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Jul 17, 2008


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Please allow me to make a few critical points for your and others' consideration:

Lockheed Martin (LM) is a bonefide provider of HR-related services to the Federal Government. In addition to the TSA contract, LM can claim the US Air Force as its client. LM and its team are serving as this armed services branch's strategic partner for HR transformation.

Accenture's loss is, indeed, a big deal -- not just in lost revenues (from $1.2B to $3B in TCV), it gave Accenture the "bonefides" to play in the Federal Government HRO marketplace.

HRO in the Federal Government is here to stay ... but it's different. The Office of Management & Budget recently submitted a report to Congress on the HR Lines of Business program(http://www.whitehouse.gov/omb/egov/documents/2008_HRLoB_Report.PDF) that provides a strong case for continued support of the initiative.


Interesting points. Taking a broader view, you have to question the ability of public sector entities to take on BPO services. I recall all the issues with the UK's Inland Revenue, National Health Service, not to mention the States of Florida and Georgia. It appears, based on multiple situations over the last decade, that public sector operational heads are too quick to eject their service providers than work with them to improve service delivery. I have also seen several outsourcing evaluations with public-bodies which were painful, unsuccessful engagements that never came near to fruition. Change is not something these orgs embrace well.

Commercial firms also struggle in many instances to achieve operational success in BPO situations, but tend to work harder with their providers to get it right, rather than scream from the rooftops after 2/3 years and eject them after a single contract term.

Good luck to Lockheed Martin - I hope they can sway the attitude of public sector leaders to be more proactive and positive towards supporting their outsourcing relationships.


If rumors are true that Accenture had performace issues as a major contributor to their not being selected for this much larger opportunity, other agencies will take this to heart as they make their own decisions on HRO. Federal $$ paid for the startup of a lot of new lines of business for firms like Accenture and IBM, so I do expect we'll see Lockheed Martin, which has been working on its HRO business for more than three years (based on their requests to me for participation in pursuits), expanding in HRO to state and local governments and then to te private sector IF they get this right.

All excellent points Phil. What many may forget is that Accenture is the only external service provider authorized to provide payroll services to federal agencies vis-a-vis the HR Lines of Business (LOB) initiative. The HR LOB's represent five internal shared service centers and four external shared service providers that are eligible to compete for the human resources needs of all federal agencies. (See http://www.opm.gov/egov/HR_LOB/ for more details) I point this out only to underline your view that although this represents a significant victory for Lockheed Martin, this by no means spells defeat for Accenture.


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