IRS Wants to Be a Testbed for Bleeding-Edge Tech

Technological innovations are revolutionizing processes in every sector that can figure out how best to use them—and the government’s tax collector is willing to risk up to five years and $7 million per project to be on that bleeding edge.

The Internal Revenue Service is starting a new acquisition program called Pilot IRS, in which the agency plans to upend the procurement process while integrating new technologies that meet specific mission needs and work functions.

“Pilot IRS will aggressively pursue a streamlined and cost-effective approach to testing and deploying technology solutions that will have an immediate impact on its mission and how the IRS supports the American taxpayer,” the agency wrote in a special notice on FedBizOpps announcing the program.

Under the traditional procurement process, an agency offers a set of specific requirements, then seeks a solution that meets that criteria for the lowest price—a method that doesn’t always work well when it comes to technological innovation, the notice notes.

“For those who are familiar with traditional government procurements, Pilot IRS will appear substantively different from how the government normally pursues information technology and other solutions,” the notice states.

Instead, the Pilot IRS program will focus on how the agency does business today and fund the development of ideas to improve those processes with technologies like digitization and robotic process automation. By becoming a part of the development process, the IRS hopes to get access to innovation it can’t buy off a contract vehicle while being able to test the technology on IRS systems every step of the way.

“This is not simply a question on ‘how quickly can we buy it,’ but also a ‘how do we test it and decide whether or not to fund it for deployment,’” according to the notice. “Pilot IRS has established an approach where solicitations/calls and proposals/bids will be simple for firms to create and the IRS to evaluate, and decisions will be made in a streamlined and accelerated timeline.”

The first part—Phase 0—is the development of the problem statement. Rather than suggest potential solutions, IRS officials will hold a virtual conference to outline a specific problem and offer three use-case scenarios in which an IRS employee might find themselves. Vendors and other private sector innovators on the line will be able to ask questions, then decide if they have a solution that fits the need.

With the problem set, the project moves into a four-phase process of testing and deployment, with funding and deliverables for each phase.

The first full phase consists of three stages, beginning with a 10-page written proposal. From those, officials will pick pitches for 15- to 30-minute oral presentations before picking proposals to move on to the testing stage.

Funding for Phase I will be capped at $25,000 and the testing period will last no more than 30 days.

Phase II will involve more testing, including cybersecurity and interoperability with IRS systems. But along with more testing comes more funding: up to $100,000.

The second phase will last up to two months.

Proposals that make it to the third phase will get up to $200,000 and four months to test their solution on actual IRS systems. This phase will focus on customer experience and usability, as well as a more in-depth interoperability test.

The final phase—Phase IV—is where innovators can earn the big money. The limited pilot stage comes with up to $5 million in funding over four and half years while the solution is tested for scalability and reliability across the IRS enterprise.

“Inherently, this process will represent some risk to the IRS, as the technologies may not currently be fully aligned to its mission,” the notice states. “However, the IRS recognizes that risk is inherent to the operations of any organization and acknowledges that it must sometimes accept risk to further its mission.”

The IRS is building in safeguards to limit some of this risk.

The funding amounts and length of time will increase from one phase to the next, though the specifics will vary for different calls and projects. For the start of Pilot IRS, no single project will receive more than $7 million for all phases combined.

The amount of funding and length of each phase will be determined as the prior phase ends, giving IRS officials even more control.

“For example, the specifics of the work/cost for Phase 2 will be established as part of the work completed in Phase 1, the specifics of Phase 3 at the end of Phase 2, and so forth,” the notice states. “Depending on results and mission priorities, the IRS will decide to fund all, some or none of the challenges at each phase.”

IRS officials declined to comment to Nextgov at this time but said more would be coming for this program in 2019.