GovernmentExecutive.com

By Martin Bosworth

What Is This?

When corporations merge, executives routinely consolidate functions that are duplicative. These functions include human resources, back-office operations and information technology. In doing so, executives look to consolidate the business processes and IT systems that support the functions. The idea is a company doesn't need two HR systems, two payment systems, two e-mail systems and so on. After all, consolidation is a large part of what makes the merger financially viable -- creating economies of scale that present efficiencies that reduce unit costs.

The same theory can be applied to government, and the Bush administration has tried to do just that with its lines of business initiative. The administration started off with the President's Management Agenda, a document issued in 2001 outlining more than a dozen initiatives that create a government that is focused on results and is more accessible to citizens. Part of its strategy has been to expand and improve the use of IT for the benefit of Americans. To support the agenda, the Office of Management and Budget began in 2004 analyzing five lines of business to determine how these functions could comply with the agenda's call to expand electronic government, or what OMB refers to as the e-gov program. In particular, OMB analyzed how government executives could use technology in each line of business to cut costs and improve service. The strategies include consolidating computer networks and functions into a few agencies that would serve as a service provider.

The five lines of business OMB initially analyzed were:

Case Management: Managed by the Justice Department, the Case Management Line of Business aims to make it easier to share information across law enforcement agencies. The line-of-business analysis is designed to identify business practices that could most easily be consolidated to implement the best procedures to share data among agencies.

Grants Management: Jointly managed by the Health and Human Services Department and the National Science Foundation, the Grants Management Line of Business aims to enhance access to federal grants, improve financial reporting and ensure that information is comprehensive.

Health: A primary goal of the e-gov initiative has been the adoption of centralized electronic health records that physicians and clinicians can access for patients' records and medical histories. The Federal Health Architecture Line of Business, overseen by HHS, is charged with making sure that that government health IT systems are interoperable with private sector applications, maintain appropriate standards for patient confidentiality and have accountable results from spending on new programs.

Human Resources Management: Managed through the Office of Personnel Management, the Human Resources Line of Business was created to explore the use of governmentwide technological solutions for basic HR functions to cut costs, increase efficiency and provide better customer support.

Financial Management: Overseen by the General Services Administration, the Financial Management Line of Business is designed to reduce the costs of managing the government's transactions and statements by sharing accounting systems across agencies. With it, architects of the Financial Management Line of Business hope to ensure transparency in accounting, improve budget decisions and planning, and share financial data easily.

Since 2004, OMB has added more lines of business, including:

Information Systems Security, in which program leaders identify governmentwide data security risks and redundant processes that can be consolidated or eliminated to cut costs.

Budget Formulation and Execution, in which OMB, in partnership with the Education Department, promotes information sharing among agency budget offices to build a common framework of up-to-date data to support budgetary and financial decision-making.

Geospatial, in which OMB developed in coordination with the Interior Department a process to identify separate federal geospatial research efforts that could be consolidated to save money and to identify those functions that could be outsourced to the private sector.

IT Infrastructure, which OMB co-manages with the General Services Administration to identify common IT services that government can consolidate to cut costs and to enable agencies to develop applications that can better serve the public and support federal programs.

Why Should I Care?

The ultimate goals of consolidating and integrating the government's lines of business are to save money and to improve operations. IT is a primary enabler for every line of business. OMB estimates the government can save as much as $5 billion over 10 years by consolidating systems and functions just in the financial and human resources lines of business.

The lines of business analysis reflected a push to integrate common IT and e-gov-related practices across agencies into a single unified standard. Most agencies have internal processes and systems to manage common tasks. These systems often are incompatible with systems operated by other agencies. OMB planned to form "centers of excellence" or "shared service vendors" for each line of business to manage common functions and tasks across agencies. For example, the Treasury Department would manage financial and billing records for all agencies, while Justice would share criminal case files with the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives, and HHS' different agencies, offices and institutes would have a common standard for health record information.

