IRS pulling work from modernization contractors

IG report on IRS transition efforts

The Internal Revenue Service is pulling duties away from its prime contractor for systems modernization because of budget constraints and other concerns. It will now heavily rely on its employees, according to comments from IRS officials and a new report.

In the report released today, the Treasury Inspector General for Tax Administration states that the IRS initially heavily relied on prime contractor Computer Sciences Corp. to update its business processes and systems.

But the IRS has taken the primary role as the systems integrator for all projects. The agency had to assume the new role because it could no longer afford to pay for all of CSC’s services, the report states.

The role is a significant operational change for the IRS, requiring new procedures, employees and offices, the IG report states.

Richard Spires, the IRS’ chief information officer, alluded to the change in a speech Oct. 24. “We are trying to take on more responsibility for the overall programmatics and some of the systems engineering,” Spires said, speaking at an Input breakfast. However, “that does not mean there is not a key role for contractors.”

In January 2005, budget reductions and concerns about CSC’s performance caused IRS officials to take over many duties, according to the IG. In August, House Ways and Means Committee Chairman Bill Thomas (R-Calif.) chided IRS officials for spending $18.5 million on contracts with CSC and getting no working product. CSC has rebutted Thomas’ assertions.

Because of the budget cuts, “we have to build a business strategy that is consistent with the funding streams that are much more realistically going to be appropriated,” said Tom Lucas, the IRS’ senior adviser for enterprise architecture, who spoke with Spires Oct. 24.

The IG report states that the IRS did well in handling two of the 14 modernization tasks. It filled vacant positions in its modernization engineering office and simplified certain business methods. The report states that the IRS has taken good first steps in the transition, and it initially can manage the other 12 tasks.

However, the IG is reserving its final judgment of success. It wants metrics to objectively determine progress, according to the report.

“We believe it is now time to begin measuring progress,” the IG report states. Without such measures, officials cannot determine if transitioning is working effectively.