The Office of Personnel Management (OPM) is advancing a sole-source contract with Workday to create a comprehensive human capital management (HCM) solution. This initiative responds to the agency’s fragmented human resources (HR) systems and the urgent need to comply with workforce restructuring and merit-based hiring mandates set by President Trump’s executive orders.
According to a memo from OPM’s Chief Strategy and Innovation Officer, Dennis Johnson, the agency requires more efficient, integrated HR capabilities and real-time workforce data that its current systems cannot provide. The existing HR systems are plagued with challenges, including payroll inaccuracies and excess manual workloads, which hinder the agency’s ability to meet federal guidelines effectively.
Workday is tasked with delivering a cloud-based HR solution by July 15, coinciding with the end of the current federal hiring freeze. The system must include essential HR functionalities such as core HR management, payroll and benefits integration, time and attendance tracking, talent acquisition, and performance management. It is crucial for the new system to comply with federal security standards and must be FedRAMP-certified.
As new hiring regulations take effect on the same date, it is vital for OPM to have visibility into workforce attrition, authorizations, and vacancies, as outlined in the memo. The agency has determined that Workday is the only vendor capable of meeting its integrated needs, particularly given Workday’s extensive experience with large clients, including Walmart and agencies like the Energy Department and Defense Intelligence Agency.
While the memo does not specify financial figures for the Workday contract, OPM anticipates a significant cost reduction—up to 70%—compared to current expenditure. Furthermore, the agency estimates potential savings of $600,000, which would stem from automating processes to comply with the new executive orders.
In selecting Workday, OPM consulted various agencies that have successfully adopted cloud-based HCM systems. The decision to pursue a no-bid contract was driven by the urgency of complying with executive mandates within a six to nine-month timeframe, which would not have been feasible via a traditional procurement process.
The implications of this contract extend beyond OPM, potentially influencing how other federal agencies approach their HR systems in the future. A source has indicated that OPM is leading a broader trend towards the adoption of cloud-based solutions across government agencies, with Workday setting a key precedent. The company is actively collaborating with several federal systems integrators, including Accenture Federal Services and KPMG, to support this transition.
With this pivotal move, OPM is poised to transform its HR capabilities, improve compliance with federal regulations, and set a standard for future government HR system implementations, paving the way for a more efficient and responsive workforce management approach.