Concerns have arisen regarding OMB’s financial management line of business initiative, although to date the attention in Congress to the issue has not resulted in proposed legislative changes, the Congressional Research Service has said.
The report noted that federal financial management systems generate the information that is used by government officials to manage and oversee agency programs and operations, and that concerns about the quality of agency financial information, and about the costs of operating and modernizing the systems that produce it, have prompted a number of systems improvement initiatives in recent years. One of those efforts, the financial line of business initiative, seeks to consolidate agency systems at a limited number of third-party shared service providers (SSPs), and standardize the related business processes government-wide.
OMB in 2006 directed all federal agencies needing to upgrade or modernize their financial management systems either to transfer their core financial functions to an SSP, seek designation as an SSP, or to prove that they can operate their in-house systems with less risk and at a lower cost than an SSP. Agencies that undergo migration must, in most cases, select their SSPs through competitions between public and private organizations. OMB’s guidance also requires all agencies eventually to adopt government-wide business and accounting practices, which are under development in FMLOB workgroups.
Said CRS, “It is widely acknowledged that consolidation and standardization may improve the cost and quality of agency financial data. Proponents suggest that the sooner agencies move to SSPs, the sooner the government may enhance its efficiency and capacity for oversight.”
