A pre-mortem on OPM’s HR 2.0 initiative: Imagining failure in order to support success
Large-scale IT modernization projects fail with remarkable regularity. They fail in private companies with strong profit incentives and unified leadership. They fail in state and local governments with narrower missions and simpler constraints. And they fail — often spectacularly — in the federal government. Entire multibillion‑dollar industries exist precisely because implementing large, complex software, including Enterprise Resource Planning (ERP) systems, is hard: technically complex, organizationally disruptive, politically fraught, and culturally destabilizing.
OPM’s new HR 2.0 initiative is therefore entering hostile terrain by default. The initiative aspires to rationalize, consolidate, and modernize a sprawling thicket of federal human resources systems that has grown organically over half a century. It seeks to replace dozens of agency‑specific solutions, hundreds of interfaces, and innumerable manual workarounds with a standardized, interoperable, enterprise‑wide platform capable of supporting modern workforce management.
Those of us who have followed federal HR modernization for years desperately want this effort to succeed. The current HR IT landscape is costly, brittle, opaque, insecure, and increasingly misaligned with how the federal government needs to recruit, manage, pay, and deploy its workforce. As OPM has documented and independent research shows, the federal government likely wastes billions of dollars maintaining hundreds of systems that slow agencies down, force them to duplicate effort, and obfuscate rather than clarify the data required to make business and workforce decisions. Some of these systems are decades old and have been assessed as a high risk to government operations if they should fail. Modernization is no longer optional. It is a prerequisite for addressing mission delivery, workforce planning, and public trust.
But optimism is not a plan, and aspiration is not execution. In our experience, the greatest danger to large federal IT programs is not a lack of good intentions, but rather a failure to fully internalize how hard it is to succeed and avoid the missteps of the past. In that spirit, this paper adopts an intentionally uncomfortable posture: It is a pre‑mortem. Rather than waiting until a future GAO report, Inspector General audit, or congressional hearing explains why this effort underperformed, we imagine that possible failure mode now.
We assume — purely for analytical purposes — that OPM’s HR 2.0 initiative did not achieve its intended outcomes. From that hypothetical vantage, we ask:
- What were the most likely failure modes that doomed the effort?
- What could OPM, OMB, Congress, and agencies have done earlier to materially reduce those risks?
- What questions should OMB and OPM leadership be asking today to avoid that outcome?
OPM, agencies, and OMB have already invested substantial time and energy in planning this effort. This paper is intended to complement — not undermine — that work by surfacing structural vulnerabilities early, when they can still be addressed. This, in turn, can help guide implementation teams’ focus today under the presumption that success, with care and forethought, is possible despite all the barriers.
HR 2.0 is a good idea, but it has risks
At its core, OPM’s initiative is a good one and addresses an often-neglected part of the federal business enterprise that has long needed attention from senior leadership. It is also perhaps the most ambitious attempt ever made to solve this problem once and for all. In fact, OPM has made a series of choices related to how it has structured the program — decisions that demonstrate the administration’s seriousness and commitment, and we mostly agree with the impulse and meaning behind each of them:
- Single award – Currently, several different vendors service the federal government, including Oracle, SAP, and Workday. This creates interoperability and data standards challenges, as upgrades need to be made in each proprietary code-base when policies or directions change. OPM’s approach in HR 2.0 solves this by mandating a move to one, single software company, which can tightly integrate the entire federal enterprise into a standard solution that is easier and cheaper to maintain.
- Direct contracting with software OEM – Historically, when agencies moved to new systems, they contracted with a large system integrator (SI) that served as something of a middleman between the agency and the company that actually built the software. These SIs served as translators between the two groups: business requirements from agency to vendor, technical specifications from vendor to agency. However, this creates additional cost and management complexity as the agency relies on a third party to act in its interests. OPM’s approach in HR 2.0 solves this by establishing a direct contracting relationship between OPM and the eventual software vendor so that OPM can control vendor behavior and changes to the underlying single code-base.
- Recoup costs from agencies – There are a variety of models for funding mandatory government-wide services, including both specific appropriations and also pooling funds from agencies to a central account. For HR 2.0, OPM appears to be electing the latter, which gives agencies “skin in the game” and ownership of the resulting solution: They’re paying for it, so they are true customers rather than simply takers of OPM’s direction.
