Challenges to a modern federal payroll system abound

The Interior Business Center’s payroll system would need to be broken apart to upgrade it, let alone move to a modernized replacement.

That’s just one example of the many challenges current payroll providers are facing as they look to get on board with the administration’s massive plan for a modernized payroll shared service.

Within and outside the Department of the Interior, IBC is a shared service provider of payroll operations including paychecks to multiple federal agencies, and its system is fully integrated.

But in September, the General Services Administration awarded a 10-year, $2.5 billion shared services contract for a new, governmentwide payroll system dubbed NewPay.

“Do we remain the provider for those other small modules, are new ones created, are the agencies going to have to take on that work themselves … or are we really going to sit down and plan for the end-to-end solution?” Michele Singer, director of IBC, said Wednesday at an SAP event in Washington, D.C.

NewPay presents a “unique opportunity to collaborate,” Singer said, but agencies and supporting contractors already delivering payroll services will be the key to its success because of their institutional knowledge.

Addressing aging and outdated payroll systems with NewPay is GSA’s first step in becoming a Quality Services Management Office for all things human resources, but it won’t happen overnight.

“It’s going to take us probably the next five-plus years to make the migration to a modernized payroll system,” said Dave Mader, civilian sector chief strategy officer at Deloitte.

Since 2000, the federal government has reduced 26 legacy payroll systems down to five, and they’re not interoperable, he said.

Interoperability will be a “huge hurdle,” and some agencies will be forced to give up the unique systems they have, Singer said.

Also unclear is whether NewPay will be funded through existing providers, GSA, individual agencies, or one big appropriation. Once the money is allocated, transparency will be necessary to ensure it’s being spent effectively, Singer said.

Providers will need to work “intensely” with customers to establish NewPay requirements, and ensuring data is entered once and populates all other systems is a must, she added.

Singer said NewPay will fail if it’s left to one agency or the private sector to develop, as opposed to an “all hands on deck” approach.

“I am not a competitor of the National Finance Center or [the Defense Finance and Accounting Service] or GSA. I am a colleague. I am a fellow civil servant,” she said. “And I am here to collaborate to bring about the next generation of payroll services.”