IRS Prime must shape up or ship out, overseers say

By Mary Mosquera and Matt McLaughlin

Connecting state and local government leaders

| December 11, 2003

<font color="CC0000">(UPDATED) </font>IRS Prime contractor Computer Sciences Corp. should be replaced if it does not show significant performance improvement on the tax agency's lengthy modernization project, the IRS Oversight Board said in a report today.<br>

IRS Commissioner Mark Everson told the board he had misgivings about CSC's performance, but he has established a strong working relationship with the contractor's executive management, which has committed to work with the IRS to fix the problems, the report said. CSC expects to retain its leadership of IRS' Prime contract. 'CSC and the companies supporting modernization are confident that we will successfully deliver CADE, and we fully expect we will continue our efforts in close partnership with the IRS,' CSC spokesman James Sullivan said in response to the report.Everson enlisted the Carnegie Mellon University's Software Engineering Institute to review CADE. SEI approved of the system design and use of a business rules engine to make the development and maintenance of the system more efficient.But it was uncertain that the business rules engine could handle the size and complexity of the CADE system until the rules were defined and modeled. The institute and the board recommended defining the rules as soon as possible.Among other recommendations the board made in its report:(Posted 11:16 a.m. and updated 3:12 p.m.)

IRS Prime contractor Computer Sciences Corp. should be replaced if it does not show significant performance improvement on the tax agency's lengthy modernization project, the IRS Oversight Board said in a report today.

Several independent assessments of the Business Systems Modernization program 'make it clear that the IRS and its Prime contractor cannot continue to operate in a business-as-usual manner,' the board wrote.

CSC undertook the Prime role in late 1998.

'Over time, the existing systems will become impossible to maintain and at that point, the ability to administer our country's tax system will be in grave danger,' said Larry Levitan, chairman of the board's Business Transformation Committee, in a release. 'Such a risk to our nation is unacceptable. The IRS and the Prime must get it right this time.'

The modernization program appeared at the point of unraveling last summer, the board said. Virtually all of the projects with a major impact on improving customer service and the IRS' internal operations experienced serious delays and cost overruns.

These projects include:

CADE, which was supposed to begin operation in August. The IRS delayed the rollout and has not set a new target date. The system is projected to cost $30 million more than the original estimate.

The Integrated Financial System, which will replace the IRS' old core financial systems, was delayed from its October deployment to spring 2004. It is $50 million over the original estimate.

The Custodial Accounting Project, which will provide control and reporting capabilities, is 15 months behind schedule and $61.5 million over budget.

(Click for Oct. 16 GCN story)

IRS should hire more workers with experience on large, complex systems.

The agency should reduce the number of projects it conducts at the same time.

Agency officials should closely monitor CSC's performance on the project.

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