- Explicit direction to agencies – There are various ways to drive adoption of single solutions. OPM and OMB have elected to pursue a top-down, mandatory, whole-of-government approach that establishes a schedule and mandates adoption. This solves many common collective-action problems across government: No agency wants to go first and everyone would prefer to push the timeline out as far as possible.
However, we also know how hard this is going to be, both because of our own experience working on this topic inside the federal government ,and because the government has failed at this exact exercise before. In fact, it has already failed at this project this decade.
Learning from DoD’s failure
In March of 2025, Secretary of Defense Pete Hegseth released a memo and then a video highlighting an effort to cut wasteful spending and putting several programs on hold. The first program on his list was the Defense Civilian Human Resources Management System, or DCHRMS (pronounced dee-charms in classic defense bureaucracy style).
The program had been “intended to streamline a significant portion of the Department’s legacy Human Resources (HR) information technology stack – an important mission we still need to achieve – but further investment in the DCHRMS project would be throwing more good taxpayer money after bad.” In his telling, the program was “780 percent over budget. We’re not doing that anymore.” It was over — the DoD had tried and spectacularly failed to move to a single HR system for just its own department. This high-profile bust is exactly what we mean when we say this type of HR IT modernization is hard and fails all the time.
The project originally started in 2018 as a $36 million, one-year proof of concept and then morphed into a years-long effort to consolidate at least six separate DoD systems based on Oracle’s E-Business Suite software onto a single, DoD-wide Oracle Cloud HCM platform. The project moved from proof of concept into full execution without a formal acquisition or rigorous planning, leaving the systems integrator that managed the legacy systems also in charge of implementing the new system. The department tried mightily to standardize business processes across DoD services. But people familiar with the project say that middle managers and subject-matter experts across the department added requirements that led to scope creep as the project wore on. As the project timeline began slipping, Oracle introduced new technologies and features that led to further slippage to incorporate them into the program baseline. By the time the program was cancelled, it was not clear what DoD’s measures of success were. That the integrator responsible for deploying the new system was simultaneously profiting from operating the legacy systems also presented an obvious conflict of interest.
The DCHRMS saga maps several pitfalls associated with large-scale enterprise IT modernization programs. The failure to maintain a rigorous convergence baseline and guard against scope creep is one. That seems to have been compounded by a business model and accountability structure that were not well thought through or did not adhere to best practices. And ultimately, by the time it became clear that the program was unable to deliver concrete, measurable outcomes in a reasonable and well-defined timeframe, the state of technology had evolved, rendering the program’s initial targets irrelevant and forcing the program to rebaseline.
These reasons for failure are not unique to DCHRMS, nor are they unforeseeable. In fact, they are some of the most common failure modes that doom complicated, multi\stakeholder technology implementations in complex organizations. Not even the DoD’s generally deferential-to-leadership and can-do culture could overcome them.
Predicting failure modes and mitigating the risks
For OMB and OPM to avoid this fate for HR 2.0, they need to consider the possibility of failure and take the risks of their approach head on. DCHRMS was a good idea, too, but good ideas only get you out of the gate and not over the finish line.
Based on our experience, we’ve imagine what the failure modes might be; suggest mitigations; and, crucially, articulate the questions leaders should be asking today to try to avoid failure in the future.
Failure mode 1: The single-award strategy backfires, or Industry doth protest too much
Scenario: In early 2026, GSA awarded the government-wide contract to implement HR 2.0 to a single vendor after a competitive evaluation,but the project quickly went the way of JEDI. Within weeks, two unsuccessful offerors — gigantic tech companies with deep pockets and nothing to lose — filed protests with GAO, arguing that the evaluation criteria unfairly favored the awardee’s architecture and that OPM had failed to adequately consider total cost of ownership. GAO sustained one protest on narrow technical grounds, requiring a reevaluation. That process took months, during which a third vendor protested, alleging the revised criteria were designed to reverse-engineer the original outcome. By the time the litigation resolved in late 2027, OPM had lost its original program leadership, the vendor’s proposed technical team had largely dispersed to other projects, and three agencies that had been preparing for early implementation had redirected their modernization budgets elsewhere.
