IRS delays tax database ? again

The Internal Revenue Service has had to delay the launch of the taxpayer database at the center of its Business Systems Modernization program once again, prompting the agency to bring in an independent organization to evaluate the project's progress.

The IRS announced July 25 that the initial deployment of the Customer Account Data Engine would be pushed back from its current launch date of August 2003 to March or April of 2004.

CADE, which will store all taxpayer information processed at the IRS, is the heart of the agency's modernization efforts under the Prime contract, led by Computer Sciences Corp. This delay is the latest in a series of holdups that have moved the project from its original launch date of December 2001.

The project will continue to move forward and the delay should not affect taxpayers, any of the other portions of the Business Systems Modernization or the IRS' two e-filing initiatives, said Terry Lemons, an IRS spokesman.

The agency, meanwhile, has hired the Carnegie Mellon University Software Engineering Institute to conduct an evaluation and report back to the IRS by the end of October. The review will evaluate the progress of the project, decide whether any corrections to the schedule and goals are needed, assess the performance of the Prime team and review the agency's management of the almost 5-year-old contract.

At his confirmation hearing in March, IRS Commissioner Mark Everson said he would use the August milestone as a guidepost for the future of the modernization program. Officials already modified the contract after it was delayed in the spring of 2002 to make it a fixed-price contract so the government will not have to pay the Prime contract team any more than the amount already agreed on.

To date, the IRS has put $67 million into the CADE project — $33 million in fiscal 2003 alone. In fiscal 2004, the agency plans to spend $84 million of the $458 million requested for the entire modernization program.

"The point we're at right now is [that] it's time to have an independent review to see if any midcourse corrections are needed," Lemons said.

John Reece, who served as chief information officer at the IRS from March 2001 until April of this year, said a major challenge is to provide the code that will exchange information between CADE and all of the legacy systems at IRS that will still be running for several years.

"The thing about CADE is that no one's ever done one of these before and never done one of this magnitude and scale, and it's got to be perfect," Reece said.

IRS officials have also asked the IRS Oversight Board, a congressionally mandated group of public- and private-sector experts, to assess the future of the project. Larry Levitan, chair of the board's business transformation committee, said that "the fact that this [delay] came at this point is not a surprise, but it is a disappointment."

The project, however, must go forward, because stopping it is "absolutely not an option," he said.

CSC, the lead vendor under the Prime contract for the entire Business Systems Modernization, said in a statement that executives are confident that CADE will be ready for the 2004 tax-filing season, and the company welcomes the Software Engineering Institute's evaluation.


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