office with supporting OMB’s 

efforts to develop shared services strategy, policy and guidance.

• In 2018, GSA merged USSM with the Office of Executive Councils to form the Shared Solutions and 

Performance Improvement office. This office will continue work with the Shared Services Policy Officer 

within OMB to develop government-wide shared services strategy, policies, and guidance.

Since 2014, GSA has been a co-leader for the cross-agency priority goal of expanding shared services.

Department of the 

Treasury (Treasury)

In 2010, FIT succeeded FSIO as the managing partner for the Financial Management Line of Business. As 

managing partner, FIT oversaw shared services initiatives for financial management activities until 2016. 

Since 2016, FIT has continued to work on financial management shared services efforts and to collaborate 

with GSA on developing government-wide guidance.

Office of Personnel 

Management (OPM) 

As managing partner of the Human Resources (HR) Line of Business, OPM oversaw shared services 

initiatives for HR activities from 2004 to 2016. Since 2016, OPM has continued to work on HR shared 

services policy and to collaborate with GSA on developing government-wide guidance.

Selected shared services providers

National Finance 

Center (NFC)

NFC, within the U.S. Department of Agriculture, has been a federal shared services provider (FSSP) of 

payroll shared services since 2003. Over the years, NFC has expanded the services it offers to agencies to 

include additional HR services. 

Administrative 

Resource Center 

(ARC)

ARC, part of the Department of the Treasury’s Bureau of the Fiscal Service, is a shared services provider for 

financial management, HR, and IT services. OMB designated ARC as an FSSP in 2004. In 2013, ARC reapplied for financial management FSSP designation. OMB and FIT selected ARC as one of four financial 

management FSSPs.

Selected shared services customers

Department of Justice

(Justice)

Justice is a customer of the NFC for HR shared services.

Department of 

Education (Education)

Education officials conducted market research to determine the feasibility of migrating selected HR and 

financial management services to an FSSP, but decided not to migrate these services at present.

Source: GAO analysis of agency documentation. | GAO-19-94
Page 7 GAO-19-94 Streamlining Government

OMB’s efforts to promote HR shared services resulted in cost savings, 

cost avoidance, and more consistent service delivery. OMB announced 

the HR Line of Business in 2004 simultaneously with the Financial 

Management Line of Business. These shared services initiatives shared 

similar goals: (1) standardize systems, business processes, and data 

elements to promote consistency across the federal government; and (2) 

reduce costs by establishing a marketplace or a system of buying and 

selling products and services. In this context, the marketplace would allow 

agencies to acquire IT systems for core mission support services through 

shared services solutions.

OPM and FIT coordinated with their respective Chief Human Capital 

Officer and CFO stakeholder communities to develop data elements and 

business process standards for common HR and financial management 

activities. Setting consistent standards for data and systems can lead to 

benefits for shared services customers as well as providers. For example, 

the ability to meaningfully aggregate or compare data across the federal 

government increases as more agencies adopt common or standardized 

data elements or processes. As we have previously reported, the lack of 

comparable data across agencies can hinder efforts to analyze 

government-wide trends.11 Specifically, OPM reported in 2015 that the 

lack of standardized time and attendance data or required data 

components limits access to workforce data and hinders efforts to 

 11GAO, Data Act: Data Standards Established, but More Complete and Timely Guidance 

Is Needed to Ensure Effective Implementation, GAO-16-261 (Washington, D.C.: Jan. 29, 

2016).

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
Page 8 GAO-19-94 Streamlining Government

analyze government-wide trends.12 In addition, once providers know the 

standards, they can develop a solution applicable to multiple customer 

agencies and achieve economies of scale.

OPM oversaw one of the first efforts to create a shared services 

marketplace in 2001, which focused on payroll. That effort resulted in cost 

savings, cost avoidance, and greater consistency in the interpretation and 

application of payroll rules. In the early 2000s, many agencies’ payroll 

systems were nearing the end of their estimated life cycles. As managing 

partner of the HR Line of Business, OPM worked with OMB to identify 

payroll providers. They selected 4 of the then 22 federal payroll providers 

to serve as FSSPs for the 116 executive branch agencies.13 We 

previously reported that, according to OPM officials who had overseen 

the payroll consolidation effort, OMB authorized only the chosen federal 

payroll providers—not other agencies—to spend money on modernizing 

payroll systems, thereby encouraging the shift to the selected FSSPs.14

OPM designated six more public- and private-sector shared services 

centers to provide additional HR functions to agencies in between 2005-

2008.15 These functions include core HR services such as personnel 

action processing and benefits and compensation management, as well 

as noncore services such as HR strategy and performance management. 

According to OPM, more than 99 percent of agencies migrated to a 

payroll provider and more than 88 percent of agencies migrated to an HR 

shared services center. This resulted in an estimated savings and cost 

 12United States Office of Personnel Management, Human Resources Line of Business 

Strategic Framework (Washington, D.C.: Apr. 14, 2015).

13The FSSPs were: (1) Department of Defense, Defense Finance and Accounting Service; 

(2) United States Department of Agriculture, National Finance Center; (3) Department of 

the Interior, Interior Business Center; and (4) General Services Administration, National 

Payroll Center. Additionally, the Department of State was permitted to continue 

independent payroll operations to support overseas civilian employees. For more 

information on the e-payroll project, see GAO-17-127.

14GAO-12-542.

15In addition to the payroll FSSPs, the other two HR shared services centers are hosted 

by HHS and Treasury’s HR Connect. The private sector HR shared services centers are 

Accenture National Security Services, Allied Technology Group Inc., Carahsoft 

Technology Corporation, and International Business Machines (IBM).
Page 9 GAO-19-94 Streamlining Government

avoidance of more than $1 billion between fiscal years 2002 and 2015.16

The consolidation of payroll providers from 22 to 4 providers also 

contributed to greater consistency in the way the federal government 

interprets and applies payroll rules.

The federal government made progress toward establishing standards for 

selected financial management activities and designating providers to 

engage in a marketplace. However, information on outcomes is limited 

because data were not tracked amidst changes in the Financial 

Management Line of Business leadership and strategy. In 2004, OMB 

designated GSA’s Financial Systems Integration Office (FSIO) as 

managing partner of the Financial Management Line of Business. OMB 

also designated four FSSPs to provide financial management services to 

other agencies. They were: the Department of the Treasury’s 

Administrative Resource Center (ARC), the Department of the Interior’s 

Interior Business Center (IBC), the Department of Transportation’s 

Enterprise Service Center (ESC), and GSA’s Federal Integrated Solutions 

Center.

