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September 15, 2015 (Shared Services)

Table of contents
Meeting Minutes

September 15, 2015 (Shared Services) Forum Meeting

2:00 p.m. – 3:00 p.m.
1401 Constitution Avenue NW, Room 58022, Washington, DC 20230

Meeting called by: Labor-Management Forum
Program Manager: Mr. Frank Milman
Attendees: See sign-in sheet for participants around the room. On the phone: Laurie Schwede, Robert Budens, Fred Steckler, Howard Freidman, Laverne Byrd, Vonda Bell, Renee Desrosiers

Documents: N/A
Type of meeting: Special Meeting on Shared Services
Note Taker: Ms. Mary O’Connor


Agenda Item: Introductions
Presenter: Ms. Ellen Herbst
Introductions were done around the room and on the phone. 

Agenda item: Shared Services Presentation
Presenter: Ms. Ellen Herbst

Ms. Herbst began the discussion with recapping the shared services initiative thus far, and explaining the next steps. She referenced the email sent out by Deputy Secretary, Bruce Andrews, earlier in the day, which was deliberately light on detail, and served as a kickoff of a series of communications planned. To follow, Deputy Under Secretaries, and their equivalents, with mission enabling employees, will have town halls with staff, followed by smaller group meetings with leaders of each function in offices (e.g. – Mr. Mahoney, will meet with HR managers, supervisors, employees, to go into more detail). Communication will be specific to each bureau and each function.

To review, the project was initiated to focus on transforming mission enabling services (clients have expressed the importance of these services and couldn’t do mission without them) in four areas (HR, IT, Financial Management, Acquisition Management). The plan is to implement a shared services model to enhance the customer experience, the quality and consistency of service, with greater transparency and accountability. There are four phases of the shared services initiative. 

  • Phase 1: Assess Phase
    • § This phase ended on May 15, 2015. In this phase, governance was formed; work teams were established in each of the four areas to asses the current state of services delivered. Criteria was developed as to how those teams of people would increase better consistency and transparency when moved to a shared services approach. 
      • The work teams developed a series of recommendations that the Department Management Council (DMC), the board of directors, ratified. Recommendations of all four groups were ratified. 
  • Phase 2: Design Phase
    • § A full-time project team was assembled utilizing employees from across the Department of Commerce (Department), and from other agencies, which have background in the four shared service areas. Throughout the phase, the team continued to rely on four area councils such as the Principal Human Resources Managers Council, Chief Information Officer Council, etc...
  • Phase 3: “Getting Ready Phase”
    • § To begin October 2015
  • Phase 4: Delivery 

In Phase 2, the Design Phase, teams began to determine sequencing, which services to begin with in which bureaus in which order; sourcing, whether to build within or to buy from a source; and implementation planning. Ms. Herbst emphasized that the DMC has ratified every decision without modification coming from work teams. 

  • Financial Management
    • § The financial management team (CFO Council) agreed that much of what is done in accounting world is dependent on a robust, modern, shared system, which is not the current state for the Department. There are a number of recommendations that can’t be implemented without having a new system. 
    • § The team looked at travel, as it is a major project going on, and determined that it was a target for shared services.
      • The Department is one of the last cabinet agencies not on one of two travel systems. Now, the travel system ETS2 will be part of shared services. 
  • Acquisition Management
    • § A center piece of what has been recommended relates to strategic sourcing. One third of things the Department purchases are the same things on different contracts, in different offices. The focus of this team is how to buy common stuff smarter.
      • E.g. – there are five servicing human resources offices that have over five different contracts for HR Specialists doing the same/similar work. 
  • Information Technology
    • § The IT team examined a more common approach to IT, including to look at common things bought in IT, and to buy these things together. 
    • § The Secretary is especially passionate about bringing IT infrastructure up-to-date in the HCHB building.
  • Human Resources
    • § HR team had the broadest, deepest, and most detailed assessment and design; Ms. Herbst recognized the team for the extraordinary job.
    • § The team assessed the true transactions, paperwork processing, and basic activities that happen regularly, or on a daily basis; these types of transactions would go into a shared service organization, while other aspects of HR would stay within a retained organization. 
      • One major issue in the HR world is the time and effort it takes to hire people. In tackling parts of the hiring process through shared services, the result could have a significant impact if done differently, and in a more timely way. 
    • § All organizations within HR identified transactional work. While most transactional work would be part of the shared service organization, some aspects of services need to stay close to the client/customer, and would stay in the retained organization. 
      • E.g. – some aspects of retirement out-processing is “pure paperwork,” and would go to the shared service organization, while other aspects, like benefits counseling with the employee, would stay in the retained organization. 
  • Recommendation for Sourcing
    • § The recommendation for sourcing is to go outside the Department and find someone that already does this work for us. At the end of September, the Department will be releasing requests for outside proposals. There is currently not a federal provider that has the capacity to provide these services today. 