Transitioning from an agency's unique internal system to one that's managed by a different agency involves a large investment in staffing and time, including analyzing what parts of the information systems can be salvaged and what parts should be removed, determining how to pay for the transition, and choosing the best vendor. Employees who managed systems unique to their agency (such as internal accounting and bookkeeping) may be reassigned to other tasks if the systems they worked on are combined with another agency's or shared service vendor.

How's It Going?

OMB's management of the lines of business initiative has not been free of criticism. First, agency executives who were tagged to manage the workload complained that they were not being paid for providing services to other agencies, as would be typical in the private sector. Agency members expressed concern that the costs to provide the service and to respond to another agency's complaints about poor service might lead to budget shortfalls, particularly if one agency switched from one shared service vendor to another.

Funding also has been an issue. OMB initially considered in 2004 setting up an innovation fund, which would work essentially like a business loan, provided by congressional appropriations. But Congress repeatedly rebuffed OMB's requests to fully fund the e-gov and lines of business initiatives, citing their lack of clear results and quantified successes. In the fiscal 2007 Science, State, Justice, Commerce and Related Agencies Appropriations Act, the Senate Appropriations Committee asked for stricter cost/benefit analyses and more oversight by the inspector general. Congress also expressed concern that functions associated with the lines of business initiative that were outsourced to the private sector or another agency could affect an agency's ability to effectively manage its own programs. "Consolidation, when taken too far as an objective, can become an excuse to usurp decision-making from agencies," the Senate Appropriations Committee stated in a 2007 report.

Federal contractors also have criticized the lines of business initiative, especially the inconsistent involvement of the private sector as a potential source of suppliers for consolidated services. OMB was slow to open the competitive bids to vendors, preferring to accept bids from several agencies. Private sector and federal executives repeatedly queried the initiative's managers, including Karen Evans, OMB administrator for e-gov and IT, as to when the government would designate private sector sources as eligible to work with agencies in the lines of business. Some executives claimed the Financial Management and Human Resources lines of business were closed to private sector competition, frustrating many business executives.

Vendors initially were critical of the lines of business effort as unfairly favoring agencies in an A-76 competition. OMB relied on Circular A-76, the blueprint for overseeing commercial activities in the public sector, to determine if services would be outsourced to the private sector or managed internally among federal agencies. But the American Federation of Government Employees opposed the Bush administration's guidelines for the Financial Management line of business consolidation. AFGE charged the rules violated Circular A-76 by mandating agencies move all functions performed by 10 or fewer federal employees to a shared service center or outsourced to the private sector.

Politics also has played a role in developing the lines of business initiative. One of the early leaders of the initiative was John Sindelar, a 33-year federal employee who served in various roles at GSA. As its acting associate administrator, Sindelar was a prime player in selling the lines of business concept to federal agencies, focusing on the amount of money they could save and how it would streamline government operations. In November 2006, GSA Administrator Lurita Alexis Doan appointed Kevin Messner as associate administrator, replacing Sindelar. Messner was a former chief of staff to Arizona Republican congressmen Winrich Kolbe and Rick Renzi. With the appointment, the associate administrator position was converted from a career service position to a political appointment. Doan said she selected Messner because he could improve relations with Congress and better articulate the President's Management Agenda. Sindelar announced his retirement soon afterward.

After the Senate Appropriations Committee issued its 2007 report, OMB backed away from pushing the lines of governmentwide business initiatives. President Bush asked for no new funding of lines of business analyses in his fiscal 2008 budget, and a new initiative for IT infrastructure consolidation focused more on standardizing technologies than consolidating different systems into shared centers. Concerns over the political scandals involving Doan slowed progress as well.

Adoption of the overall President's Management Agenda has been mixed, with agencies receiving particularly poor marks for e-government technology implementation, owing to policy concerns over data breaches.

Martin Bosworth is a technology writer who lives in Washington D.C.