Under the original Financial Management Line of Business, which was 

launched in 2004, federal agencies were required to either serve as a 

shared services provider or leverage a shared services provider when 

modernizing a financial system. In 2010, OMB changed this strategy.17

Agencies would no longer be required to adopt shared services for 

financial systems. In announcing this change in strategy, OMB noted 

concerns related to the costs and risks—such as projects that did not 

meet agency needs upon completion—that medium and large agencies 

had encountered as they pursued shared services for financial 

management activities. OMB also noted that agency managers were 

more likely to pursue shared services for less complex operations such as 

common website hosting, rather than more complex operations, such as 

financial transactions. Further, OMB announced a change in leadership. 

FSIO ceased operations and OMB later designated the Department of the 

 16According to OPM, the cost estimate is based on data from the OMB IT Dashboard and 

related HR Line of Business information. OPM reported that this analysis is based on 

limited information and used for selected activities such as determining the feasibility of 

new projects and evaluating concepts. We reviewed OPM’s methodology and found it 

appropriate for this general estimate.

17Office of Management and Budget, Immediate Review of Financial Systems IT Projects, 

OMB, M-10-26 (Washington, D.C.: June 28, 2010).

Outcome Information on 

Financial Management 

Shared Services Efforts Is 

Limited
Page 10 GAO-19-94 Streamlining Government

Treasury’s Office of Financial Innovation and Transformation (FIT) as the 

new managing partner of the Financial Management Line of Business.

FIT took steps to establish a marketplace for customers seeking shared 

financial management services and to develop standards for financial 

management activities. As part of this effort, FIT created a process to 

analyze the existing financial management FSSPs to identify capability 

gaps. FIT invited the existing FSSPs and other agencies that wanted to 

receive FSSP designation to apply. In 2014, FIT selected ARC, IBC, 

ESC, and USDA Financial Management Services (which is separate from 

NFC) to provide financial management services to other federal 

agencies.18 FIT also worked with the CFO community to develop more 

than 40 business use cases for financial management activities. Business 

use cases document how a common activity, such as disbursing 

payments, is executed, including a sequential description of each step in 

the process. According to a FIT official, these business use cases foster a 

common understanding of how to execute specific financial management 

functions among customers and providers, which can make it easier for 

customers to transition to shared services. 

Further, FIT identified four initiatives to expand shared services for 

financial transactions. FIT’s four shared services initiatives included 

expanding shared services for accounts payable and accounts 

receivable, debt collection, and payment processing. FIT officials 

estimated these projects could contribute to cost savings of around $620 

million over 5 years, but they did not track cost savings. FIT officials also 

did not track the percentage of non-CFO Act agencies that migrated 

financial systems to a shared services provider.19 FSSP customer lists 

show that non-CFO Act agencies and commissions more frequently rely 

 18GSA did not apply for recertification.

19According to FIT officials, there were three CFO Act agencies engaged in the shared 

services migration process at the time: the Departments of Homeland Security, Housing 

and Urban Development, and Labor. FIT officials said they were in contact with officials at 

those agencies. Non-CFO Act agencies are not subject to the CFO Act. The 24 agencies 

which are subject to the CFO Act account for a large majority of federal government 

spending. These agencies include: the Departments of Agriculture, Commerce, Defense, 

Education, Energy, Health and Human Services, Homeland Security, Housing and Urban 

Development, the Interior, Justice, Labor, State, Transportation, the Treasury, and 

Veterans Affairs; Environmental Protection Agency; National Aeronautics and Space 

Administration; Agency for International Development; General Services Administration; 

National Science Foundation; Nuclear Regulatory Commission; Office of Personnel 

Management; Small Business Administration; and Social Security Administration. 
Page 11 GAO-19-94 Streamlining Government

on external providers for core financial shared services than do medium 

and large agencies.

FIT officials stated that OMB transferred many of FIT’s responsibilities, 

including collecting performance information, to GSA in 2016. In 2018, 

GSA officials published customer satisfaction data from 2017 and 2018

for administrative functions, including financial management services 

through the Customer Satisfaction Survey.20 GSA also plans to track the 

percentage of selected financial transactions—such as certain types of 

payments—completed by a shared services provider starting in 2020. 

However, tracking of cost data continues to be an issue, which we 

address later in this report.

Wider adoption of HR and financial management shared services has 

been impeded by challenges in two areas. First, shared services efforts 

have faced persistent governance challenges, such as limited interagency 

collaboration, difficulty reconciling benefits and trade-offs, and limited 

oversight and technical support for shared services migrations. 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. These 

issues hampered efforts to establish effective and efficient shared 

services marketplaces. As a result, these marketplaces have not been 

able to consistently support sufficient competition limiting the potential 

cost sharing efficiencies and improved performance that could be realized 

with greater usage. OMB and GSA have taken steps to address these 

challenges, which we assess later in this report.

Limited interagency collaboration. The Lines of Business governance 

structure limited collaboration across different mission support areas. This 

made it more difficult for those with expertise in acquisitions, IT, HR, and 

financial management policy to work together on shared services 

solutions. For example, although a shared payroll solution should ideally 

consider how to appropriately implement payroll rules, an area in which 

the Chief Human Capital Officers community has subject-matter 

expertise, it also needs the expertise of others. Specifically, the solution 

 20Survey results published in 2018 show that the majority of employees at CFO Act 

agencies who responded to the survey were at least somewhat satisfied with the quality 

and support of solutions received from financial management functions over the past 12 

months.

Governance and 

Marketplace Challenges 

Have Impeded Greater 

Progress toward Cost 

Savings and Other 

Performance Goals
Page 12 GAO-19-94 Streamlining Government

should also be able to integrate with an agency’s financial reporting 

systems, an area in which the CFOs and Chief Information Officers have 

expertise. Additionally, the solution should ideally leverage the 

government’s purchasing power, an area in which the Chief Acquisition 

Officers have expertise. The Lines of Business Managing Partners took 

steps intended to address this issue. For example, the HR Line of 

Business chartered the Multi-Agency Executive Strategy Committee to 

facilitate interagency collaboration by bringing together representatives 

from human capital offices across CFO Act agencies.21 Later in this 

report, we describe additional steps OMB and GSA took to promote 

greater collaboration across the individual Lines of Business. 

Difficulty reconciling benefits and trade-offs. We found that agencies 

have had difficulty reconciling the trade-offs associated with adopting a 

standardized service. OMB has issued multiple memorandums over the 

years directing agency officials to consider shared services solutions 

when researching options for replacing legacy HR or financial 

management systems.22 Despite OMB’s direction, the benefits for 

customers to migrate to a standardized solution were not always clear. 

According to ARC officials, prospective customers were invested in their 

legacy processes, or did not factor long-term cost savings or cost 

avoidance into their decision-making process, therefore limiting the full 

realization of standardized shared services.

These difficulties are illustrated in a recent experience at Education. 

