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Office of Personnel Management to get new HR system

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Award made to Workday due to 'urgent confluence of

operational

failures and binding federal mandates'

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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

By Alexandra Alper

WASHINGTON, May 8 (Reuters) - The federal HR agency at

the heart of billionaire Trump advisor Elon Musk's efforts to

slash the federal workforce says it has awarded a contract for a

new cloud-based HR platform to Workday without seeking

bids from rivals.

A sole-source award to Workday is necessary due to "an

urgent confluence of operational failures and binding federal

mandates that require immediate action," the Office of Personnel

Management said in a memo uploaded on May 2, citing strict

deadlines from the Trump 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"OPM's fragmented and outdated HR systems have reached a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.

OPM did not respond to a request for comment on the

memo, which was first reported by Washington Technology on

Wednesday. Workday said in a statement that the company was

"honored to partner with OPM" to modernize its HR systems.

The contract, awarded on May 2, comes even as the

Musk-helmed Department of Government Efficiency has sought 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. It also claims

to have saved U.S. taxpayers $160 billion to date, although its

accounting has been riddled with errors and corrections.

News of the single source award came as a shock to some

current and former employees, who described OPM's HR system as

functional and mostly migrated to the cloud already. They

described the single source award as unusual, given the

competition in an industry that includes ADP and SAP.

Dayforce ( DAY ), another competitor, expressed interest in

the project, the memo said, but argued that 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.

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. OPM argued in the memo that a "full and open

competition" would delay the project by six to nine months.

The document did not include a value for the project but OPM

said Workday's pricing for the HR-related tasks such as payroll,

hiring, time and attendance tracking, had been "determined fair

and reasonable," describing it as 70% more affordable than the

existing system.

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.