Interview transcript
Terry Gerton John, I wanna start with you. You’ve been with the shared services concept for a long time. You’ve seen Trump 1 and Trump 2. Tell us how their approach differs across the different administrations.
John Marshall Well, thanks, Terry. It’s a great question. We’re not really sure what the approach is for the current administration yet because they haven’t released a president’s management agenda, but we can get some signs from what we’ve seen out there and kind of reading the tea leaves a bit. But the first Trump administration had a very clear plan. It was announced in OMB Management Memorandum M-19-16 and included an innovative approach to creating a marketplace of shared services providers through four quality service management offices, or QSMOs, that were set up to manage financial management, human resources, cybersecurity, and grants marketplaces. Those were allowed to continue through the Biden administration. They weren’t really expanded or empowered very strongly or resourced, but they still have existed. But we haven’t seen the Trump administration, the second Trump administration, endorse or expand them. They seem to be continuing the financial management and grants. We’re not sure about cybersecurity and HR. So, a lot is yet to be seen. What we have seen from the new, the second Trump administration is a strong focus on centralization and consolidation of common services. They don’t seem to include some of the key features of shared services that we’d like to see, but they’re heading in a positive direction and we like most of what we’ve seen so far.
Terry Gerton Well Steve, let me turn that to you then because in addition to what John’s talking about the centralization approach, the Trump 2 administration has issued executive orders around acquisition, HR and financial management. Are you seeing that approach get traction in any particular way?
Steve Goodrich They are a little bit. As you know, GSA is also revamping the FAR and actually to include shared services within Section 8 of the new FAR when it’s issued. GSA is focused on procurement, OPM is focused on HR, Treasury is focused on finance. They all are starting to make traction in a centralization model, and they’re at at different levels or different stages right now. But they’re certainly getting there. OPM has their RFP out to try to develop a centralized approach for government-wide HR support services. GSA is pulling procurement into GSA more and more. And Treasury is at its beginning stages working with its QSMO actually to develop and make sure they have the systems and the foundation before they can start operations down the road.
Terry Gerton So John, in Trump 1 you made the point that there was a lot of it space for initiative and choice in the marketplace. Centralization seems to be pulling that back. Are you seeing agencies respond in a positive way?
John Marshall I don’t think we have really a lot of great feedback coming from the agencies yet. They haven’t been very communicative about their adoption or their plans for centralization to shared services. So a lot has yet to be seen. We’re kind of reading between the tea leaves right now and trying to determine how things are gonna sort out and what the agency responses will be.
Terry Gerton In market theory, markets will be more efficient than a centralization model. What do what do you have as an expectation here?
John Marshall Well, we have a lot of reasons to prefer a market-based approach because of competition, and particularly a marketplace would allow industry service providers to participate and compete with government service providers. We’re a little uncomfortable with the idea of just consolidating everything in centralized, government-delivered, government-operated functions because they tend to — over time they become monopolies and pretty bureaucratic. And so we like the idea of having a more open marketplace where competition can drive continuous innovation and customer choice and let the marketplace then sort out the winners and losers.
Terry Gerton I’m speaking with John Marshall. He’s the founder and CEO of the Shared Services Leadership Coalition. And Steve Goodrich, [who] chairs the SSLC board. So Steve, let me come back to you then. Shared Services Leadership Coalition has proposed a more competitive standard-based model. Tell us about that and how your proposal differs from what you’re seeing the administration currently implement.
Steve Goodrich Well, the administration is trying to move fairly quickly right now and with technology solutions, frankly, before they get processing governance and policy and data reform in place. So they’re moving out fast. The centralization model, as John says, may not be the optimal model to get there. What we’re proposing is a strong mandate for shared services. Because as you know, it’s come and gone from over the last forty years from administration to administration. And to get there, we need Congress really to mandate it so we can consolidate the common services across government to get there. Two, we need a strong governance structure to be able to operate, lead this across agencies and get the right mandates and security and systems and so forth and so on. Within that, we then need to do the right analysis and design of the right approach to make sure we’re consolidating appropriately, that we’re getting the duplication of systems and processes down and we can actually measure the outcomes that we’re getting to make it happen and then have an effective transition process.