Education officials debated whether to migrate the department’s financial 

management system to a shared services provider, and spent substantial 

time and money determining whether it was feasible. Education has 

 21The Multi-Agency Executive Strategy Committee is the primary governance body of the 

HR Line of Business and is made up of 24 federal cabinet agencies. The purpose of the 

committee is to provide advice and recommendations to the HR Line of Business, the 

Director of OPM, and additional government-wide executive leadership for the 

implementation of the HR Line of Business’s vision, goals, and objectives.

22For example, in May 2006, OMB issued its Competition Framework for FMLOB 

Migrations to provide guidance to agencies planning to migrate their financial 

management systems and services. In May 2012, the Obama Administration issued a 

strategy for institutionalizing a shared-first culture across the federal government. In March 

2013, OMB issued Improving Financial Systems through Shared Services, OMB 

Memorandum M-13-08, directing agencies to consider, as part of their alternatives 

analysis, the use of a federal shared services provider. More recently in April 2017, OMB

issued Comprehensive Plan for Reforming the Federal Government and Reducing the 

Federal Civilian Workforce, OMB Memorandum M-17-22, directing agencies to look for 

greater efficiency by leveraging shared services, among other actions.
Page 13 GAO-19-94 Streamlining Government

several systems which are closely integrated and dependent on one 

another, including financial and grants management. In considering tradeoffs, officials were concerned about the costs they would incur and the 

impact to their grantees if they de-coupled these systems to migrate to a 

standardized financial system. According to Education officials, they 

spent about a year meeting with officials from OMB, FIT, and ARC to 

determine the feasibility of migrating their core accounting system to 

ARC.

They also reported spending more than $750,000 on a feasibility study. 

The study noted that the cost of an internal migration would be less 

expensive than migrating to ARC.23 Ultimately, in 2016, Education 

officials decided that instead of migrating they would modernize their 

legacy system internally. GSA and OMB supported Education’s decision 

to modernize in house and agreed that Education did not need to move to 

a shared services provider at that time. However, GSA officials working 

with Education on their financial management modernization efforts noted 

that Education’s decision to pursue a customized solution that paired 

financial systems and grants contributed to the higher quoted cost of 

migrating to ARC. GSA officials also recommended that Education 

consider the costs and benefits of making changes to its financial 

management systems that would eventually facilitate the transition to a 

shared services solution. Education officials said they remain committed 

to reviewing this effort again in the future.

Limited oversight and technical support. Customer and provider 

agencies experienced issues with project management, which contributed 

to delayed and costly migrations. For example, we previously reported 

that two recent financial management migrations—involving the 

Department of Housing and Urban Development (HUD) migrating to ARC 

and the Department of Homeland Security (DHS) migrating to IBC, the 

federal shared services provider within the Department of the Interior—

were late, over budget, and only addressed a portion of the original 

project scope.

24 In 2016, we reported that HUD migrated 4 of 14 planned 

financial management capabilities to shared service solutions, but ended 

efforts to migrate the remaining 10 planned capabilities to ARC, in part 

 23 The Department of Education feasibility study concluded that an internal migration 

would cost approximately 50 percent less than migrating systems to Treasury. According 

to Treasury officials, actual costs can be significantly lower or higher than the original 

estimate.

24GAO-17-799 and GAO-16-656.
Page 14 GAO-19-94 Streamlining Government

because of weaknesses in implementing key management practices.25

For example, HUD’s senior leaders did not recognize and fully address 

challenges as they arose, including those identified with scope, schedule, 

and program costs. As a result, HUD was unable to follow through with its 

plans to replace a number of its legacy financial management systems 

and continues to maintain those systems while seeking other new 

initiatives to address aspects of the remaining capabilities. HUD spent 

about $58 million over three years before deciding to end the migration 

and modernization effort in April 2016. ARC officials reported that as of 

November 2018, it continues to provide financial management services 

for the capabilities that HUD migrated.

Similarly, in 2017, we reported that to address long-standing deficiencies 

in DHS’s financial management systems, DHS started to migrate three 

components to a modernized financial management system solution 

provided by the IBC.26 However, we found that significant challenges 

such as project management and communication problems, among 

others, disrupted the project, raising concerns about the extent to which 

objectives would be achieved as planned. In May 2016, DHS and IBC 

determined that the planned implementation dates were not viable. We 

reported that plans for DHS’s path forward on this project were delayed 

for 2 years.

In both cases, we found that the customer agencies did not consistently 

follow leading project management practices, such as properly identifying 

potential risks and developing mitigation plans. We made four 

recommendations to HUD and two recommendations to DHS intended to 

address weaknesses in their department’s financial management systems 

modernization efforts. However, as of November 2018, they had not yet 

implemented them. 

OPM took steps to address this issue for the HR Line of Business. OPM 

officials told us that in 2007 they developed an online guide to assist 

customer agencies to prepare for and manage a migration of their human 

resources operations to a shared services center. According to OPM, the 

guidance contains information regarding different delivery models, the 

 25GAO-16-656.

26The three components were the Domestic Nuclear Detection Office, Transportation 

Security Administration, and U.S. Coast Guard. See GAO-17-799. 
Page 15 GAO-19-94 Streamlining Government

migration process, and roles and responsibilities.27 Further, OMB and 

GSA recognized that customers and providers would benefit from 

additional technical support and oversight. In May 2016 guidance, OMB 

tasked GSA with assisting agencies during implementation by publishing 

guidance incorporating best practices and lessons learned in project 

management.28 OMB also tasked GSA with monitoring implementations 

to ensure that agencies are following a disciplined process and properly 

assessing project risk in partnership with OMB. Later in this report, we 

describe steps GSA has taken to provide guidance and technical 

assistance to agencies.

Funding challenges, demand uncertainty, and limited choices.

Funding challenges, demand uncertainty among providers, and limited 

choices for customers are challenges that have limited the effectiveness 

of shared services marketplaces for HR and financial management 

services. We have previously reported that agencies consider obtaining 

the funding required for consolidation and migration efforts to be a 

challenge. This can affect their ability to realize cost savings and cost 

avoidance.

29 GSA officials said funding challenges can be a barrier to 

entry into the marketplace for potential customers. In part because of 

funding challenges, agencies continue to rely on legacy IT systems for 

core mission support services. Many of these systems are increasingly at 

risk of failure because of aging technology and reliance on applications 

that are no longer supported by vendors. As a result, agencies are limited 

in their ability to deploy updates or make adjustments to ensure the 

systems support mission needs.30 In our 2017 High-Risk report, we found 

that agencies needed to establish action plans to modernize or replace 

obsolete IT investments across the federal government.31

 27According to OPM officials, OPM last updated the guidance in 2015.

28OMB, Improving Administrative Functions Through Shared Services, OMB M-16-11 

(Washington, D.C.: May 4, 2016). 

