The consolidation will reduce the annual cost of writing payroll cheques for 1.9 million civilian employees, as well as avoid spending millions of dollars to repair and upgrade legacy systems. Cheque printing costs now total an average of $77 (£48) per employee each year.
It will cost the government about $90m (£56m) in the first two years to consolidate and standardise payroll systems, which will be managed by four agencies functioning as two teams. The teams will move from legacy systems to commercial, off-the-shelf software.
The cost of processing a cheque varies among the processing centres - from $45 to $600 in annual payroll processing costs per employee.
The move will also allow the government to avoid some modernisation expenses. Several of the payroll processing centres needed upgrades that could cost about $200m (£124m) each.