Feds Seek Vendor Help for Payroll Processing Upgrade

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Technology vendors that support the different missions of U.S. government agencies may have a major opportunity to provide innovative IT assistance for a task that is common to all: preparing the payroll for 2.3 million federal workers.

The General Services Administration and the Office of Personnel Management have been sifting through responses from IT vendors on a GSA/OPM request for information on significantly upgrading federal payroll processing. The initiative includes the potential for converting existing payroll systems to cloud-based platforms. The window for vendor responses to the proposal closed late last month.

There are five federal shared service providers that split the work of payroll processing for nearly 200 government units, including cabinet departments and various administrative agencies. These SSPs include the National Finance Center at the U.S. Department of Agriculture and GSA's own Payroll Services Branch.

The five SSPs base their payroll operations on a range of IT systems, including internally developed and maintained software and commercial-off-the-shelf (COTS) products.

The five SSPs conduct their payroll operations in significantly different ways. Each provider uses separate, independently developed and maintained human resources, payroll, and time and attendance systems to calculate pay, according to GSA. Each provider employs multiple transactional systems, data sources and interfaces to arrive at accurate gross and net pay determinations.

"In addition, each SSP maintains its own methods and practices for maintaining and evolving these systems in response to emerging human capital and information technology requirements," notes the GSA's RFI.

While all payroll preparers must follow policies issued by OPM, the implementation often involves different computer coding and IT mechanisms.

"With a workforce of over 2 million nonseasonal, full-time federal employees -- ranging from federal justices to park rangers -- the task inherently involves a unique level of complexity in the payroll system," said Beth Angerman, executive director of the Unified Shared Services Management, or USSM, office at GSA.

"In addition, federal pay involves many exceptions and special cases mandated by law that are applicable only to federal employees," she noted.

Federal compensation calculations can involve differentials for geographic location and fringe benefits. OPM recently has established flexibility provisions, such as differing vacation schemes, to improve its ability to compete with the private sector -- which adds even more factors in calculating pay and benefits -- in hiring and retaining workers.

All of those factors lead to a challenging data management environment.

Improvement of the pay calculation process was a primary goal of the request for vendor information, GSA and OPM noted, but other goals stated in the request indicate that the government is interested in making major IT processing improvements to federal compensation systems.

For example, GSA has invited vendor perspectives on the following:

"In the private sector, payroll management is a competitive and innovative industry. The federal government is eager to learn whether there are new technologies that help improve performance," GSA's Angerman said.

GSA is interested in gathering information on how the government can leverage cloud solutions for government-wide payroll functions, including information on cloud security, according to the RFI. The agency asked for vendor feedback regarding "on-demand scaling of processing, secure storage, and network capability."

"Cloud has matured to incorporate a wide range of services beyond just application hosting. The federal government invited industry to help payroll providers understand the full potential for cloud," Angerman said.

The USSM office has been assigned the task of coordinating the RFI as a prime example of implementing the shared-service concept -- especially in the context of utilizing IT solutions.

Within the federal government, shared-service situations occur when a single provider performs common administrative or mission operations for more than one department, agency, or agency unit, according to the Partnership for Public Service. Corporate members of the group include Accenture, Deloitte, Microsoft and VMware.

In October 2015 GSA established the USSM to assist federal agencies in organizing and managing shared-service operations more efficiently. IT use often can be enhanced to implement shared-service goals.

The payroll function lends itself to the shared-service concept.

"In the early 2000s, the government standardized payroll processing throughout federal agencies and reduced the number of shared-service providers to four from 26. It was a major milestone with estimated savings of (US)$1.1 billion over 10 years, and improved service quality for employees," said Eden Murrie, government transformation and agency partnerships director at the Partnership for Public Service.

The project is a "solid step toward better payroll processing in federal agencies and stronger shared-services in general. We look forward to seeing how this effort might pave the way for additional shared-services," she told the E-Commerce Times.

In fact, the entire federal payroll processing operation might be reduced to a single entity, the GSA indicated in its RFI: "The issuance of this RFI is not meant to imply there would, or would not be a single product, platform, architecture, or provider recommended for federal payroll. As with many common or government-wide solutions, the final approach may involve one, or multiple technologies, delivery modalities, and providers."

Issuance of the RFI is no guarantee that a federal contract solicitation will emanate from the research, GSA emphasized. However, such market research efforts often result in contract opportunities.

John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.

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