WALES: State Dept’s New $35M Payroll Contract

Payroll AdvanceImage by Jeremy Brooks via Flickr

A Virginia-based company, STG, Inc. (STG) announced yesterday, September 28, 2009 that it has been awarded the Department of State’s Bureau of Resource Management (RM) Worldwide Agency-wide Locally Engaged Staff (WALES) contract. Under this $35 million, 5-year contract, STG will design, develop and implement a payroll solution for more than 90,000 American & Foreign Service National staff and Foreign Service Annuitants.

“The State Department has placed a lot of confidence in STG and we are proud to have been selected for this unique responsibility,” said STG CEO Simon Lee. “STG has a long tradition of providing mission critical support to 20 of the 28 Bureaus and separate offices at the Department. We will continue to provide that same level of support to ensure the success of this important program.”

This is the first time I’ve heard of WALES, the contract, so I had to look it up. Here is what USAspending.gov says about it:

As the exclusive “civilian” provider, over 40 agencies rely on DoS to deliver Foreign Service National (FSN) employee e-Payroll services. This is a major challenge because, in contrast to most multi-nationals, the USG has staff in over 180 countries and must:

* accurately pay 49,000 employees
* comply with 500+ compensation plans tailored to local laws/prevailing practices
* deal with 150+ currencies and their fluctuating exchange rates.

DoS currently operates/maintains four versions of FSNPay in Charleston and Bangkok, each requiring its own cadre of support experts. These 20+ year old, legacy systems represent major operational risk as they require modification each pay period. Moreover, DoS faces similar challenges with respect to the legacy FARADS system (the application used to generate annuitant payments to over 15,000 retired Foreign Service Officers (FSOs) and qualified beneficiaries).

Following rigorous product demonstrations (that were conducted as part of a Sources Sought/Market Research RFI), DoS concluded that several COTS products could address most of the USG’s FSN employee and FSO annuitant payroll needs. This means that WALES will replace this obsolete technology with a single, modern rules-based COTS system better suited to support constant change. This is critical because the USG must satisfy time-sensitive taxation/benefits requirements that arise from legislation/regulatory rules enacted in 180+ countries.

In short, this will help DoS make accurate and timely payments to its FSNs and retired FSOs, achieve clean audit opinions, and continue to satisfy the 40+ agencies that rely on its overseas payroll services. In addition to the USG-wide “share-in” savings achieved by providing e-Payroll services to other agencies, this investment promotes cost avoidance by replacing five payroll systems with one to eliminate redundant:

* Acquisition/deployment activities
* Service center operations
* Hardware
* Software licensing
* System maintenance

These benefits will be largely realized in FY11, following a phased implementation. Total FY2009 spending: $7.0 M; Investment End Date: 09/30/2011

More here on WALES from state.gov. Check out the original solicitation for this contract at FedBiz.

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