Federal HR Overhaul Faces Challenges to Overcome Past Failures

Consolidating federal HR systems into a single platform by 2028 aims to save billions, but success depends on avoiding past missteps.

Jan. 27, 2026 at 6:39pm

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The U.S. federal government currently uses over 100 outdated and insecure human resources systems to manage payroll and benefits for roughly two million employees, costing billions annually just to maintain. A new initiative, 'Federal HR 2.0,' promises to consolidate these systems into a single platform by 2028, but its success will depend on the government's ability to look beyond the contractors and vendors that created the problem in the first place.

Why it matters

The federal government's fragmented HR infrastructure has led to lost productivity, disruptions for employees, and billions in wasted taxpayer dollars. Consolidating these systems could save money and improve efficiency, but past failures to modernize HR systems raise concerns about whether the government can avoid repeating the same mistakes.

The details

Between 2019 and 2023, federal agencies spent about $3.3 billion on legacy Oracle PeopleSoft and SAP HR systems, with more than half going to maintenance alone. Outdated HR infrastructure also costs the government an additional $1 billion annually in lost productivity. Federal HR leaders spend nearly half their time on manual workarounds and error correction, tasks that modern systems could handle automatically. The 'maintenance trap' has prevented agencies from affording actual modernization efforts.

  • The Office of Management and Budget and the Office of Personnel Management announced plans to consolidate federal HR into a single platform by 2028.
  • Between 2019 and 2023, federal agencies spent about $3.3 billion on legacy HR systems, with more than half going to maintenance.

The players

Office of Management and Budget

The federal agency responsible for overseeing the administration's budget development and execution, as well as evaluating the effectiveness of agency programs.

Office of Personnel Management

The federal agency that manages the civil service of the federal government, including the federal government's human resources and personnel policy operations.

Evan Swarztrauber

A Senior Fellow at the Foundation for American Innovation who previously served as a policy advisor to FCC Chairman Ajit Pai and FCC Commissioner Brendan Carr.

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What they’re saying

“We're not doing that anymore.”

— Pete Hegseth, Defense Secretary

What’s next

OPM is seeking a 10-year, single-award contract to serve two million federal employees, and agencies have been directed to pause their own HR modernization efforts pending this centralized procurement. Congressional oversight and legislation like the bipartisan SAMOSA Act could help ensure the success of Federal HR 2.0 by increasing transparency and accountability.

The takeaway

The federal government's history of failed HR modernization efforts has created a 'maintenance trap' where agencies spend billions just to keep outdated systems running, leaving little budget for actual improvements. Federal HR 2.0 represents an opportunity to break this cycle, but only if the government can avoid repeating the mistakes of the past by moving away from the contractors and vendors that created the problem in the first place.