US Agency OPM Awards HR Tech Firm Workday Contract in a Non-Competitive Process

The US Office of Personnel Management (OPM) has contracted cloud-based HR platform Workday. OPM processes reductions in force, retirement applications, and other workforce overhauls for the federal government.

According to Reuters, Workday’s OPM contract is aimed at supporting the agency with managing an influx in HR work. Workday’s federal agency contract was single-sourced and awarded without competition.

Justification for Single Sourcing

OPM justified its decision to sole-source the contract due to strict lines. Last week, the agency published a statement on the government website saying its HR systems had reached a failure point.

“OPM’s fragmented and outdated HR systems have reached a critical failure point, resulting in payroll errors, benefits disruptions and a manual workload that is no longer sustainable. Simultaneously, recent presidential directives impose strict deadlines for workforce restructuring and merit-based hiring reforms, requiring real-time workforce data and integrated HR capabilities that OPM’s current systems cannot deliver,” the justification read in part.

Workday’s HR platform agreement will cover a range of services including time and attendance tracking, HR processing, and talent acquisition. Workday will also support OPM with management of payroll and benefits systems, performance monitoring, and federal compliance.

Approaching Deadline

The expedited contracting of Workday’s cloud-based HR systems comes at a time when OPM is working to meet approaching deadlines. The federal agency wants to have the contract commence by July 15 when the government freezes hiring of employees.

Workday’s contract with the OPM is valued at $342,000 and will run for a year. The OPM said it will conduct a competitive contracting process once this period lapses. Workday expressed appreciation for the opportunity to support the agency.

“Workday is honoured to partner with OPM in modernizing their HR systems to enhance operational efficiency and elevate the experience for federal employees,” Workday spokesperson said.

OPM contracted Workday just months after the newly established Department of Government Efficiency (DOGE) sought to reduce federal workforce and contracts. Elon Musk’s DOGE initiative has spearheaded government overhaul efforts that have led to either resignation, firing, or early retirement of 260,000 federal workers. The department has also claimed that it has saved $160 billion for US citizens. However, its calculations have been riddled with errors. Despite this, Workday sees big HR possibilities in DOGE.

“We see it as a massive opportunity for Workday. Spending time in DC, everyone is pulling for Workday. They want to move to our platform,” Workday CEO Carl Eschenbach said in an interview earlier this year.

Casting Doubt

Some OPM employees have expressed doubt at Workday’s capability to handle government HR tasks. According to them, the agency’s current HR system has already been shifted to the cloud and remains functional.

“Pay is one of the things the existing HR shared service providers already do very well. This could either transform the way the government does HR or completely backfire and make things far worse. And in my humble opinion, it’s going to be the latter. I think this will backfire.” An OPM employee said.

OPM staff also described the award as unusual due to the high competition in the industry. Some of Workday’s biggest competitors include SAP Day force and ADP. OPM’s justification memo indicated that another HR systems firm had expressed interest in the contract.

However, the agency chose Workday due to the work it did for Walmart, which is the largest private employer in the US. The agency argued that Workday has worked with other Fortune 500 establishments, which proved its unique ability to meet OPM’s HR needs.

Federal agencies are required to demonstrate compelling and unusual urgency to get approval for sole-souring. They also must demonstrate that selected vendors are uniquely capable of delivering the contract. According to OPM, a competitive bidding process would have delayed its project by up to nine months.