US government finance shared services marketplace: ‘ever-evolving’ tech among top challenges
Complying with ‘ever-evolving’ standards in technology fields such as artificial intelligence (AI) and cloud computing are among the biggest challenges faced by the US federal government’s centralised financial management shared services marketplace, an analysis has found.
The Department of the Treasury’s Financial Management Quality Service Management Office (FM QSMO) has for the past three years operated a Financial Management (FM) Marketplace where government agencies, federal and commercial providers are able to buy and sell shared services and solutions.
“While the FM Marketplace has achieved progress, the federal government has experienced challenges to success – such as raising awareness of the FM Marketplace, addressing changing technology and new requirements, coordinating across functional areas and addressing modernization funding,” the ‘Financial Management Shared Services: Progress and Identified Challenges’ report by the Government Accountability Office (GAO) summarises.
Use of the FM Marketplace – which currently offers 139 solutions and services from 25 providers (of which 20 are commercial vendors) – has nonetheless, however, significantly increased. During fiscal year 2024, components or offices within four CFO Act [Chief Financial Officers Act 1990] agencies used the FM Marketplace to procure more than $183m-worth (about £137m) of services and solutions, up from just $3m (£2.24m) of services and solutions in 2023. (The four organisations being: the Department of Commerce’s US Patent and Trademark Office, the US Army, Treasury’s Bureau of the Fiscal Service and the Department of Homeland Security’s US Citizenship and Immigration Services).
The FM QSMO estimates that 72% of CFO Act agency core financial systems will require a ‘significant modernization’ by 2035, ‘which is expected to increase FM Marketplace procurements’, the report states.
Read more Trump orders end of US government cheques in digital disbursements overhaul
‘Consolidation’ push
The 12-page report – subtitled as a Q&A Report to Congressional Committees and published on 10 December– provides examples of the types of financial management shared services and solutions provided across the federal government as including: financial transaction processing; routine financial management business process automation; financial statements preparation; and core financial systems.
In its opening section – titled Why this matters – the report notes that federal agencies managed more than $6.8trillion (£5.1 trillion) of federal funds during fiscal year 2024.
“The federal government has taken steps to share financial management services across the government to help improve efficiency, transparency and stewardship of these funds,” it explains. “Consolidating financial management services can help reduce duplicative efforts and costs across government for common business activities.”
The report then sets out how the federal government has launched multiple initiatives to promote agencies’ use of financial management shared services over the past two decades. These include the Office of Management and Budget (OMB) designating the Treasury Department as a Financial Management Quality Service Management Office to develop and manage the FM Marketplace in 2020; and, more recently, a White House executive order (‘Protecting America’s Bank Account Against Fraud, Waste and Abuse’ – signed on 25 March) requiring all agencies subject to the CFO Act to consolidate their core financial systems and use financial management solutions offered by the FM Marketplace.
Addressing the implementation to date of financial management shared services, the report states that FM QSMO identified four challenges (in addition to an FM QSMO’s lessons learned repository): raising awareness of the FM Marketplace; new and changing technology requirements; coordination across functional areas; and funding availability for modernisation.
Read more: Trump and DOGE demand ‘centralised tech systems’ to ‘record every payment’
Four challenges to take-up
Each of the four challenges is summarised in the report.
On the challenge of raising awareness, the report notes that FM QSMO “stated that it can be difficult to spread awareness of the marketplace within large agencies since FM QSMO relies on agency points of contact to identify and share information with components and staff within their agencies… [and that] according to FM QSMO, this has resulted in large components at some agencies not realizing the FM Marketplace existed”.
“Additionally, FM QSMO noted that while it is well connected to the financial management community, there are members of the acquisition community that have either no or limited awareness of the marketplace,” it continues. “Additionally, members of the acquisition community are not aware of the requirement to use the FM Marketplace, as outlined in OMB M-19-16 [2019 OMB memo that established a new, government-wide shared services strategy by creating QSMOs]. To raise awareness, FM QSMO has held targeted meetings and workshops for agencies and the acquisition community.”
On the topic of changing tech requirements, the report notes that government agencies “face challenges in complying with ever-evolving standards that result from advancing technologies, such as cloud-based solutions, managed-service models and artificial intelligence”. It states that “according to FM QSMO, continuously updating systems to keep up with frequent new requirements poses a significant financial burden to many agencies.”
It points out that to “reduce the burden” on individual government agencies, FM QSMO developed a financial management capability framework (FMCF) to establish baseline standards that FM Marketplace solutions and services need to meet.
This stpry was first published on Global Government Forum’s sister titile Global Government Fintech: US Gov finance shared services marketplace: ‘ever-evolving’ tech among top challenges
Sign up here to recieve Global Government Fintech’s free editorial newsletter
‘Constrained budget environment’
On coordination across functional areas, FM QSMO stated that “collaborating across functional areas (for example, travel, real property, payroll, etc.) has historically been a challenge”.
To address this challenge, FM QSMO ‘collaborates with agency officials to understand their perspectives, meets with the Business Standards Council and other stakeholders to coordinate standards across functional areas, and aims to ensure that solutions in the FM Marketplace capture the correct data,’ the report states.
On modernisation funding,the report refers to a “constrained budget environment over the past decade”.
“Additionally, FM QSMO stated that agencies require additional funding to implement and comply with required core financial system changes each year, such as new financial management accounting requirements,” it states. “To address this challenge, FM QSMO stated that it collaborates with agencies to understand specific challenges, provide suggestions, and assess options.”
The report incorporates input from beyond US shores, with officials in Australia, Ireland, Sweden and the UK having provided lessons from their own governments’ implementation of financial management shared services. These include establishing a “strong governance structure”; performance monitoring and measuring progress; and “addressing capability and capacity”, with governmentsreporting facing a “large capacity gap for people with appropriate skills to launch and manage a shared service system”.
“While shared services offer potential for optimising government resources, we have previously reported that past efforts to migrate to shared services have not consistently increased cost savings, efficiencies, or customer satisfaction,” the report states towards the end. “The challenges and lessons learned identified in this report offer important considerations as OMB develops guidance under the March 2025 executive order for the latest initiative.”
About Ian Hall
Ian is Global Government Finance editor. He has formerly held roles including UK director of Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in the Balkans at English-language weekly the Sofia Echo (Bulgaria: 1998-1999).
Related Posts
