Originally published OPM quietly awards large HR management contract to Workday on by https://federalnewsnetwork.com/contracting/2025/05/opm-quietly-awards-large-hr-management-contract-to-workday/ at Federal News Network
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The Office of Personnel Management is hoping the sole-source, one-year contract it just awarded to Workday, a cloud-based HR services company, will help the agency manage what’s turned into a massive influx of HR work.
As OPM processes federal retirement applications, reductions in force (RIFs) and other rapid workforce overhauls under the Trump administration, the agency said the sole-source contract, awarded without an open competition, was necessary “due to an urgent confluence of operational failures and binding federal mandates that require immediate action.”
“OPM’s fragmented and outdated HR systems have reached a critical failure point, resulting in payroll errors, benefits disruptions and a manual workload that is no longer sustainable,” OPM wrote in its justification of the contract award, published to SAM.gov last week. “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 contract with Workday will cover services for HR and personnel processing, payroll and benefits systems, time and attendance tracking, talent acquisition and performance management, all while ensuring compliance with federal requirements, according to the contract award notice.
“Workday is honored to partner with OPM in modernizing their HR systems to enhance operational efficiency and elevate the experience for federal employees,” a Workday spokesperson said in a statement to Federal News Network.
At the same time OPM made the contract award to Workday, it also told agencies in a new memo that those who use the National Finance Center (NFC) or Interior Business Center (IBC) for payroll and HR services will have to submit all retirement paperwork electronically starting June 2. After July 15, OPM will no longer accept paper submissions and will only take retirement applications through its Online Retirement Application (ORA).
The expedited move to Workday’s HR systems comes as OPM is attempting to meet other approaching deadlines. The agency is aiming to have the contract in place as close as possible to July 15 — the date that the current governmentwide hiring freeze will lift.
The Workday contract will last for one year, at the end of which OPM said it plans to conduct an open competition for the next iteration of the HR IT contract. OPM didn’t say how much the one-year contract was worth and did not immediately respond to Federal News Network’s request for comment.
In its justification statement, OPM said without an immediate contract award, the agency’s current HR systems would require significant manual labor to develop RIF registers. The agency also justified the award by arguing that its current HR systems would be unable “to process the expected doubling of the retirement application backlog with the same quality of service.”
The anticipated influx of retirement applications stems from an increasing number of federal employees who have opted into the Voluntary Early Retirement Authority (VERA) and the second round of the deferred resignation program (DRP).
On top of the immediate HR processing needs, the Trump administration’s upcoming changes to the federal performance management system and recruitment processes also necessitate an immediate award, OPM said in its justification.
“OPM is experiencing a systemic breakdown in its HR, payroll and benefits infrastructure, evidenced by payroll errors, retirement processing delays, grievance filings and serious data reconciliation failures,” the agency wrote.
To manage the massive flood of HR work, OPM stated that Workday is “the only vendor capable of meeting the agency’s immediate, multifaceted requirements,” given the contractor’s single cloud-based platform for HR systems, ability to provide real-time dashboards and alignment with federal-specific requirements — among several other reasons.
“Market research and inter-agency consultation found no other provider that meets this combination of requirements with similar speed, scale and government experience,” OPM wrote. “This acquisition is not the result of poor planning, but rather a response to an unanticipated acceleration of operational crises and federally imposed deadlines.”
Some employees within OPM, however, are casting doubt on the contractor’s ability to manage the government’s highly complex HR systems, particularly its federal payroll systems.
“Pay is one of the things the existing HR shared service providers already do very well,” an OPM employee familiar with the contract award, who requested anonymity to be able to speak candidly, told Federal News Network. “This could either transform the way 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.”
OPM is also ramping up the pressure on agencies to modernize their own HR systems. Wednesday’s retirement guidance said agencies using NFC and IBC should begin training HR staff on the changes prior to June 2.
“For those not serviced by NFC or IBC, OPM will provide a complementary method for electronic submissions. Detailed instructions will be provided at a later date,” OPM Acting Director Charles Ezell wrote. “OPM will coordinate directly with payroll providers to ensure all agencies they service will have access to ORA in the near future.”
Ezell added that future retirement applications will not be accepted in anything but a digital format. Retirement packages sent by paper will be returned to the agency to be resubmitted digitally.
The guidance from OPM comes after the agency announced in February that it had processed a federal retirement application entirely digitally from start to finish for the first time ever.
“Legacy systems, with outdated technology and cumbersome procedures, have delayed retirements and frustrated employees who have dedicated their careers to public service,” Ezell wrote in the new guidance to agencies. “By harnessing modern technology and inter-agency collaboration, OPM has been working to deliver a retirement process that is fast, user-friendly and responsive to the needs of our employees.”
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Originally published OPM quietly awards large HR management contract to Workday on by https://federalnewsnetwork.com/contracting/2025/05/opm-quietly-awards-large-hr-management-contract-to-workday/ at Federal News Network
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