29GAO, Data Center Consolidation: Reporting Can Be Improved to Reflect Substantial 

Planned Savings, GAO-14-713 (Washington, D.C.: Sept. 25, 2014).

30GAO, Information Technology: Federal Agencies Need to Address Aging Legacy 

Systems, GAO-16-468 (Washington, D.C.: May 25, 2016).

31GAO, High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts 

Needed on Others, GAO-17-317 (Washington, D.C.: Feb. 15, 2017).
Page 16 GAO-19-94 Streamlining Government

Some FSSPs have also struggled to keep up with the capital investments 

necessary to modernize. We previously reported that OPM officials 

involved with the payroll consolidation effort said that funding had not 

materialized for systems modernization for the four payroll service 

providers, though it was expected at the outset of the initiative.32 The 

officials said this lack of funding was a major problem that put the longterm viability of the effort at risk. According to NFC officials, the HR 

FSSPs continue to find it difficult to keep up with the capital investments 

necessary to modernize. GSA officials said that federal investment in HR 

and financial management systems modernization lags behind the private 

sector.

According to agency officials and subject-matter experts, federal and 

commercial shared services providers faced uncertainty related to 

customer demand, which made it difficult for them to plan and more fully 

participate in the shared services marketplace. For example, ARC 

officials said that in determining whether to invest in system improvement, 

they need to evaluate the impact on current customers as well as the 

benefits to potential customers. They also pointed out that the costs 

associated with systems improvements would be borne by the current 

customer base if potential new customers failed to materialize.

On the customer side, both agency officials and subject-matter experts 

told us that potential customers often found it difficult to identify providers 

capable of meeting their needs. Some customers wanted a la carte 

services and others had needs which surpassed the capacity of available 

providers. For example, Education’s HR officials said it was difficult to find 

a provider to meet their needs for specific HR services. A lack of up-todate information about providers’ services and costs complicated their 

search process. Education officials said they reached out to several 

FSSPs, but either they did not provide the specific services Education 

wanted, they were not taking on new customers, or the cost was not 

feasible for Education. We previously found that as more agencies 

consider transitioning to shared services providers, making pricing and 

performance information publically available can help agencies determine 

the most efficient method for obtaining services.33

 32GAO-12-542.

33GAO, Revolving Funds: Additional Pricing and Performance Information for FAA and 

Treasury Funds Could Enhance Agency Decisions on Shared Services, GAO-16-477 

(Washington, D.C.: May 10, 2016). 
Page 17 GAO-19-94 Streamlining Government

Subject-matter experts said that large agencies also had challenges 

finding an FSSP capable of meeting their needs. For example, one 

subject-matter expert who works at a large agency with more than 

350,000 employees described the challenges his agency faced identifying 

a provider capable of providing financial management services. He said 

one potential FSSP was concerned that adding a large customer would 

negatively impact its ability to serve other customers. In light of the 

difficulty in finding a provider with sufficient capacity, the agency decided 

to modernize its financial system internally.

In light of these challenges, agency adoption of shared services has been 

slow and uneven. In 2015, the Association of Government Accountants 

(AGA) surveyed government managers and staff, and found that difficult 

migration experiences raised doubts among officials at other agencies 

contemplating shared services. AGA found that respondents considering 

migrating to a shared services provider were hearing enough concerns 

that they were not eager to undergo a substantial migration.34

Consequently, agencies continue to conduct common business activities 

in an inconsistent manner and maintain unique systems. Therefore, they 

may be missing opportunities to achieve cost savings offered by greater 

use of shared services. For example, according to OPM, there are at 

least 108 different systems that send time and attendance data to FSSPs. 

There are also an estimated 86 learning management systems across the 

government.35 We have consistently reported that duplicative and 

incompatible agency business systems and data prevent agencies from 

sharing data, or force them to depend on expensive, custom-developed 

systems or programs to do so.36

 34Association of Government Accountants, User Experiences: Shared Services in 

Government Financial Management-Part 2 (Alexandria, VA: October 2015).

35Office of Personnel Management, Human Resources Line of Business Strategic 

Framework (Washington, D.C.: Apr. 14, 2015).

36GAO-16-261 and GAO, Opportunities to Reduce Potential Duplication in Government 

Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: 

Mar. 1, 2011).
Page 18 GAO-19-94 Streamlining Government

Over the past several years, OMB and GSA have taken actions—

including creating a new governance structure and redesigning the 

marketplace—to address the challenges that impeded more widespread 

adoption of shared services. To bolster interagency collaboration, OMB 

issued guidance in 2016, which designated a Shared Services Policy 

Officer within OMB with responsibility and authority to develop and 

implement government-wide shared services policy. OMB also tasked the 

new Unified Shared Services Management (USSM) office within GSA to 

bring together key stakeholders, including the managing partners of the 

different lines of business, and representatives from customer and 

provider agencies.37

GSA also introduced the Federal Integrated Business Framework to build 

on ongoing efforts by OPM and FIT to develop standards for HR and 

financial management data elements and business processes, among 

other things.

38 As part of this effort, cross-agency working groups 

 37OMB M-16-11.

38According to the GSA website, the Federal Integrated Business Framework includes five 

components. These are: (1) federal business life cycles, service areas, functions, and 

activities serve as the basis for a common understanding of what services agencies need 

and solutions should offer; (2) business capabilities are the outcome-based business 

needs mapped to federal government authoritative references, forms, and data standards; 

(3) business use cases are a set of agency “stories” that document the key activities, 

inputs, outputs, and other lines of business intersections to describe how the federal 

government operates; (4) standard data elements identify the minimum data fields 

required to support the inputs and outputs noted in the use cases and capabilities; and (5) 

performance metrics define how the government measures successful delivery of 

outcomes based on timeliness, efficiency, and accuracy targets.

OMB and GSA Have 

Taken Actions to 

Address Governance 

and Marketplace 

Challenges, but 

Could Strengthen 

Their Implementation 

Approach

OMB and GSA Have 

Taken Actions to Address

Persistent Challenges
Page 19 GAO-19-94 Streamlining Government

identified 11 end-to-end processes for mission support services. Similar 

to the business use cases FIT developed, these business processes 

document how a common administrative activity is executed, including a 

sequential description of each step in the process. According to GSA 

officials, these business processes serve as the basis for a common 

understanding of what services agencies need, and what shared services 

providers should offer. These working groups also bring together those 

with expertise in acquisitions, IT, HR, and financial management policies.

