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U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

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Modernizing Merit

Leveraging Scale

Agency flexibility must also be balanced and bounded by yet another imperative: our responsibility to capitalize on the tremendous efficiencies and economies that can only be achieved by leveraging the Federal Government’s immense “buying power” as a single employer. This serves as our third guiding principle: leveraging scale. Thus, even in a future of agency-specific HR systems, certain elements of the Federal civil service should remain part of a standard, overarching architecture that maximizes efficiency and effectiveness.

The most obvious example of this leverage is the Federal Employees Health Benefits Program (FEHBP). As the President has noted,the FEHBP is a model for health care delivery, and its efficacy is in part derived from the fact that it treats the Federal workforce as a single population, a huge risk pool that can be leveraged to maintain and improve benefits, reduce costs (to both the taxpayer and the employee), and mitigate financial risks. The same can be said for other benefit programs, from retirement and life insurance to long-term care and flexible spending accounts. That is why OPM has steadfastly opposed agency attempts to secede from these programs…the actuarial cost of balkanizing the Federal civil service in this regard is just too high. Standardization here is consistent with, and ultimately complements, the other principles of modernization.

We are just beginning to leverage scale in another critical area: HR information systems. For years, agencies have been spending hundreds of millions of dollars on information technology to support HR operations; however, in many respects, those investments have been redundant and wasteful, each literally re-inventing the wheel at great cost to the American taxpayer. For years, no one provided any central leadership in this area, allowing those redundancies to proliferate. The 21st Century OPM is changing that. Building upon such successful e-Gov initiatives as Recruitment One-Stop and GoLearn, OPM has been designated by the President as the “managing partner” for the Federal Government’s entire HR information technology line of business.

The underlying premise of that line of business is simple: at their root, separate agency HR information systems share a common, core set of functional requirements, and we can capitalize on that commonality (much as we do with benefit programs) to achieve considerable savings – not just in IT costs but also in order-of-magnitude efficiencies in HR service delivery. This will remain the case even as we afford agencies greater flexibilities, for at the transaction level, the functionality of our HR and payroll systems will continue to converge, providing an opportunity for even greater economies and savings – through consolidation and eventually, competitive sourcing of service delivery. Fears that consolidation is a thinly-veiled attempt to reestablish uniformity are groundless. The systems can and should be designed to accommodate flexibility. We have an obligation to provide American citizens the most value for their hard-earned tax dollars; this too must drive our modernization efforts.

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