Experts see little fallout from Thomas’ criticism of CSC

A dispute between Computer Sciences Corp. and House Ways and Means Committee Chairman Rep. Bill Thomas (R-Calif.) about the integrator’s work upgrading a fraud-detection system at the Internal Revenue Service is not likely to affect CSC’s prospects for future federal work, according to several experts on government/industry relations.

Alan Webber, a senior business analyst at Forrester Research, said even a letter from a congressman as powerful as Thomas, whose home district is close to CSC’s headquarters, would probably not impair the IRS’ relationship with CSC.

Thomas sent a strongly worded letter to Treasury Secretary Henry Paulson Aug. 3, claiming that CSC botched the redesign of the IRS’ Electronic Fraud Detection System (EFDS), which finds fraudulent tax returns.

Webber said the IRS and CSC might change certain program management and reporting requirements, but he added that the IRS won’t drop CSC as a contractor. “CSC’s business is solid,” Webber said. “The criticism isn’t going to affect it.”

The IRS has faced other project debacles in its history, said Robert Guerra, a partner at the consulting firm Guerra Kiviat. The contractors on those projects did not seem to suffer any repercussions, he added.

“Companies seem to somehow stay ahead of their performance deficiencies,” Guerra added.

But Bob Lohfeld, president of Lohfeld Consulting Group, said a company’s performance history in the federal marketplace is important in winning contracts. “When you are marred by an event like this, you can’t just shrug it off,” he said. “People will remember this and ask more questions.”

Lohfeld said critical correspondence from Capitol Hill can affect relationships between an agency and its contractor. CSC should focus on the project with better management and more oversight.

A four-month investigation by the House Ways and Means Committee uncovered problems at all levels of the EFDS project.

Thomas wrote that the IRS paid CSC $18.5 million for more than two years of work, even though the contractor produced no working product. He urged Paulson to hold IRS officials accountable for the failed program and to re-examine the IRS’ contracting relationship with CSC.

IRS Commissioner Mark Everson said the work is unacceptable. He said in a statement that the IRS will fire employees for the EFDS failures. Moreover, he added, “we are reviewing our options with the contractor.”

“CSC is proud of its successful record of delivering on the IRS Business Systems Modernization program, one of the largest and most complex IT and business process transformation programs ever attempted in the public or private sectors,” the company said in a statement.

“CSC is working closely with the IRS to ensure that EFDS is fully operational for the 2007 filing season,” the company said. A CSC spokesman declined further comment.