WASHINGTON: The federal human resources agency at the heart of billionaire Trump advisor Elon Musk’s efforts to slash the federal workforce has awarded a contract for a new cloud-based HR platform to Workday without seeking bids from rivals, raising questions among the agency’s current and former employees.
The workers, consulted on Thursday, described the sole source contract as unusual, given the competition in an industry that includes ADP and SAP. They expressed surprise to see OPM’s largely successful in-house HR platform on track to be replaced.
The Office of Personnel Management said in a May 2 memo that the sole source award was necessary due to “an urgent confluence of operational failures and binding federal mandates that require immediate action,“, citing strict deadlines from President Donald Trump’s administration for workforce restructuring and hiring reforms.
“OPM’s fragmented and outdated HR systems have reached a critical failure point, resulting in payroll errors, benefits disruptions, and a manual workload that is no longer sustainable,“ said the memo.
Workday said in a statement it was “honored to partner with OPM” to modernize its HR systems via the 12-month $342,200 contract. OPM did not respond to a request for comment on the memo, first reported by Washington Technology on Wednesday.
The contract, awarded on May 2, puts Workday in charge of HR-related tasks such as payroll, hiring, time and attendance tracking.
The Musk-helmed Department of Government Efficiency has said it is trying to cut the federal workforce and slash contracts.
DOGE has led an unprecedented government overhaul in which some 260,000 civil servants have resigned, been fired or taken early retirement, according to a Reuters tally. DOGE claims to have saved U.S. taxpayers $160 billion to date, although its accounting has been riddled with errors and corrections.
Among the employees who were shown the door at OPM were many of those charged with running award-winning federal HR platforms like USA Performance and USA Staffing, which OPM spent millions developing for use across the federal government and which the agency now appears to be replacing with Workday.
Deprived of dozens of key support staff, those platforms may in fact be breaking down, two former employees with knowledge of the matter said, adding most of OPM’s HR platforms have already been migrated to the cloud.
“Unusual and compelling urgency”
Usually, to win approval for a non-competitive bidding process, agencies need to demonstrate “unusual and compelling urgency” and show that the chosen vendor is uniquely up to the challenge.
Dayforce, another competitor, expressed interest in the project, the memo said. But the memo said Workday’s work for Walmart, the largest private U.S. employer, and other Fortune 500 companies showed it was “unique” in its ability to scale up to meet OPM’s needs.
OPM argued in the memo that a “full and open competition” would delay the project by six to nine months.
Workday CEO Carl Eschenbach has made no secret of the possibilities he sees 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,“ Eschenbach said in a CNBC interview earlier this year.
