Stephen Galvan on SBA's outsourcing of financial management services

What exact accounting and budgeting functions did you outsource to the private sector? Which ones did you keep in-house?

Was your functional support of the system also outsourced? In other words, functional SME's understand the business side of the house and also the system side in order to assist users with the system. If your business processes are very similar to other agencies accounting/budgeting processes, then this is usually not an issue for a private agency to take over. However, if they are different the private agency will not be able to interact with the user community as effectively as keeping functional SME support in-house.

Please tell me what you did

Before I answer your question, I would like to clarify for the audience that this effort was not and is not about outsourcing. Rather, it is about leveraging best practices, infrastructure and cost-efficiencies through cross-servicing. Our approach is consistent with the administration’s E-Gov Line of Business initiative, which is designed to improve the cost, quality, and performance of financial management (FM) systems by leveraging shared service solutions.

Now to the substance of your question. We are not outsourcing accounting and budgeting functions. We continue to perform in-house the budget and accounting functions, but in 2003, we contracted out to Corio Inc. the hosting of our administrative accounting system that includes General Ledger, Accounts Payable, Accounts Receivables, and Purchasing.

We did not outsource the functional support of the system. Our direct hire staff continues to perform the functions in-house. We did, however, hire a small business to provide some functional and system support for our in-house staff.

1. What specific FM services (application management, business processes etc.)has SBA outsourced?

2. With the outsourcing of these services, does SBA see itself as in compliance with the Financial Management Line of Business initiative.

3. How does SBA integrated its core financial system with its of financial/mixed systems and the egov't systems (e-travel, e-payroll, CCR etc)?

Is the SBA considering the outsourcing of any parts of the SBA Bond Guarantee Program to a firm, or firms, that can provide the following:

1. Uniform pre-qualification of potential contractor clients by a firm independent of the sureties writing the bonds;

2. Uniform claims handling by a single firm at established rates performed by qualified bond claims handlers;

3. Implementation of risk management tools established uniformily from the "top-down", which will allow for the underwriting of more qualified DBE contractors in the program, at greatly reduced bond losses to the program;

4. Underwriting oversight and accountability by independent and qualified surety underwriters;

5. Pre-qualification of outside legal counsel, at preferred rates, given direction by qualified claims handlers; and

6. Independent analysis of underwriting policies of surety companies, with full accountability of record keeping and periodic audits by qualified surety audit firms?

Is there an interest in implementing a service that will help increase small business participation in the construction market which is typically limited by the bonding capacity? Is this a service under consideration? Who could I speak with to discuss this topic?

Roger

This is not a decision about outsourcing; it is rather about leveraging best practices, infrastructure, and cost efficiencies through cross servicing. What is driving SBA's decision is the Administration’s line of business E-Gov initiative, which is designed to improve the cost, quality, and performance of financial management (FM) systems by leveraging shared service solutions.

We are hosting our administrative accounting system that includes General Ledger, Accounts Payable, Accounts Receivables, and Purchasing.