Workday wins, then loses, contract with US Office for Personnel Management

Workday (Nasdaq:WDAY) won a contract to replace the HR systems at the US Office for Personnel Management (OPM) — and then a few days later it lost it, despite having no competition.

Two words on the US government’s System for Award Management (SAM) website put an end to the short-lived single source contract: “canceled justification.”

The contract, awarded on May 2 without a vendor bidding process, and cancelled on May 9, would have been for twelve months of services including core HR processing, payroll and benefits integration with audit-ready reporting, time and attendance tracking, talent acquisition and performance management, and compliance with federal-specific requirements such as FedRAMP, Title 5, electronic SF-52 routing, and audit trails. Compatibility with existing federal IT systems also figured in the requirements.

The implementation was to be complete within 90 days.

At just $342,200 it was a relatively small contract, but it could have led to a larger one given the services OPM provides to other government departments via its current system.

Operational failures

In its justification document for the original contract award on SAM, OPM said, “A sole-source award to Workday is necessary due to an urgent confluence of operational failures and binding federal mandates that require immediate action. OPM’s fragmented and outdated HR systems have reached a critical failure point, resulting in payroll errors, benefits disruptions, and a manual workload that is no longer sustainable.”

OPM used the document to defend its decision to award the contract without a competition, saying, “This acquisition is not the result of poor planning, but rather a response to an unanticipated acceleration of operational crises and federally imposed deadlines. Workday is the only responsible source capable of delivering the required capabilities within the time available, and full and open competition with other vendors would result in unacceptable delays, noncompliance, and mission failure.”

At the end of the contract period, OPM said, it intended to conduct a “full and open competition,” although it added that this would only occur “if no justifiable sole-source condition exists.”

Rule of law

The contract award drew criticism from current and former employees of OPM, Reuters reported, as well as from the Information Technology Acquisition Advisory Council, which makes recommendations to improve federal IT contracting.

IT-AAC director John Weiler thanked the OPM “for upholding the rule of law and taking corrective action” in a post on LinkedIn, adding, “OPM escaped a bruising protest that would have further delayed its HR modernization journey. Hopefully this is a lesson for others looking for shortcuts that the rule of law is not the problem. It’s how we implement!”

Asked about the contract cancellation, a Workday representative would only say that the company “remains committed to supporting the federal government with its HR modernization efforts.”

The OPM did not respond to a request for comment by publication time.

More Workday news:

Workday aims to manage AI agents like employees

Workday to cut 1,750 jobs, shift focus to AI and global expansion

Why are Salesforce and Workday building an AI employee service agent together?

>