CSC’s Overhaul Of IRS Systems Is Falling Short
By KATE BERRY
Five years into an $8 billion project to modernize the Internal Revenue Service’s computer systems, the agency and its prime contractor, Computer Sciences Corp., are feeling the sting of a report that found cost overruns, management delays and performance shortfalls.
The problems found in a report released by the General Accounting Office in January are modest so far. But the report found that the IRS’s business systems modernization is “considered at significant risk” of not succeeding.
The agency also needs to strengthen its management team, the report found, and El Segundo-based Computer Sciences, the prime contractor, is expected to take a more active role in that area, the report said.
“Reliance on a combination of immature processes and individual capabilities and heroic efforts is not a recipe for success,” the GAO report states. “Past government and industry experience shows the probability of repeating successes on projects using this approach is low.”
Computer Sciences and IRS officials both refused to comment.
The modernization project involves 20,000 major tasks and schedules involving dozens of organizations.
The GAO report cited 18 projects that “have experienced cost or schedule shortfalls,” with delays ranging from four to 14 months each and cost increases of $1 million to $6 million.
The report didn’t assign specific blame to Computer Sciences or to the IRS, but rather assessed the project as a whole.
Former IRS Commissioner Charles O. Rossotti, who headed the agency during the time the report was being prepared, testified before Congress last year that the management culture and structure of the agency were even more antiquated than its decades-old technology.
Rossotti, who retired in November, joined the IRS in 1997 after the agency admitted spending $3.3 billion on a previous computer upgrade that largely failed.
“The IRS needs to improve service to taxpayers and stay in compliance with tax laws,” said Jim White, a GAO analyst who worked on the report. “They have to modernize their systems and there’s still a lot of work to do.”
Computer Sciences won the $8 billion 15-year contract in 1998 and is leading a team of vendors in the effort.
The GAO report credited the IRS for rolling out new software to handle routine taxpayer telephone inquiries. The agency is also in the process of creating a new computer security system and shifting taxpayer records to a new modern database.
However, the pace of the upgrades has been considerably slower than expected, the GAO said.
While computers have allowed the IRS to closely track wages and interest paid or received by taxpayers, the agency has been less successful at examining the business income of entrepreneurs and large corporations.
The greater scrutiny of wage earners relates directly to the IRS’s computer systems, which are capable of comparing entries on individual tax returns with those reported by employers. But the technology is not in place to scrutinize entrepreneurs and businesses because there is no third party to verify their tax returns.
In his testimony, Rossotti said that as much as one out of every five dollars earned by partnerships is not reported on individual tax returns.