The single-award approach isn’t inherently flawed, but it demands unusual discipline in execution and presents significant risks. OPM and GSA must assume protests are coming and prepare accordingly, both legally and programmatically. Their goal should be twofold: make protests less likely to succeed on their merits, and structure the program so that even a sustained protest doesn’t collapse momentum entirely. Here’s how:
- Build legitimacy through transparency. Proactively explain the award decision to appropriators, GAO, industry associations, and agency stakeholders. When policymakers and others understand and accept the rationale, vendors have less political cover for delay tactics. This will set the stage for effective vendor debriefs as well.
- Build innovation incentives directly into task orders. Normally, the federal government drives innovation in its vendor base through competition: Companies compete to offer the mix of capabilities relative to price and are incentivized to lower their work margins. In a single-award model, OPM loses some of this competitive pressure to innovate. As a result, rather than assuming innovation will emerge organically as a result of market forces, OPM should explicitly reward it. This could include incentive fees tied to measurable improvements in usability, automation, or data quality, as well as structured mechanisms for piloting and scaling new capabilities.
- Protect exit options. Require data portability in nonproprietary formats and government ownership of custom code. Real exit options, even if unlikely to be exercised, weaken the “lock-in/lock-out” narrative that makes protests attractive.
- Maintain the ecosystem. A curated marketplace for ancillary solutions (i.e., microsolutions outside the scope of the current contract) keeps competitive pressure alive and gives losing vendors a reason to stay engaged with the federal government rather than litigate over the loss of their entire market share.
Key questions for OPM and OMB leadership to ask: What is our realistic timeline and budget for protest and litigation? And have we structured the program so that a significant delay won’t collapse momentum entirely?
Failure mode 2: An OPM-led, OPM-managed effort becomes a bottleneck or Herding Cats Is too Hard
Scenario: By mid-2027, the program had a governance problem that no one wanted to name. OPM had established an impressive array of boards, councils, and working groups, but decisions that should have taken days were taking months. Agency requests for configuration changes sat in queues. Escalation paths were unclear. When disputes reached senior leadership, they often got sent back for “more analysis.” Agencies, meanwhile, learned that the fastest path to resolution was to route around OPM entirely: calling OMB, complaining to appropriators, or simply delaying participation until someone else went first.
Centralizing authority at OPM makes sense in theory: It’s the government’s HR agency, and fragmented leadership doomed earlier efforts. But centralization only works if OPM has the capacity to actually lead, and if governance structures enable decisions rather than defer them when agencies push back — and they will push back. This requires deliberate investment in both institutional capability and stakeholder engagement:
- Build capacity before you need it. OPM will need staff profiles it hasn’t historically employed at scale: senior IT program executives, enterprise architects, contracting specialists, and financial managers. Borrowing talent through detailees can help initially, but durable capability requires permanent investment and new types of positions.
- Design governance for speed. Establish clear decision rights, escalation paths, and timelines at every tier. Linked governance bodies must cover the full range of strategy, policy, contracting, operations, stakeholder engagement, and performance. They should have authority to resolve issues, not just discuss them. When decisions are kicked up the ladder, there should be a deadline for resolution.
- Develop model interagency agreements (IAAs). Standardized IAAs with explicit service levels, cost allocation, and dispute resolution will reduce the transaction costs that otherwise consume leadership attention.
- Make agencies partners, not passengers. Leverage the Chief Human Capital Officers (CHCO) Council not only as a communication channel, but also as a genuine forum for surfacing concerns and shaping implementation. Agencies need to see that their expertise matters, even when their preferred approaches don’t prevail.
- Treat HR 2.0 as a product, not as a project. HR 2.0’s success relies not simply on the implementation of a new IT system, but on the ongoing evolution of the features and functionalities that will enable the system to respond to and meet the needs of agency users. The private sector, and increasingly parts of the government, have adopted a “product operation model” to manage around these constraints. OPM should leverage the considerable experience its HR Solutions organization has with this model and mindset to adopt many of these management principles for HR 2.0.
Key questions for OPM and OMB leadership to ask: Does OPM have — or can it rapidly build — the programmatic capacity to manage a government-wide implementation? Or will it need to partner more deeply with other organizations to fill critical gaps?
