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Office of Personnel Management to get new HR system

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Workday gets contract with no rival bids considered

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OPM says Workday has 'unique' ability to meet agency's

needs

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Current and former OPM employees describe process as

unusual

(New throughout, adds details, share price, contract value,

background)

By Alexandra Alper

WASHINGTON, May 8 (Reuters) -

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"OPM's fragmented and outdated HR systems have reached a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 ( DAY ), another competitor, expressed interest in

the project, the memo said. But the memo said Workday's work for

Walmart ( WMT ), 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.