IRS: Same as it ever was?

The latest report raising serious concerns about the Internal Revenue Service's modernization program comes from the Treasury Department's inspector general, whose conclusions match much of what other independent auditors have found: Management of the IRS Prime contract must be improved if it is to avoid the fate of other failed modernization efforts.

The inspector general found that nearly $10 million had been wasted, the work was behind schedule, performance-based contracting had not been closely followed and project managers had not established proper accountability for tasks.

Those failures are similar to what the General Accounting Office cited as the reasons for the downfall of the Tax Systems Modernization program, the precursor to the agency's current business systems modernization program. TSM was a decade-long effort that wasted $3.3 billion before the IRS killed it in 1997.

The new program was supposed to be different. When the IRS awarded the contract to Computer Sciences Corp. in late 1998, IRS officials said they had improved program management by breaking the huge project into modular pieces and incorporating performance measurements. An oversight board was established to bring some private-sector know-how, and an IRS blueprint for the modernization program drew high praise.

The IRS can point to several successes. For example, an upgraded call-in system helped the agency handle the deluge of phone calls it received when it mailed out tax rebates last fall. Also, IRS officials say they have fixed many of the problems listed by the inspector general, whose analysis was conducted between February 2000 and October 2001.

But the management miscues pointed out by GAO and the inspector general bring back familiar refrains of missed deadlines, cost overruns and poor management. Congress may need to take a serious look at the program to see if improvements have been made before agreeing to the $400 million request from the agency for fiscal 2003.

Members of the Senate Finance Committee plan to hold hearings on the project soon. Maybe then we will learn if the IRS has made the necessary changes to avoid moving closer to another TSM.