GSA also developed guidance for selecting and migrating to a shared 

services provider. The new guidance identified opportunities for GSA to 

review agency migration materials. GSA developed the Modernization 

and Migration Management Playbook (M3 Playbook), a compilation of 

leading project management practices and lessons learned from past 

systems migrations, and met with agencies contemplating or undertaking 

migrations.39 The M3 Playbook divides a typical shared services migration 

into six phases. For each phase, the M3 Playbook identifies key steps 

agencies should take before they move on, such as completing a risk 

mitigation strategy and defining performance and success metrics. At the 

end of each phase, the M3 Playbook recommends a “tollgate” review to 

ensure both customer and provider completed the necessary steps and 

are ready to move to the next phase. GSA is to provide recommendations 

to OMB on the migrations based on observations of project status and 

risk from tollgate reviews.

Agency officials involved with HR and financial management migrations 

we spoke with said they found both the Playbook and GSA’s reviews 

helpful. For example, Justice officials said they started to use the 

Playbook once it was available midway through their HR system 

migration to NFC. Prior to each tollgate review, Justice officials said they 

submitted the required deliverables so that GSA had time to review the 

documents prior to the meetings. Justice officials said that GSA staff 

reviewing their materials offered concrete suggestions such as 

developing and documenting success metrics, strengthening their 

business case, and developing a risk assessment document. According 

to Justice officials, these suggestions improved the migration process. 

Education officials also reported they appreciated the project 

management expertise provided by GSA staff.

 39GSA, Modernization and Migration Management (M3) Playbook, accessed Oct. 1, 2018, 

https://www.ussm.gov/m3/.
Page 20 GAO-19-94 Streamlining Government

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. We 

examined their approach for the new model and found they were 

following some key change management practices, but there are 

weaknesses with the implementation. 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. Nor have they identified and documented some key roles and 

responsibilities. The action plan also does not explain how OMB and GSA 

will provide information to customers about provider services, pricing, and 

performance. Lastly, OMB and GSA have not implemented a process for 

collecting and tracking cost-savings data.

OMB and GSA described their plan for the new marketplace in an action 

plan, released in March 2018, along with the President’s Management 

Agenda.40 The management agenda issued a new cross-agency priority 

(CAP) goal to improve the effectiveness of shared services. According to 

the management agenda, the shared services goal will support CAP 

goals related to IT modernization, data accountability and transparency, 

and the workforce of the future. OMB and GSA are the shared services 

goal leaders and staff said they are coordinating with other CAP goal 

leaders to achieve their objectives.

To oversee the marketplace and provide greater accountability for 

migrations, OMB and GSA are implementing a new two–tier governance 

structure (see figure 2).

 40For more information, see the President’s Management Agenda, accessed Nov. 13, 

2018, https://www.whitehouse.gov/omb/management/pma/.

OMB and GSA Introduced 

a New Shared Services 

Marketplace Model, but 

Could Strengthen Their 

Implementation Approach
Page 21 GAO-19-94 Streamlining Government

Figure 2: Description of Entities Involved with Developing Shared Services Strategy, Policy, and Standards

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. According to 

OMB and GSA’s action plan, the Review Boards will administer standards 

and will review all task orders for shared services purchases for 

compliance with the standards. The Review Boards will need to approve 

any requested customizations. According to GSA officials, the contracts 

for the various vendors providing shared technology and transaction 

processing services will be purchased through and managed by Service 

Management Offices (SMO). The SMO will be responsible for managing 

the integration of new commercial suppliers into the marketplace and 

responding to user concerns. The SMO will also be held accountable for 

provider performance. OMB staff noted that the details of the Review 

Boards depend on the shared services solutions that are identified.
Page 22 GAO-19-94 Streamlining Government

Figure 3 describes the different options customers will have for 

purchasing shared services in the new marketplace. The figure also 

shows how a Review Board and SMO are intended to interact with 

customers and providers.

Figure 3: Office of Management and Budget and General Service Administration’s 

New Model for the Shared Services Marketplace

To determine whether the marketplace model functions as intended, OMB 

and GSA introduced an initiative, NewPay. 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.41 Software-as-a-Service—a cloudbased 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. According to OMB and 

 41The agreements were awarded to two teams: (1) Team Carahsoft, which includes 

Carahsoft Technology Corporation, Immix Technology, and Deloitte Consulting LLP; and 

(2) Team Grant Thornton, which includes Grant Thornton, The Arcanum Group, Inc., and 

CGI Federal. 
Page 23 GAO-19-94 Streamlining Government

GSA staff, Software-as-a Service should help address some of the 

challenges with demand uncertainty because providers can more easily 

increase and decrease capacity depending on changes in demand than 

FSSPs have been able to do with their current technology.

Our prior work on organizational transformations shows that incorporating 

change management practices—such as setting implementation goals 

and a timeline to show progress—improves the likelihood of successful 

reforms.42 Adopting key change management practices can also help 

managers recognize and address agency cultural factors that can inhibit 

reform efforts. As OMB and GSA prepared to implement the new 

marketplace model, they incorporated some key change management 

practices. For example, they defined their vision for a shared services 

marketplace and some of the key activities needed to achieve that future 

state. GSA also issued a draft statement of objectives for NewPay in 

December 2017. The statement includes a comprehensive list of tasks 

related to project management and assigns responsibility for those tasks 

to the prospective customers, providers, or the government agency that 

will fulfill the SMO role.

Although OMB and GSA have incorporated some key change 

management practices, we found some weaknesses in OMB and GSA’s 

implementation of the marketplace.

Monitoring. OMB and GSA do not have a finalized plan to monitor the 

implementation of NewPay. We have previously identified key questions 

for agencies that are planning and implementing transformations. In that 

work, we found that agencies need to monitor and evaluate their efforts to 

identify areas for improvement. We have also reported that effective 

monitoring plans should include performance goals and milestones, 

transparent reporting tools to help manage stakeholder expectations, and 

 42GAO, Government Reorganization: Key Questions to Assess Agency Reform Efforts, 

GAO-18-427 (Washington, D.C.: June 13, 2018); and Results-Oriented Cultures: 

Implementation Steps to Assist Mergers and Organizational Transformations,

GAO-03-669 (Washington, D.C.: July 2, 2003).
Page 24 GAO-19-94 Streamlining Government

a process for capturing lessons learned to improve the management of 

subsequent phases.43

OMB and GSA staff said they are working on a plan to help them 

implement NewPay. However, it is not yet complete and they did not 

provide us with a draft to review. They said their plans continue to evolve 

and they anticipate having an implementation plan by spring 2019. The 

lack of a finalized plan with the elements listed above hinders OMB and 

GSA’s ability to provide sufficient oversight for this transition. Having such 

a plan would provide various benefits to the NewPay implementation 

effort. First, a monitoring plan that includes performance goals and 

milestones would help OMB and GSA track how many and how well 

customer agencies are transitioning from one provider to another. 

Similarly, setting performance goals related to continued delivery of

services during the transition could help OMB and GSA more quickly 

identify gaps and make adjustments as needed. Specifically, OMB and 

GSA could more effectively monitor how the new approach for purchasing 

payroll, and work schedule and leave management systems integrates 

with current HR systems.

