IRS plans to request first Prime funding

The Internal Revenue Service's top technology official last week told a group of industry leaders that the tax agency this week will request its first set of funds from Congress to develop a business plan for the IRS' high-profile, multibillion-dollar modernization project.

During a meeting of the Council for Electronic Revenue Communication Advancement, IRS chief information officer Paul Cosgrave said the "business system planning project'' will detail the IRS' development plans for how the agency will spend money to manage its Prime Systems Integration Services Contract—commonly known as Prime—to modernize IRS computer systems.

The IRS considers Prime, which the information technology community estimates will cost as much as $5 billion, as a key element in making the agency more customer-friendly and able to process better the more than 200 million tax filings it receives each year.

Obtaining funding to develop a plan is important, Cosgrave said, because the IRS intends to ask Congress to free up funds for purchasing the hardware and software for the modernization project. Members of Congress have said they will not release funds for the Prime project until they see the IRS' plans on how the money will be spent. Congress put in place the spending restrictions because of the IRS' past unsuccessful modernization attempts—attempts that cost taxpayers billions of dollars.

"The key message is, we're going to work with Congress as a partner," Cosgrave said. "We are very cognizant of [Congress'] concerns. This is not a big-bang program. We will ask for money in sessions. We're literally going to show them everything. This is an open process."

Cosgrave said the IRS has yet to determine the amount of money it plans to ask Congress to provide. But he said the request will be less than 10 percent of the $506 million already set aside for the agency's Prime modernization project in the Information Technology Investment Account. The ITIA is a special capital account set up for the IRS to make large IT purchases.

Some industry leaders said the IRS is taking the right approach in working more closely with Congress. They predict that Congress may free up some money—less than $50 million—for the business plan to give the new team a chance. Also, industry leaders say Congress will use the plan to get a feel for how much financial support it will give the current modernization project.

"When you take a look at what [IRS commissioner Charles] Rossotti is doing, you have to be impressed because he's lining up the right players,'' said Robert Carberry Jr., director of government sales for Federal Liaison Services Inc., who worked 24 years for the Pennsylvania Revenue Department. "It's not an easy job."

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AT A GLANCE

* Estimated value: $5 billion.* Contractors will include : Computer Sciences Corp. (lead contractor), with support from IBM Corp., KPMG LLP, Lucent Technologies, Northrop Grumman Corp., Science Applications International Corp. and Unisys Corp.* Will improve phone and Internet service for individuals contacting the IRS and will expand electronic filing.* Will include installation of new generation of workstations.* Will expire in 2013.