IRS modernization plan garners GAO praise

The General Accounting Office in about two weeks is expected to release a rare positive report about a federal information technology plan—in this case cautiously complimenting the Internal Revenue Service on its initial funding plan to manage its high-profile modernization effort.

In the report, which FCW obtained, GAO concludes that IRS' initial plan for its $5 billion Prime Systems Integration and Services Contract is off to a good start and is in compliance with guidelines set by Congress, which has said it will not fund the modernization project until it approves the spending plan. Congress put spending restrictions in place because the IRS has a history of unsuccessful modernization attempts that cost taxpayers billions of dollars.

"I've only seen two or three favorable reports in the 18 years that I've read GAO reports," said Olga Grkavac, executive vice president of the Enterprise Solutions Division of the Information Technology Association of America. "Usually the positive reports are few and far between. A glowing GAO report is truly an accomplishment."

In its report, "Tax Systems Modernization: Results of Review of IRS' Initial Expenditure Plan," GAO states that the IRS has successfully met Congress' guidelines and has received approval from appointed watchdog committees to proceed with the plan. The initial plan is a success primarily because the IRS has broken down the enormous project into several smaller projects, GAO reports.

According to the report, the IRS will produce a series of incremental funding plans over the life of the 15-year project. Those plans will detail how each subproject will be managed. For example, in the initial plan, the IRS requests that the appropriations committees approve $35 million so that it can identify systems that need to be modernized over the next five years; determine the full modernization cost; justify why each system needs to be upgraded; determine the sequence in which the systems will be developed and deployed; and develop architecture standards. The IRS wants to complete this by Oct. 31, 1999.

"These initiatives are consistent with our past recommendations for completing the blueprint, and collectively they represent the first steps needed to satisfy the legislative condition to implement the blueprint," the GAO report states. "IRS' initial expenditure plan is an appropriate first step toward successful systems modernization."

IRS chief information officer Paul Cosgrave last week told a group of IT industry leaders that he is optimistic the appropriations committees will approve the initial plan and funding request currently under review.

"It looks good," Cosgrave said. "We will probably get the money. Congress said they have more information [in the initial plan] than they had when they gave [the IRS] $4 billion [for past modernization efforts]."

The IRS spent $2.5 billion on its last IT systems upgrade effort, the Tax Systems Modernization program, and the agency was criticized for not properly addressing security concerns, not defining a clear systems architecture, not preparing a comprehensive plan for managing telecommunications throughout the agency and not developing performance metrics that reflect how the systems would meet users' business objectives.

Robert Tobias, president of the National Treasury Employees Union and a member of the IRS' Core Business Systems Executive Steering Committee, which monitors the Prime project, said the IRS earned GAO's initial support in part because of the IRS' new leadership and its commercial-savvy expertise.

"[Commissioner Charles] Rossotti and Cosgrave bring experience that the IRS didn't have," Tobias said. "The report represents the real work the IRS has done over the past year," he said. "It's a long way from here to there, but the IRS is taking very important critical first steps in the right direction."

Some IT industry leaders predict that Congress may fund the initial plan because it wants to see Prime carried out successfully. Also, industry leaders said Congress will use the initial plan to get a feel for how much financial support it will give the entire project.

Funding for the plan will come from the Information Technology Investments Account, a special capital account that has a total of $506 million set aside for the IRS to make large IT purchases.

According to the initial plan, the IRS wants to spend $17 million to develop a five-year "core business systems" strategy that, among other things, leverages new IT; $11.6 million to develop the management and engineering capability to build and implement modernized systems; and $8.9 million to validate system requirements and define the network and platform technology infrastructure, among other things.

Cosgrave told industry leaders that the GAO report is an important piece of the puzzle because it will help the Prime team, headed by Computer Sciences Corp., to request funding from Congress.

"While the process for acquiring funding was arduous, I feel that as we continue to build trust and partner with Congress, I hope the process could be streamlined," Cosgrave said.

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