Embed Size (px)
Citation preview
UNIVERSITY
UNUNUNUNNIVERSNIV RSITY
Accenture Federal ServicesDelivering Public Service for the Future
Beyond Headcounts: Rethinking Services Contracting to Improve Government Efficiency
2
In a recent survey by Government Business Council, a clear majority of federal managers—92 percent—say they contract for services today.1 Their three primary means for procuring services is through staff augmentation, intra- or inter-departmental shared services, or a commercial vendor.
Agencies have an opportunity to achieve targeted outcomes by leveraging their service providers more strategically. By using federal centers and commercial vendors adroitly, government agencies can avoid major capital expenditures on systems, save operational costs, improve service delivery and gain valuable expertise.
More importantly, outlining expected outcomes up front, aligning costs closely with these services and holding their service providers responsible for delivering these outcomes—on time and on budget—will not only save agencies money but also help them reach mission targets more efficiently.
A question of cost-effectivenessStaff augmentation is the most common form of services contracting, with 68 percent of federal managers indicating they hire contract labor for mission-support services.2 They ostensibly use contract labor to gain temporary access to outside expertise. But more than a third of federal managers (37 percent) say their top reason for using contract personnel is actually to bypass headcount limitations.3 This strategy, however, is proving to be short-sighted with few benefits, costing as much as 80 percent more than in-house employees to perform comparable functions.4 In addition, as short-term labor often becomes long-term, contracting costs continue to drain agencies’ budgets.
“Staff augmentation gave us a very flexible hiring model and expertise on demand,” says Andrew Jackson, Assistant Secretary of Education for Management. However, Jackson also recognizes the tradeoff from using contract personnel. “Where we see we have a long-term need, we can usually acquire expertise through fulltime employees and lower our costs by bringing them onto our payroll,” he says. “But that’s the tension: either more flexibility or more stability in the role and potential cost savings.”5
Shared services—whether from a center within a department or agency, or from another agency—can deliver services more cost effectively by leveraging technology platforms and solutions across multiple clients. Commercial providers can also help their clients achieve even greater savings by maximizing efficiencies from scale and specialization. Federal managers recognize that shared services centers—for IT infrastructure, finance and human resources—offer tangible benefits, including higher efficiency, standardization and cost-effectiveness.
Many federal government leaders express dissatisfaction with the support services they receive today. They are concerned about the costs and critical of their quality. This raises an important question: By focusing more sharply on outcomes, can agencies reap broader benefits and seize much greater value from these services?
Staff augmentation refers to the use of contract labor to acquire needed expertise or manpower on a short-term basis. Within the federal marketplace, shared services refers to the provision of applications or business services across a single department or agency, or by one agency to other departments and agencies. A commercial provider frequently offers support to a shared services operation. In some instances, a government agency may hand over the execution of a specific function or business process to a commercial provider—frequently offsite—and delivered on an outcomes basis.
3
Ned Holland, Assistant Secretary of Health and Human Services for Administration, has benefitted greatly from shared services. Holland, whose department oversees HHS’s Program Support Center (PSC), says, “Among the 40 to 50 services we provide, our rates for just about all of them are going down.” Among its portfolio of services, PSC provides traditional back-office functions, “ranging from paper shredding and mail processing, to disposal of excess property.” In FY 2013, PSC managed approximately 73 percent of all federal government grants, resulting in estimated cost savings of $11 million.6
A better wayFederal agencies have the opportunity to vastly improve the way they buy mission-support services. Managers would benefit from assessing their needs more holistically and identifying the appropriate mix of internal and external capabilities to address them. They may consider consolidating staff augmentation contracts and moving them to a federal shared service center (FSSC) or commercial provider. Most FSSCs charge a set fee, based on the agency employee population or a percentage of the agency’s budget. Similarly, most commercial firms charge on a firm, fixed-fee or transaction basis. They can also hold contractors more accountable for their work, specifying outcomes and tying those outcomes to real costs.
Some federal agency managers are looking at reorganizing their workforce by first conducting an analysis of which functions are best performed by full time employees and which are best performed by contractors or other service providers. This gives them insight into how to employ more outcome-based support services with greater cost savings.
That said, FSSCs and commercial providers can certainly do a better job of articulating the costs and benefits of their services offerings. If federal managers’ chief concern with services contracting is fear of overpaying, providers must demonstrate that this is not the case. Providers can also make contracts more attractive by offering to lower fees (or even waive them) if services are not delivered as guaranteed or do not achieve specific objectives.
Optimizing services contracting may seem like a steep hill to climb for many federal agencies. But by better articulating their needs and setting clear goals as well as expectations, organizations can perform more effectively while staying within budgets and delivering public service for the future.
For More InformationTo discuss how to improve performance and operations to reduce costs within your organization, please contact:
Glenn Davidson, Managing [email protected]
Lon Anderson, Senior [email protected]
Visit us: accenture.com/federal
Follow us at @AccentureFed
Connect with us on LinkedIn
Copyright © 2015 Accenture
All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
About Accenture Federal ServicesAccenture Federal Services is a U.S. company, with offices in Arlington, Va., and is a wholly owned subsidiary of Accenture LLP. Accenture’s Federal business has served every cabinet-level department and 30 of the largest Federal organizations with clients at defense, intelligence, public safety, civilian and military health organizations.
About Accenture Accenture is a global management consulting, technology services and outsourcing company, with more than 336,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.
1 Accenture Federal Services: Can Federal Agencies Get More Out of Contracting to Improve Government Efficiency? A Candid Survey of Federal Managers; 20152 Ibid3 Ibid4 Ibid5 Government Business Council: “Inside Services Contracting: Best Practices for Staff Augmentation and Shared Services”; 2015. 6 Ibid
