Workday Secures Sole-Source Contract with OPM for HR Overhaul

WASHINGTON, D.C. — The Office of Personnel Management (OPM) has awarded a sole-source, one-year contract to Workday, a cloud-based human resources services company, to modernize its federal employee payroll, benefits, and performance management systems, OPM announced on May 7, 2025.

The contract is intended to address a growing backlog of HR tasks, including federal retirement applications and workforce adjustments that have become necessary under the recent administration’s directives. OPM cited an “urgent confluence of operational failures and binding federal mandates” as reasons for the contract being awarded without a competitive bidding process.

“OPM’s fragmented and outdated HR systems have reached a critical failure point, resulting in payroll errors and benefits disruptions,” the agency wrote in its justification posted on SAM.gov. OPM stated that the new contract would provide integrated HR capabilities and real-time workforce data that its current systems lack.

Workday spokesperson expressed eagerness to partner with OPM, stating, “We are honored to help modernize their HR operations for enhanced efficiency and improved employee experience.” This contract includes services for payroll processing, time tracking, talent acquisition, and performance management.

As part of this transition, OPM has mandated that all federal retirement paperwork must be submitted electronically starting June 2, 2025. After July 15, paper submissions will no longer be accepted.

The OPM is moving quickly to implement the Workday system in hopes of resolving the anticipated increase in retirement applications, particularly from those opting into the Voluntary Early Retirement Authority (VERA).

However, concerns have been raised among OPM employees regarding Workday’s capability to manage the complex federal HR systems. An anonymous source commented, “This could either transform HR in government or backfire, and I fear it will be the latter.”

OPM plans to reassess the contract at the end of the year and will consider an open competition for future HR IT contracts. The agency has not disclosed the financial terms of the Workday contract and has not responded to further inquiries regarding its specifics.

Amid these changes, OPM is prompting other agencies to modernize their HR systems, with Acting Director Charles Ezell stating that innovative methods for electronic submissions will be introduced shortly.