Additionally, transparent reporting tools, such as web-based reporting on 

key milestones, could help OMB and GSA demonstrate that they are 

aware of challenges and are addressing them as they arise. Greater 

reporting transparency could also help build momentum, show progress, 

and help justify continuing investments in reforming shared services 

efforts. Finally, a process for capturing lessons learned based on NewPay 

could help OMB and GSA improve the process for subsequent initiatives 

and further minimize disruptions to agency delivery of services during 

these future transitions.

Without a monitoring plan with performance goals and milestones, 

transparent reporting tools, and a process for capturing lessons learned, it 

will be more difficult for OMB and GSA to provide oversight of the 

transition and its effects on providers and customers, including whether 

there are interruptions to delivery of services. A monitoring plan could 

 43GAO-12-542 and GAO-18-427. To develop these questions, GAO reviewed its prior 

work and leading practices on organizational transformations; collaboration; government 

streamlining and efficiency; fragmentation, overlap, and duplication; high-risk; and on 

other agency longstanding management challenges. GAO also identified subject matter 

specialists knowledgeable about issues related to public management and government 

reform who reviewed and commented on GAO’s key questions for planning and 

implementing transformations.
Page 25 GAO-19-94 Streamlining Government

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.

Roles and responsibilities. OMB and GSA have also not identified or 

documented some key roles and responsibilities related to the 

implementation of NewPay. Identifying a NewPay SMO is a crucial first 

step, since the SMO is supposed to play a key role driving standards and 

holding customers and providers accountable for performance. However, 

OMB and GSA have not announced which agency will serve as the SMO. 

Further, they have not identified which agencies or officials will serve on 

the NewPay Review Board. They also have not documented the authority 

or the resources the SMO and Review Board will have to enforce agency 

adoption of standards.

OMB and GSA have also not yet documented which agency will be 

responsible for interpreting payroll rules and regulations. This has been 

an ongoing issue for the payroll FSSPs. According to GSA and NFC 

officials, the payroll FSSPs have been interpreting business rules 

differently, and thus have implemented new regulations inconsistently. 

According to NFC officials, the payroll FSSPs requested the 

establishment of a governing body to help standardize the process for 

implementing new regulations. OPM officials told us in September 2018 

that they intend to start providing guidance to support payroll 

standardization to the extent allowed by law and regulation in the future. 

However, as of October 2018, OMB and GSA had not documented this 

decision.

According to federal standards on internal control, management should 

establish an organizational structure, assign responsibility, and delegate 

authority to achieve an entity’s objectives. When the organizational 

structure describes overall responsibilities, and when those 

responsibilities are assigned to discrete units, then organizations can 

operate more efficiently and effectively.44 Moreover, in our previous body 

of work on enhancing interagency collaboration, we identified key 

practices that can help agencies mitigate challenges when they attempt to 

 44GAO-14-704G.
Page 26 GAO-19-94 Streamlining Government

work collaboratively.45 For example, clarifying roles and responsibilities 

can enhance interagency collaboration.

OMB staff and GSA officials said they are still identifying which agencies 

or entities will fill key roles and assume key responsibilities. They 

anticipate that some of this information will be finalized by spring 2019. 

Identifying and documenting roles and responsibilities would help ensure 

that key stakeholders are involved in planning and implementation 

activities. Until OMB and GSA clearly identify, communicate, and 

document key roles and responsibilities, they run the risk of not achieving 

their objectives. They also risk repeating past problems, such as the 

inconsistent implementation and interpretation of standards and

migrations that encounter costly delays because agencies do not follow 

available guidance.

Information on services, pricing, and performance. Although the 

action plan aims to help additional providers enter the marketplace, it 

does not explain how OMB and GSA will provide information to 

customers about provider services, pricing, and performance. According 

to the Association of Government Accountants, effective marketplaces 

require market transparency with information on services, pricing, and 

performance.46 Also, according to federal standards on internal control, 

managers should externally communicate the necessary quality 

information to achieve an entity’s objectives.47

As we have previously reported, reliable information on the costs of 

federal programs and activities is crucial for effective management of 

government operations.48 OMB staff and GSA officials said that data 

collection efforts are on hold as they continue to try to determine what 

performance metrics they will use and share with potential customers. 

Without up-to-date information on providers—such as the services they 

 45GAO, Managing for Results: Key Considerations for Implementing Interagency 

Collaborative Mechanisms, GAO-12-1022 (Washington, D.C.: Sept. 27, 2012).

46Association of Government Accountants, Annual CIO Survey: Study of Shared Services, 

The Pursuit of Government Efficiency: Opportunities to Advance Federal Shared Services

(Alexandria, VA: January 2015).

47GAO-14-704G.

48GAO, Budget Issues: Electronic Processing of Non-IRS Collections Has Increased but 

Better Understanding of Cost Structure Is Needed GAO-10-11 (Washington, D.C.: Nov. 

20, 2009).
Page 27 GAO-19-94 Streamlining Government

offer, their level of performance, and their costs—it will be time 

consuming and difficult for potential customers to compare providers. This 

lack of information could slow the rate of shared services adoption.

Cost-savings data. In the CAP goal action plan for shared services, 

OMB and GSA established a cost savings goal of an estimated $2 billion 

over 10 years based on reforms to the shared services governance 

structure and marketplace. However, their action plan does not include 

steps they intend to take to collect and track cost-savings data. Such data 

would allow them to assess their progress toward their goal. In their 

action plan, OMB and GSA included performance measures for goals 

such as customer satisfaction. They also have output measures related to 

HR and financial management activities. However, they did not include a 

measure to gauge their progress in achieving cost savings. In our 

previous work on key questions for agencies that are planning and 

implementing transformations, we found that agencies need to have 

processes in place to collect the needed data and evidence to effectively 

measure goals of reform efforts.49

OMB and GSA said they are still finalizing their implementation plan. 

Including a process to collect and track cost savings data in the final plan 

would position them to assess how well their reform efforts are 

contributing to their cost savings goal.50 Cost savings data would also 

support oversight efforts, as OMB and GSA could better communicate to 

Congress and other relevant stakeholders the extent to which their 

reforms are contributing to cost savings goals. Earlier in this report, we 

described how difficult it was to determine the progress of the financial

management line of business because the managing partners of that 

effort did not track data on cost savings. Until OMB and GSA finalize a 

plan for collecting the needed data and evidence to effectively measure 

cost-savings goals, they risk experiencing a similar challenge.

OMB and GSA’s action plan to support the shared services CAP goal 

does not directly address funding challenges. However, new legislation 

intended to promote IT modernization efforts may address these 

challenges. In 2017, Congress enacted the Modernizing Government 

Technology (MGT) Act as part of the 2018 National Defense 

 49GAO-18-427.