Failure mode 3: Contracting directly with OEMs goes awry, or Integrators were integral after all
Scenario: The idea was novel: contract directly with the software company, make it accountable for delivery, and relegate the big integrators to supporting roles. However, what no one fully appreciated was that the OEM had never run a federal program at this scale. Its government practice was built around licensing, not implementation. When agencies reached out to them directly, staff struggled to handle their dual role as client navigator and enforcer of standards. Meanwhile, the integrator subcontractors had little incentive to go beyond its narrowly defined task orders; It had learned from experience that exceeding scope meant absorbing risk. By 2028, the program had developed a peculiar dysfunction: The OEM nominally owned delivery but lacked the expertise to drive it, while the integrators who had the expertise lacked the authority or incentive to deploy it. Problems that should have been resolved at the working level instead became triangular disputes among OPM, the OEM, and whichever integrator happened to be nearby when something broke.
Contracting directly with the OEM aligns authority with product knowledge, a real advantage when implementation challenges stem from product limitations. But OEMs are product companies, not delivery organizations. Making this model work requires treating the OEM relationship as a partnership to be developed, not a vendor to be managed, and designing governance structures that compensate for predictable gaps. Here’s how:
- Conduct rigorous OEM due diligence. Go beyond product maturity to assess delivery capacity, federal acquisition experience, subcontractor management capability, and organizational culture. How does the OEM handle failure? How does it resolve disputes? What’s its approach to managing agency customers?
- Design governance as a “team of teams.” The OEM should orchestrate, not micromanage. Agencies and their integrator partners need clear roles and enough autonomy to solve problems without constant escalation. Decision rights should be explicit and documented.
- Stress-test capacity assumptions. OEMs may underestimate what federal implementation requires: cleared staff, program management depth, constant stakeholder engagement. Validate their staffing plans and scaling assumptions before award, during early execution, and down the stretch to avoid foreseeable issues.
- Anticipate finger-pointing and design around it. Establish clear responsibility matrices distinguishing product issues from configuration or data issues. Create joint risk registers and escalation paths that prioritize resolution over blame.
- Maintain a curated marketplace for extensions. Even the best core system won’t cover everything. OPM and the OEM should jointly certify integrator-built solutions to ensure they align with enterprise standards without stifling innovation.
Key Questions for OPM and OMB leadership to ask: Has the OEM ever successfully delivered a program of comparable scale and complexity? And if not, what governance structures will compensate for that inexperience?
Failure Mode 4: Configuration management becomes unmanageable, or The Christmas tree collapses under its own weight”
Scenario: No one could point to the moment the baseline stopped being a baseline. It happened gradually, one exception at a time. An agency with a unique pay authority needed a configuration variant; that was legitimate. Another agency’s union agreement required a different leave-tracking workflow; that was unavoidable. A third agency wanted to preserve a legacy-report format that its budget office depended on; that was easier to accommodate than to fight. By 2028, the “standard” system had 17 major configuration branches, 42 approved extensions, and an uncounted number of agency-specific workflows that had been implemented as “temporary” accommodations. The vendor’s upgrade cycle, originally planned for quarterly releases, slipped to annual. Even then, each upgrade required months of regression testing across configuration variants to ensure that push of new commercial code didn’t break these customizations. The government had succeeded in replacing dozens of legacy systems with a single modern platform. Unfortunately, it also had recreated the fragmentation that modernization was supposed to eliminate.
Configuration pressure is inevitable. Federal HR is governed by multiple statutory regimes, and agencies will always have legitimate reasons for divergence. Some amount of tailoring is inevitable, but the major goal OPM should consider is how it might govern the solution so that exceptions remain exceptions rather than becoming the new normal. This requires treating configuration management as a strategic discipline, not an administrative afterthought. Here’s how:
- Define the baseline clearly and defend it. Establish explicit standard processes and hold agencies to them unless divergence is legally required. “We’ve always done it this way” is not a sufficient justification.
- Create a hierarchy of tailoring options. Not all customization is equal. Advanced configuration within the product is preferable to extensions; extensions are preferable to bolt-on integrations; core product modifications should be rare and require executive approval.
- Sequence for simplicity. Start implementation with smaller, less complex agencies to establish guardrails before tackling organizations with intricate labor agreements and statutory exceptions.