Ms. Herbst stated that she recognizes that this is a huge change management initiative, with big goals, and big change, including a change in systems, and change in people (both performing and receiving these services). She affirmed that there is a commitment to the highest levels of this Department to work with all employees, and to avoid any lay-offs and RIFs. The Department will work with employees to transition, if needed, into other jobs. There is a commitment to work hard to make sure that a result of delivering better services is also taking care of Department employees.

Further communication with Department employees is the next step, including a more in depth conversation with those working directly in the shared services areas. There will also be communication with those employees not in these areas. Ms. Herbst asked everyone to be committed to be open and transparent, and to express concerns transparently to those who can answer questions. She noted that there was a major effort to tease out everyone’s questions regarding the 21st century open office space, and that is part of what made it such a successful move. She emphasized that there was no question too small, which led to a better plan, and a better space. Ms. Herbst thinks that the same transparency would help with the shared services initiative. 


A member expressed the great description of the shared services initiative by Ms. Herbst, in excluding terms like “reorganization” or “contracting out.” The member conveyed that the concern of labor is the before and after results in transitioning. The concern is that someone from outside will be doing the work of current employees, and the member wanted to know if this is in fact a reorganization. 

The member also pointed out the positive media coverage in Federal News Radio of Census’ efforts to hire quicker to meet their needs through a business management process. Management thanked the member for highlighting Census’ efforts, and stated they are looking forward to the day that this can be done for mission critical occupations, without a focus on so much transactional work. 

A management member emphasized that the before stage is where we are today, and that there are certain problems with it. One example is that HR spends more than one third of work time answering questions. The management member cannot clearly say what the future state is, but that we are getting closer to its definition. Ms. Herbst also noted that in the past, information wasn’t shared that wasn’t fully defined, and that the future state definition is still being formed. Putting in place some new technology, and process changes, will shape the future state, and also allow current employees in the shared services areas to focus on more mission oriented work. 

A member brought up the Federal Activities Inventory Reform (FAIR) Act, which provides a process for identifying the functions of the Federal Government that are not inherently governmental functions, and was concerned that the process being set up for shared services could go right through areas that are “inherently governmental.” The member’s concerns were that without having a future state defined, any job could be argued as not “inherently governmental,” and that this precedent would be a disservice to the civil service. 

Management stated that at end of the day, all employees will be impacted some way. While things may be shifted around, there are career opportunities for people who want to learn something different, and employees will need to make a decision as to what their future is. There will be something for everyone to do, but it may not be the same as their current position. Ms. Herbst emphasized that as a manager, she wants HR professionals to be able to focus on workforce planning, strategic planning, attrition rates, development, etc…and when someone is focused on paperwork and tracking forms, they may not be able to focus on this type of work. By freeing up transactional work, employees may be able to focus on these strategic areas. She takes the fact that jobs will be changing very seriously. A member called this a reorganization, and wants to make sure that all the rules are followed, if this is the case. Ms. Herbst took this as a question and will follow up with the member. 

Another member thought that the shared services initiative was still being worked on within the context of the Labor Management Forum (Forum) and wanted to know how to determine what goods/services would get budget priorities if these services were now shared. Specifically, USPTO wanted to assure that their collected fees still go to their costs. Ms. Herbst confirmed that the shared services initiative will not impact budgetary decisions by bureaus in any way, and that USPTO did participate in the assess phase, along with every operating unit, and sees places where they’d like to participate in the initiative. 

The member was also concerned that the shared services initiative was focused on efficiency, but Ms. Herbst confirmed that’s not the case, as the focus is to deliver higher quality services more effectively. A member asked if this conversation will continue in October, and it was confirmed as a standing topic for the Forum. Mr. Kukovich confirmed to the Forum that he is the current “working group,” and that more labor members can be added to the group.

Action Items Person Responsible Deadline
Determine if this needs to follow reorganization rules and will follow up with working group (Ken Kukovich) Ellen Herbst TBD