50This cost savings goal is for shared services for HR and financial management activities, 

among others.
Page 28 GAO-19-94 Streamlining Government

Authorization Act.51 The MGT Act allows agencies to create working 

capital funds for modernizing IT systems. Working capital funds are 

primarily used for business-like activities, such as purchasing 

consolidated or shared services within and between federal agencies.52

The MGT Act allows CFO Act agencies to transition legacy systems to 

cloud computing platforms or other innovative platforms and technologies, 

among other things. We have previously reported that working capital 

funds provide agencies with an opportunity to operate more efficiently by 

consolidating services and creating incentives for customers and 

managers to exercise cost control and economic restraint.53

The MGT Act also established the Technology Modernization Fund and 

Technology Modernization Board.54 Agencies can apply to the board for 

loans for IT modernization projects, including replacing legacy systems 

with shared services. In February 2018, OMB issued guidance on the 

initial process agencies should follow to submit proposals to the board.55

As of February 2019, OMB announced plans to award close to $90 million 

to various agencies for modernization projects.56 Two of these awards 

were for shared services: one award was to GSA for more than $20 

million to help fund NewPay and one award was to USDA for $5 million to 

migrate 10 IT applications to a shared services cloud platform model.

When properly implemented, a shared services model for HR and 

financial management activities has the potential to help the federal 

government cut costs and modernize aging IT systems. Over the past 15 

 51Pub. L. No. 115-91, 131 Stat. 1283 (Dec. 12, 2017). 

52GAO, Intragovernmental Revolving Funds: Commerce Departmental and Census 

Working Capital Funds Should Better Reflect Key Operating Principles, GAO-12-56 

(Washington, D.C.: Nov. 18, 2011). For more information on working capital funds, see 

GAO, A Glossary of Terms Used in the Federal Budget Process, GAO-05-734SP 

(Washington, D.C.: Sept. 2005).

53GAO-12-56. 

54Pub. L. No. 115-91. The Consolidated Appropriations Act of 2018 appropriated $100 

million for the Technology Modernization Fund to remain available until expended.

55Office of Management and Budget, Memorandum for the Heads of Executive 

Departments and Agencies, Implementation of the Modernizing Government Technology

Act, M-18-12 (Washington, D.C.: Feb. 27, 2018).

56The Departments of Energy and Labor, and HUD, received awards. GSA and USDA 

received two awards.

Conclusions
Page 29 GAO-19-94 Streamlining Government

years there have been some notable shared services successes: for 

example, consolidating payroll services resulted in more than $1 billion in 

cost savings and cost avoidance over 10 years, according to OPM 

estimates. However, there have also been persistent governance and 

marketplace challenges that have impeded more widespread adoption of 

shared services.

OMB and GSA have been involved in shared services reform efforts for 

decades. Their plan for a new shared services governance structure and 

marketplace has the potential to address some of the challenges that 

have previously hindered more widespread adoption of shared services. 

For example, their 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. 

However, several weaknesses in their implementation of NewPay could 

limit the initiative’s success. OMB and GSA do not have a plan to monitor 

NewPay’s implementation. They also have not documented key decisionmaking 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.

OMB and GSA also do not have a process to provide information to 

customers about provider services, pricing, and performance. Developing 

such a process would help minimize the challenges of transitioning to 

shared services on key stakeholders. Finally, OMB and GSA do not have 

a process for collecting and tracking cost-savings data. Until OMB and 

GSA finalize their plan for collecting the related data and evidence to 

measure their cost savings goal of an estimated $2 billion over 10 years, 

they will not be able to determine and report progress made.
Page 30 GAO-19-94 Streamlining Government

We are making four recommendations to OMB to work with GSA, which is 

the co-goal leader for the shared services CAP goal.

OMB’s Shared Services Policy Officer should work with GSA to finalize a 

plan for monitoring the implementation of NewPay. The plan should 

include:

• implementation goals, a timeline, and milestones for agencies to 

transition from one provider to another;

• transparent reporting mechanisms on key milestones; and

• a process for capturing and communicating lessons learned. 

(Recommendation 1)

OMB’s Shared Services Policy Officer should work with GSA to document 

key roles and responsibilities, including which agency will be the NewPay 

SMO, who will be assigned to the NewPay Task Order Review Board, 

how the SMO, the Review Board, and other key stakeholders will work 

together, and which agency will be responsible for interpreting payroll 

rules and regulations. (Recommendation 2)

OMB’s Shared Services Policy Officer should work with GSA to update 

provider information on services offered, pricing, and performance and 

share that information with prospective customers. (Recommendation 3)

OMB’s Shared Services Policy Officer should work with GSA to 

implement a process for collecting and tracking cost-savings data that 

would allow them to assess progress toward the shared services costsavings goal of an estimated $2 billion over 10 years. (Recommendation 

4)

We provided a draft of this report to the Director of OMB, the 

Administrator of GSA, the Acting Director of OPM, the Secretary of the 

Treasury, the Deputy Assistant Inspector General for Audit of the USDA, 

the Secretary of Education, and the Assistant Attorney General for 

Administration of Justice for review and comment. OMB staff did not 

agree or disagree with our recommendations. In comments provided by 

email, OMB staff stated OMB has been re-evaluating its shared services 

policies and may provide an updated policy in the future. OMB, GSA, 

Treasury, OPM, USDA, and the Department of Education provided 

Recommendations for 

Executive Action

Agency Comments
Page 31 GAO-19-94 Streamlining Government

technical comments on this report which were incorporated as 

appropriate. The Department of Justice did not have comments.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the appropriate 

congressional committees, the Director of the Office of Management and 

Budget, the Administrator of General Services Administration, the Acting 

Director of the U.S. Office of Personnel Management, the Secretary of the 

Treasury, the Deputy Assistant Inspector General for Audit of the U.S. 

Department of Agriculture, the Secretary of the Department of Education, 

and the Assistant Attorney General for Administration of the Department 

of Justice, and other interested parties. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov.

If you or your staff has any questions about this report, please contact 

Tranchau (Kris) T. Nguyen at (202) 512-2660 or Nguyentt@gao.gov. 

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of our report. Key contributors to 

this report are listed in appendix II.

Tranchau (Kris) T. Nguyen

Acting Director, Strategic Issues
Page 32 GAO-19-94 Streamlining Government

List of Requesters

The Honorable Michael B. Enzi

Chairman

Committee on the Budget

United States Senate

The Honorable Gerald E. Connolly

Chairman

The Honorable Mark Meadows

Ranking Member

Subcommittee on Government Operations

Committee on Oversight and Reform

House of Representatives

The Honorable Will Hurd

House of Representatives

The Honorable Robin L. Kelly

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 33 GAO-19-94 Streamlining Government

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.