- Use funding as a governance lever. Agencies should pay for tailoring beyond the baseline but only after accepting and implementing the standard. This creates natural friction against unnecessary divergence.
- Make configuration decisions transparent. Publish what’s been approved, what’s been denied, and why. Transparency counters the belief, widespread in government, that “everything we do is special.”
- Align with civil service reform. Configuration complexity is downstream of policy complexity. OPM and OMB should work with Congress to explain how statutory exceptions drive cost and discourage future proliferation.
Key Questions for OPM and OMB leadership to ask: Who has the authority to say “no” to an agency’s configuration request> And will those with that authority get backup when politically powerful agencies push back?
Failure mode 5: Funding is insufficient, unreliable, or unsustainable, or The passed hat drops
Scenario: The funding model mapped to a usual format for government: Agencies would pay for their participation, OPM would recover costs through its revolving fund, and the program would be self-sustaining once it reached scale. What the model hadn’t accounted for was the messy reality of federal budgeting. Three agencies requested implementation funding in their FY 2027 submissions; two were denied by their appropriations subcommittees, who saw HR modernization as discretionary against more pressing mission needs. A fourth agency had funds but couldn’t obligate them in time because its IAA with OPM was still being negotiated. By 2028, the program’s wave schedule had been revised four times, each revision eroding vendor confidence that the government was serious. The OEM, facing uncertain volume, quietly raised its per-agency pricing to hedge against lower-than-expected adoption. Agencies that had been on the fence used the chaos as justification to wait. OPM found itself in the worst of all positions: accountable for a government-wide program but dependent on agencies it couldn’t compel and appropriators it couldn’t control.
In the federal government, budgets are political documents as much as they are management ones. The way money flows determines who has authority, who bears risk, and who ultimately decides what gets built. A distributed funding model may be administratively orthodox, but it diffuses accountability in ways that are toxic to enterprise modernization. OPM and OMB should treat the funding architecture as a strategic design decision, not an inherited constraint. Here’s how:
- Seek direct appropriations for implementation. Congress should appropriate funds to OPM specifically for the implementation phase, with a defined transition to a revolving fund model for operations and maintenance. This gives OPM real authority to enforce configuration discipline and control sequencing without having to beg, borrow and steal from across government.
- Partner early with OMB and appropriators. Don’t wait for the budget cycle to explain why traditional funding models are ill-suited to enterprise transformation. Build the case now for why centralized implementation funding produces better outcomes at lower long-term cost, and take advantage of the opportunity to explain how viewing this initiative through a product management lens implies the need for a different funding strategy.
- Impose transparency on revolving fund operations. If agencies will eventually pay through the revolving fund, they need clear visibility into what they’re paying for. Publish cost drivers, configuration decisions, and tradeoff rationales.
- Plan for multi-year commitment. Seek multi-year appropriations where feasible. They reduce annual renegotiation risk and signal to vendors, agencies, and oversight bodies that the government is serious.
- Use funding to enforce sequencing. Agencies that want to delay should understand that funding availability may not wait for them. Early participation should carry advantages; late entry should carry costs.
Key Questions for OPM and OMB leadership to ask: Can this program realistically achieve its objectives through distributed agency funding? Or does success require a level of centralized financial authority that OPM does not currently have, at least at the implementation phase?
Failure Mode 6: Agencies are not ready when their turn comes, or Agencies miss their marks
Scenario: OPM and the OEM did their parts. The contract was awarded, governance was established, and the wave schedule was published 18 months in advance. What no one had fully reckoned with was the state of agency readiness. The first wave included 4agencies, chosen for their manageable size and expressed enthusiasm. Two were genuinely prepared: Their data was clean, processes were documented, and change management was underway. The other two had overestimated their readiness. One discovered during configuration that its position data existed in three different systems that had never been reconciled; cleaning it would take nine months. The other had documented its “as-is” processes, but those documents described how the agency thought things worked rather than how they actually worked, a gap that surfaced only when end users began testing. OPM faced an uncomfortable choice: delay the wave, which would ripple across the entire schedule; lower quality standards, which would embed problems into the baseline; or push forward and absorb the pain.
