IRS rolls out final RFP

In the long-awaited final request for proposals for its tax systems modernization
program, the IRS made changes to head in the direction IRS commissioner Charles Rossotti
now wants the service to go.

The IRS solicitation underscores the difference between Rossotti's vision and that of
Arthur Gross, the former chief information officer who developed the draft RFP.

The final RFP for the Prime Systems Integration Services Contract combines the systems
upgrades with a massive reorganization of the service. The Gross draft focused exclusively
on systems modernization.

Although it clearly defines the role of the lead contractor, the final RFP also leaves
the door open for competition between the prime contractor and its subcontractors.

The RFP also shifts oversight power from the CIO to the commissioner by designating
Rossotti as chairman of the service's Modernization Steering Committee.

Changes seemed inevitable after Rossotti became the IRS commissioner late last year.

The service had planned to issue the final RFP in January but Rossotti delayed its
release. At the time, Rossotti said that as a new commissioner he needed to review the
draft and might want some modifications.

The move appeared to create a management rift at the agency. Although Gross said he
approved of the Rossotti review, Gross announced his plans to leave the service shortly
after the RFP's postponement. He left April 1.

The IRS has not yet replaced Gross. The agency hired a national recruiting agency to
help find a new CIO.

Despite stark differences between the RFP and the draft document that Gross released in
October, officials at Lockheed Martin Corp. and Computer Sciences Corp.--the two companies
competing for the 15-year modernization work--said they welcomed its release.

"We have done a preliminary examination of the RFP documentation and, overall, we
are pleased with the map that's been drawn for this procurement," said Ron
Vucurevich, Lockheed Martin's vice president for information systems integration programs.

Don Brown, vice president for CSC's integrated systems division, said his team is
pleased that the IRS prime RFP is on the street.

"We are confident our alliance of blue-ribbon companies will meet or exceed the
expectation of the IRS as we assemble our proposal," he said.

Lockheed Martin has teamed up with Electronic Data Systems Corp. and Arthur Andersen of
Chicago to compete for the contract. CSC has joined forces with IBM Corp., KPMG Peat
Marwick of New York, Northrop Grumman Corp., Science Applications International Corp. of
San Diego and Unisys Corp.

The RFP outlines what the agency wants to achieve during the first of the project's
five phases but leaves it to the bidders to propose ideas on the remaining four phases.

CSC and Lockheed Martin must submit their proposals by June 1. IRS officials said they
will award the contract in December, two months later than previously planned.

The RFP differs from the draft version in several aspects, all of which conform to
Rossotti's conviction that he and the IRS should play a more prominent management role in
the modernization project, vendors familiar with the RFP said.

The RFP lets the IRS transfer modernization work from the prime contractor to
subcontractors if the service is not satisfied with the prime contractor's performance.

The prime contractor's four main duties under the RFP are managing the overall work on
the contract, buying hardware and software, upgrading the IRS' systems infrastructure and
overseeing integration.

Under Gross' draft, the prime contractor and its subcontractors were to build a
nationwide systems infrastructure upon which other support tax processing systems would be
built.

Phase I in the RFP is primarily limited to building telephone call routing systems,
management systems and a security infrastructure so that customer service employees can
access up-to-date taxpayer information online.

Customer service has become a major priority for the IRS in the wake of congressional
hearings last summer in which witnesses described examples of rudeness and threats from
IRS employees.

The RFP calls for commercial systems products to improve its customer service
performance.

The plan, however, is still based on the mainframe-centric architecture that Gross and
his staff developed.

The changes in the RFP were driven by larger reorganization plans that Rossotti has for
the IRS.

"Modernization of the IRS ought not be driven by developing modernized systems
that reflect inefficient and ineffective existing business practices," the RFP said.

Rossotti said at a congressional hearing earlier this year that he wants to restructure
the agency into four units, each charged with end-to-end responsibility for serving a
particular group.

The groups are individual taxpayers; small businesses and self-employed taxpayers;
large businesses; and employee plans, exempt organizations and state and local
governments.