To address both of our objectives, we conducted a literature review of 

GAO work and other relevant publications on HR and financial 

management shared services. In addition to GAO reports, we selected 

reports by think tanks and professional associations from the past 15 

years, such as reports by the Partnership for Public Service and the 

Association of Government Accountants (AGA).1 We reviewed reports 

that described past HR and financial management federal shared 

services initiatives or specific shared services migrations involving HR or 

financial management services.2 These reports assessed the outcomes, 

challenges, or summarized lessons learned associated with those 

initiatives or migrations.

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. Key documents we reviewed included: 

OMB memorandums announcing federal shared services initiatives; the 

Modernization and Migration Management (M3) Playbook, guidance that 

GSA developed and provides to agencies considering or implementing 

shared services migrations; strategic or operational plans for earlier 

shared services initiatives, such as the Human Resources and Financial 

Management Lines of Business; and strategic or operational plans for 

 1

The Partnership for Public Service is a nonprofit organization that conducts research and 

advocates for practices intended to make the federal government more effective. The 

Association of Government Accountants is a member organization for government 

financial management professionals.

2

GAO, DHS Financial Management: Better Use of Best Practices Could Help Manage 

System Modernization Project Risks, GAO-17-799 (Washington, D.C.: Sept. 26, 2017); 

Financial Management Systems: HUD Needs to Address Management and Governance 

Weaknesses that Jeopardize its Modernization Efforts, GAO-16-656 (Washington, D.C.: 

July 28, 2016); and GAO-10-808.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 34 GAO-19-94 Streamlining Government

ongoing shared services initiatives such as the Federal Integrated 

Business Framework, a model GSA developed with the lines of business 

managing partners for moving agencies toward common, cloud-based 

solutions for management functions.

To illustrate examples of outcomes and challenges, we selected two 

federal shared services providers (FSSPs), federal agencies that provide 

shared services to other agencies: the National Finance Center (NFC) 

within the U.S. Department of Agriculture (USDA) and the Administrative 

Resource Center (ARC) within Treasury. We also selected two customer 

agencies: the Departments of Justice (Justice) and Education 

(Education), which are experiencing different phases of shared services 

migrations.

We made our selection based on a number of factors. To capture a range 

of experience and perspectives, we selected a mix of customer and 

provider agencies. We selected one HR and one financial management 

systems migration to review, as well as one migration in an earlier phase 

and one in a later phase. To capture an in-depth perspective of a 

migration, we selected one customer and provider working together on a 

migration. To capture perspectives on OMB and GSA’s efforts to address 

shared services challenges and improve outcomes, we selected provider 

and customer agencies that were meeting regularly with GSA in 2016 or 

2017 on their shared services migration. Our selection of agencies is nongeneralizable and their experiences and outcomes may not be reflective 

of all migrations.

We reviewed guidance, planning, and performance documents at the four 

selected agencies. Specifically, we reviewed planning documents that 

describe shared services migration purpose and goals, the composition 

and responsibilities of the project management team, and estimated costs 

and savings; documented results of market research and analyses of 

alternatives; risk management strategies; service level agreements and 

performance metrics; communication plans for stakeholders; and reports 

that capture lessons learned.

For each of the illustrative example agencies, we interviewed agency 

officials involved with shared services migrations. At Justice, we 

interviewed the project management team overseeing the HR migration to 

the NFC. At Education, we interviewed the officials who reviewed the 

Department’s HR and financial management shared services options. At 

the two FSSPs, we interviewed officials knowledgeable about the 
Appendix I: Objectives, Scope, and 

Methodology

Page 35 GAO-19-94 Streamlining Government

outcomes and challenges associated with past and ongoing federal 

shared services initiatives.

We also interviewed subject-matter experts who were involved in public 

and private shared services migrations as customers, providers, or 

consultants. We met with members of the Shared Services Leadership 

Coalition, an interest group promoting shared services solutions involving 

commercial vendors. The members who participated in the group 

interview discussed shared services benefits, challenges, and lessons 

learned.3 We also met with members of the nonprofit Partnership for 

Public Service Shared Services Roundtable.4 The roundtable members 

who participated in the group interview are federal employees involved 

with shared services operations. They represented a mix of small and 

large agencies.

To further address the second objective, we reviewed OMB and GSA’s 

efforts to identify and address challenges and lessons learned from past 

migrations, including the new shared services action plan OMB released 

in March 2018. We assessed the extent to which OMB and GSA’s plan 

and guidance are designed to facilitate better shared services outcomes 

using criteria such as standards for internal control in the federal 

government, principles identified in our previous work related to 

addressing major management challenges, and the Association of 

Government Accountants criteria for effective marketplaces.5 During our 

interviews with customer and provider agency officials and subject-matter 

experts, we asked for their perspectives on these efforts and the likely 

effect they will have on ongoing and future shared services migrations.

 3

Two of the members we spoke with in January 2018 work for companies that later won 

the first NewPay contracts.

4

In 2013, the Partnership established the Shared Services Roundtable, a joint community 

of federal and private shared service providers, customers, policymakers, and other 

agency officials. The Roundtable has issued several reports and met with OMB and GSA 

officials to help shape the government-wide shared services strategy with the ultimate 

goal of creating a public-private shared services marketplace.

5

GAO, Government Reorganization: Key Questions to Assess Agency Reform Efforts, 

GAO-18-427 (Washington, D.C.: June 13, 2018); Standards for Internal Control in the 

Federal Government, GAO-14-704G (Washington, D.C.: Sept. 10, 2014); Streamlining 

Government: Questions to Consider when Evaluating Proposals to Consolidate Physical 

Infrastructure and Management Functions, GAO-12-542 (Washington, D.C.: May 23, 

2012); and Association of Government Accountants, Annual CIO Survey: Study of Shared 

Services, The Pursuit of Government Efficiency: Opportunities to Advance Federal Shared 

Services (Alexandria, VA: Jan. 2015).
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-19-94 Streamlining Government

We conducted this performance audit from June 2017 to March 2019 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 37 GAO-19-94 Streamlining Government

Tranchau (Kris) T. Nguyen, (202) 512-2660, Nguyentt@gao.gov

Key contributors to this report include Sonya Phillips (Assistant Director), 

Jessica Nierenberg (Analyst-in-Charge), Rose Almoguera, and Monique 

Nasrallah. Faisal Amin, Ann Czapiewski, Timothy J. DiNapoli, Jared 

Dmello, Robert Gebhart, Amanda Gill, Dave Hinchman, Gina Hoover, 

Valerie Hopkins, John Hussey, Heather Krause, Michael LaForge, Laura 

Pacheco, Paula M. Rascona, and Kevin Walsh also contributed to this 

report.

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(102138)
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