Agency readiness isn’t just an agency problem, it is also a program problem. OPM can execute flawlessly on procurement, governance, and vendor management and still fail if agencies aren’t prepared when their turn comes. That means readiness requirements need to be specific, measurable, and consequential. Agencies have incentives to obfuscate their readiness until it’s too late if they don’t think you’re serious or don’t understand what you’re asking them to do. OPM needs a clear escalation path if agencies miss their marks. Here’s how:
- Define clear readiness thresholds. Agencies need specific targets—data quality metrics, process documentation standards, and change management milestones—not general encouragement to “prepare.” These thresholds should be published early and tied explicitly to wave eligibility.
- Assess readiness independently. Self-reported readiness is unreliable. OPM should establish assessment mechanisms—whether internal or third-party—to validate agency preparation before committing to implementation dates.
- Make sequencing flexible. Wave schedules should be benchmarked against readiness, with the explicit expectation that agencies can be swapped based on objective criteria. Agencies that are ready should move forward; agencies that aren’t should wait.
- Provide resources for preparation. Readiness work requires investment—staff time, contractor support, leadership attention. OPM should issue detailed preparation guidance immediately upon award and establish contract vehicles for data cleanup, process reengineering, and change management.
- Incentivize early engagement. Agencies with complex needs should be encouraged to participate in early planning, even if they won’t implement in early waves. Early involvement confers influence and builds the expertise that makes later implementation smoother.
Key questions for leadership: How will OPM distinguish among agencies that are genuinely ready and those that merely believe they are? And what happens when an agency in the latter category is scheduled for an early wave?
Failure mode 7: Executive sponsorship wanes over time, or Government takes its eye off the ball
Scenario: For the first two years of the term, the program had everything it needed: White House attention, OMB backing, an OPM Director with the right skills who made modernization a personal priority, and agency heads who understood they were expected to participate. Then, as happens in nearly every term, political appointees began to turn over. New appointees came in after the midterms with different priorities. The career staff who understood the program’s history remained, but their authority to make decisions — and their air cover when those decisions were contested — evaporated. Agency executives who had reluctantly committed to early waves found that their objections now received a more sympathetic hearing. By 2028, the program still existed: contracts were in place, some agencies had implemented, governance bodies still met. But the urgency was gone. Wave schedules slipped. The program had become one of many initiatives rather than the initiative. It would eventually deliver something — but not the enterprise transformation that had been promised.
Executive attention is a wasting asset. It cannot be sustained indefinitely through personal commitment alone: Eventually, leaders move on, priorities shift, and attention migrates to newer challenges. The only way to protect a multi-year, multiadministration program is to convert early momentum into durable structures that don’t depend on any single leader’s continued engagement, and embed support for this program in the career staff who will need to sustain it across agencies far into the future.
- Codify governance beyond individuals. Decision rights, escalation paths, and performance standards should be documented and institutionalized, not dependent on personal relationships or informal understandings.
- Build a permanent career backbone. Political leadership is transient; career leadership is not. Invest in a cadre of SES leaders at OPM and participating agencies who understand the program’s full arc and are empowered to sustain it across transitions.
- Secure bipartisan congressional support. Frame the initiative as state-capacity investment, not an administration priority. Active engagement with authorizers and appropriators across parties is essential; without it, the program becomes vulnerable to being labeled discretionary or ideological.
- Lock in early wins. Move quickly to establish durable artifacts — contracts, standards, migrated agencies — that create facts on the ground. Reversal becomes harder when real implementation has occurred.
- Practice radical transparency. Publish progress, setbacks, costs, and tradeoffs. Transparency builds the credibility that sustains support across leadership transitions and reduces the risk that future leaders view the program as a black box inherited from predecessors.
Key question for OPM and OMB leadership to ask: What specific structures, commitments, and artifacts can be put in place in the next 18 months that would make it difficult for a future administration to abandon or significantly scale back this initiative?
OPM needs to manage the risk without paralyzing the program
All of these failure modes are, in our view, plausible but they are not inevitable. The fact that they’re extremely foreseeable makes them easier to plan around.
The good news is that the risks facing this initiative are not primarily technical. Whomever OPM selects as the vendor will likely be able to deliver some kind of working product. Rather, the risks are mostly governance risks, capacity risks, and incentive-alignment risks. The bad news is that these risks are harder to mitigate, and addressing them requires more than better requirements or more detailed project plans. It requires a conscious effort to design institutions, funding flows, and oversight mechanisms that help the program succeed rather than simply document its shortcomings.
