IRS wants up-front cash for Prime

A top information technology official at the Internal Revenue Service last week warned that if Congress does not advance it $325 million, the tax agency's high-profile modernization effort could be delayed.

During a recent hearing, the IRS asked members of the House Ways and Means Committee to support its advance appropriations request of $325 million to make certain that funding is available in a special account in two years for the tax agency's systems modernization project, known as the Prime Systems Integration and Services Contract.

But the General Accounting Office recommended at the same hearing that the committee deny or pose restrictions on the request because the IRS did not include the required supporting information to justify the $325 million.

Al Mazei, assistant commissioner of the IRS' Program Management and Architectural Office, said the IRS' request is a "heads up" to warn Congress that the IRS needs the money to be available in the Information Technology Investment Account to avoid lengthy procurement procedures that could prolong the multiple-year project, Mazei said. ITIA is a special capital account set up for the IRS to make large IT purchases such as computer systems and software.

IRS officials made the request for an advance because they are concerned that current funding in ITIA, which totals $506 million, will be devoted to other modernization projects during fiscal 1999 and 2000, leaving little behind for the rest of the work in 2001, when the IRS plans to be building the new systems, Mazei said.

Of the $506 million, the IRS plans to spend about $361 million during fiscal 1999 and 2000, which will leave $145 million in ITIA for fiscal 2001, according to GAO.

"When you get to 2001, the majority of the money may be spent,'' Mazei said. If there is not enough money in the fund, "we may not get any money until 2002. We need the funding to continue the project."

James White, director for GAO's tax policy and administration issues, recommended that Congress deny or pose restrictions on the request because the IRS was unable to base its budget request on a "clear and complete definition of fiscal year 2001 IT investments and did not justify these investments with cost/benefit analysis." White said he is against the IRS' funding request because the agency used cost estimates from its March 1998 Prime request for proposals and general cost estimations to determine how much the project will cost in 2001.

Mazei said the IRS is developing its strategic plans on how to manage the project and expects the plans to be completed by Sept. 30. The plans will identify the systems to be modernized over the next five years, the cost estimates, the business case justification, the sequence in which the systems will be developed and deployed, and the architecture standards governing their development. The IRS awarded the multibillion-dollar Prime contract last year to Computer Sciences Corp. to lead a team of IT experts who would overhaul the agency's obsolete systems over the next 15 years.

Even though he does not support the IRS' request, White said it is not a sign that the modernization attempt is starting off on the wrong foot, unlike past modernization attempts. White said the IRS seems to be doing some careful planning.

"They haven't been premature on [the planning side]," White said. "All they've done here is asked for money. They haven't made a commitment to spend the money until they have developed a proposal.''

Representatives from the appropriations committees and the House Ways and Means Committee could not be reached for comment. White said he believes a decision has not been made concerning the request.

Mazei said the IRS' goal was to encourage Congress to think about funding with the intent to supply Congress with specific information in September. Mazei said he has not heard from Congress but advises that "if we can't continue to make progress, the requirement to modernize the agency will be hampered."