Terry Gerton Tell me about your governance model. Who would be in charge of oversight there?
Steve Goodrich Well, our proposed model we have the OMB DDM as the policy director, if you will, for this and the authority. We have GSA leading the operations through a management center. And then there’s roles for the PMC, there is roles for the agencies advisory going through this as well. And you have the operating centers to make sure this is done and done right.
Terry Gerton Are you hearing from any of those agencies that they’re interested in taking on that governance role?
Steve Goodrich There’s — GSA would have interest in getting there. As you know, OSP, which has been drawn back over the years, was the original design, as the M-19-16 says, is the coordinating element. But our proposed legislation would actually give it the authority it needs, led by a commissioner within GSA for government operations with which to get there.
Terry Gerton So John, let me come back to you because you mentioned something in your last response that I think ties in with this governance piece. When you get a government centralized service function, it tends to become a monopoly, but it’s also really hard to invest in technology modernization. How would you see this centralization model staying current and actually addressing the service concerns of the federal agency constituents?
John Marshall That is a great question. And I think that the flip side of that question sets up the response that we would like to see, which is the marketplace, because if you had a marketplace with industry and government service providers, you would have continuous competition across the service providers and customer choice, which would — which should provide the incentives to drive innovation in the marketplace by all those providers. So it’s a really important feature that we think ought to be incorporated. And we’re concerned that government centralized services haven’t had access to appropriations or technology modernization funds for modernization. So we’re concerned that they would follow the example that we’ve seen too often of centralized service providers not modernizing, not keeping up and becoming non-responsive and antiquated over time.
Terry Gerton Steve, you want to follow up?
Steve Goodrich Yeah, I would. You can look at good models like Canada, Texas has done a pretty good job of developing partnerships with industry. And so that moves away from the traditional FAR firm-fixed price contract approach, where as technology advances, as process or new policies advance, the companies involved, the partnership involved are responsible for the implementation and bringing those two new technologies to the forefront without contract change orders and things like that, it’s built into the process.
Terry Gerton So Steve, as you look forward, what sorts of policy or legislative change is SSLC recommending?
Steve Goodrich So, it really tees off what I was saying before, putting a piece of legislation in place that mandates shared services, that sets up the governance structure, that ensures that there is metrics, both performance and outcome metrics that are measured and reported back to Congress and the President that involves the PMC in this process and builds the strong demonstrated consolidation of common services across government to save money, to improve data, to reduce duplication, to get us there finally with a modernized system of policy, process and data.
Terry Gerton So John, I wanna wrap up with you. Legislative change is sometimes an interesting windmill to tilt at, but in the absence of that change, if the administration continues with its policy of centralization, what should agencies and industry partners be doing to prepare for that?
John Marshall Watching and seeing what comes out from the administration and and following suit. But we we’d like to see more interest in Congress and it’s hard to get legislation passed in this area. We’ve been trying at this for 10 years. We’ve seen the history of legislation, the CFO Act, GPRA and so many other landmark pieces of management legislation. They take a long time and the incubation period is a long time. So we’d like to see industry working with us and agencies showing support for a more fundamental transformational approach like we’re offering. And don’t forget, Terry, what we’re proposing is a mainstream business model that’s used by 80 or 90 percent of Fortune 500 companies for managing common services. And the potential savings are tremendous. We’ve estimated $75 to $100 billion dollars in potential savings. So that’s really what’s on the table for the value, not just improved services for employees and for customers of the government and taxpayers. This is a great opportunity that the government shouldn’t miss.
Terry Gerton Steve, let me give you the last word.
Steve Goodrich Yeah, John and I like to joke sometimes that — and it’s true, it’s not a joke — for over 40 years we’ve been sitting in meetings around shared services with OMB and oversight agencies, and it ebbs and flows from administration to administration, or they just dance around the edges. A bill passed and signed by the president will finally give it the energy and resources it needs to move it forward.
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