With this in mind, there are some things that OPM and OMB can do to get a better hold on them. In particular, there are programmatic opportunities to rethink the use of independent verification and validation (IV&V) and the role of other actors in the federal ecosystem, such as Congress, GAO, and OMB, who often play their roles as overseers, authorizers, and advisers in the process of transformation. There are also obvious lessons from private sector product management experience that can help reduce the risk of a catastrophic meltdown posed by large-scale waterfall implementations.
Traditional IV&V models often emphasize exhaustive risk identification, which may be appropriate for discrete, bounded systems. However, for a multi-year, enterprise-scale transformation operating in a high-risk environment, a more useful IV&V strategy would be selective, staged, and decision oriented. Rather than attempting to monitor everything at once, IV&V should focus on a small number of high-leverage risk domains aligned with the failure modes identified in this paper, such as configuration governance and convergence discipline, funding adequacy and sustainability, agency readiness and sequencing decisions, and executive sponsorship and institutionalization. Within these domains, IV&V should aim not merely to assess compliance, but to inform real decisions: whether to pause, resequence, simplify, or escalate. Stage gating the implementation based on these factors (rather than just cost, schedule, and performance) can help OPM and OMB course correct when they need to rather than barrel ahead until it is too late.
In conjunction with this, OPM should lean into its relationship with stakeholders such as Congress and GAO. Agencies and program managers often avoid interacting with these officers because such interactions seem to invite scrutiny and criticism. But this program, with its size and ambition, will not avoid scrutiny along the way. And engaging these powerful actors earnestly up front offers OPM the best chance it will have to enlist them as allies and secure longer-term sponsorship for this important effort.
Finally, OPM should consider adopting a product operating model for HR 2.0 rather than managing it as a traditional, time-boxed “waterfall” IT project. As our colleagues have previously argued, the product operating model directly counteracts several of the failure modes identified in this paper. Replacing rigid milestone-based delivery with iterative development cycles reduces the risk of configuration complexity spiraling out of control, because problems surface early and can be corrected before they calcify into permanent accommodations. Embedding dedicated technical product managers within the program and empowering them to resolve ambiguity, manage scope, and make tradeoff decisions addresses the governance bottleneck risk by ensuring that day-to-day decisions don’t require constant escalation to senior leadership. Continuous, outcome-based funding aligned to a product model mitigates the funding fragility by shifting the budgetary conversation from one-time project appropriations to sustained investment in a living service. And because the product model emphasizes organizational alignment with outcomes rather than obstacles, it helps insulate the program against the loss of executive sponsorship: durable team structures, institutionalized feedback loops, and transparent progress metrics create continuity that persists even as political leadership turns over.
In short, the product operating model is an institutional design that would reduce the probability of several of the most dangerous failure scenarios HR 2.0 faces, and in doing so, increase the probability of historic success.
A Final Observation
Federal HR IT modernization is ambitious because it must be. The federal government is one of the largest single employers in the world and it runs on badly outdated and outclassed HR software. The status quo is unsustainable. Fragmentation, duplication, and opacity carry their own costs and risks. The choice, then, is not between risk and safety. It is between managed risk and unmanaged risk. The failure modes outlined in this paper are not predictions — they don’t have to come true — but they are warnings. Each represents a point at which deliberate choices can either compound fragility or build resilience.
The success of this initiative will depend less on technical execution than on leaders willing to confront these choices honestly, early, and repeatedly. That, more than any single procurement or platform decision, will determine whether HR 2.0 becomes a foundation for reform — or another cautionary tale about a federal IT meltdown…
Appendix: A brief history of HR IT modernization and consolidation in the federal government
Early agency‑built HR systems
Federal agencies, like their private sector counterparts, began building enterprise HR and payroll systems in the 1970s. These systems were typically bespoke, homegrown solutions designed to meet the specific needs of individual agencies. They were written in what was then state-of-the-art programming languages such as COBOL and Natural, languages that are now considered archaic, despite the fact that they continue to underpin mission‑critical systems in the banking industry and across government.
At the time, this approach made sense. Commercial HR software barely existed, and the federal government was already one of the largest employers in the world. Computing helped agencies manage complex, routine tasks like payroll and therefore were highly customized. There was little expectation that systems would interoperate across agencies, as the internet did not yet exist in its modern form. Each organization optimized for its own statutory authorities, workforce composition, and operational needs.
Over time, however, these systems accreted complexity. New laws, pay plans, labor agreements, and reporting requirements were layered on top of old code. Documentation decayed. Original developers retired and left little in the way of documentation about what they did. Institutional knowledge became increasingly fragile. What remained were systems that worked — until they didn’t — and that were extraordinarily difficult to modify, integrate, or retire.
The commercial ERP wave
In the 1990s, commercial ERP systems, led by vendors such as SAP and PeopleSoft, rose to prominence in the private sector. Initially focused on manufacturing and finance, these platforms gradually expanded to include HR, payroll, and talent management functionality for almost all large enterprises.
By the late 1990s, federal agencies began adopting commercial HR systems, overwhelmingly selecting PeopleSoft. These implementations promised modernization, vendor support, and alignment with private‑sector best practices. In practice, agencies often customized these systems extensively to replicate legacy processes and accommodate federal‑ and agency-specific requirements inherent in the custom solutions they replaced. While modernization occurred, standardization largely did not.
Payroll consolidation: A rare success
By the early 2000s, the federal government operated more than 20 mostly bespoke payroll systems, each of which did the same basic thing: calculate payroll and send instructions to the Department of the Treasury to process. This level of duplication was expensive and untenable, leading the Bush administration to adopt payroll consolidation as a pillar of its newly minted “e‑Government” agenda and the newly established HR Line of Business.
This effort is notable for both its sponsorship and its execution. The initiative was driven directly by OMB Director Mitch Daniels, with strong leadership from OPM Director Kay Coles James. OPM conducted a formal internal competition among federal payroll providers, resulting in the designation of four agencies — the General Services Administration, the Defense Finance and Acquisition Service (DFAS), the Department of Agriculture’s National Finance Center, and the Department of the Interior’s National (now Interior) Business Center — as payroll shared service providers, responsible for processing not only their own agency’s payroll but also that of several customer agencies. The Department of Agriculture, for example, processes payroll for the Departments of Homeland Security and Justice, while DFAS processes payroll for the Veterans Administration and the Department of Energy, among other arrangements.
Despite early skepticism and schedule slippage, payroll consolidation succeeded for the most part. By 2006–2007, most civilian agencies had migrated payroll operations to one of these providers. OPM later estimated that the effort produced roughly $1 billion in savings and cost avoidance, with continued benefits accruing over time, including better standardization and control over the data supply chain from agency systems to OPM.
Crucially, this payroll consolidation was not explicitly authorized by statute or executive order. It succeeded because senior leaders treated it as a management imperative, and they enforced compliance and sustained attention long enough to overcome institutional resistance.
The long plateau: 2007–2024
After payroll consolidation, OMB sought to extend the shared services model to broader HR functionality. Beginning in 2007, OMB issued a series of memoranda requiring agencies to migrate to approved HR shared service centers when modernizing. This policy trajectory culminated in OMB Memorandum M‑19‑16, which established Quality Service Management Offices for HR, financial management, grants management, and cybersecurity.
Despite these directives, progress was uneven. Some agencies modernized successfully; many did not. Fragmentation persisted. A defining feature of this period was the absence of sustained, senior‑level executive sponsorship comparable to that seen during payroll consolidation. HR IT modernization became a perennial priority — but rarely the top priority.
This rule gives agencies significantly more authority over certain career policy roles. Whether that authority improves accountability or creates new risks depends almost entirely on how agencies interrupt and apply it.
There is a lot to like in OPM’s new memos on federal hiring and senior executives, much of which reformers have been after for years, but there’s also a troubling focus on politicizing the federal workforce.
Without the permitting workforce needed for implementation, the American public will not reap the benefits of rural broadband access, resilient supply chains, and clean, accessible water.
Throughout this phase of work, there are many actions hiring managers and staffing specialists can take to streamline the process and improve the quality of eligible candidates. Most importantly, hiring managers and staffing specialists can collaborate within and across agencies to expedite and simplify the process.