The IRS is rebuilding its systems on the fly
There's only one way to modernize a government computer system: Break everything
into pieces and rebuild around it.
That's the operating philosophy of Paul Cosgrave, the chief information
officer at the oft-maligned Internal Revenue Service. He's at the helm of
a $5 billion, 15-year project that is still in its infancy and will be
built while the existing system keeps operating.
"It feels like we're flying in an airplane we're rebuilding," Cosgrave
That's about the only way to put it as the IRS returns to Congress
each year to beg for more money to modernize and replace a system that was
put in place during the Kennedy administration.
The rebuilding is known as IRS Prime (Prime Systems Integration Services
contract), and the lead contractor is Computer Sciences Corp. But the project
is so massive that CSC has the help of partners, including Science Applications
International Corp., IBM Corp., KPMG LLP, Logicon Inc. and Unisys Corp.
Among Prime's features will be electronic filing systems, data stored digitally
instead of on tape, a new structure for the organization and better customer
service, including 24-hour automation to answer taxpayer questions.
But all this is somewhere in the future. It will take money and lots
of it. The cost: unclear. The benefits: too numerous to count.
"Modernizing the IRS is a massive undertaking and will take years to
complete and depends upon changes in the organization and technology," IRS
Commissioner Charles Rossotti has warned.
In the most recent development in the modernization program, Congress
released $148.4 million for the second and largest phase of a system that
is being built piece by piece. Last year, the IRS received $68 million
for overhauling its computers, but the price tag will be far into the billions
before it is completed.
"Although modernizing the IRS is not "Mission Impossible,' it's also not
"Fantasy Island,' " Treasury Secretary Lawrence Summers said at a modernization
conference in January. "It's not surprising that there are risks and setbacks.
It's not surprising that we've encountered obstacles that must be overcome."
With a mandate from Congress to restructure the way the IRS operates
and relates to its customers, Cosgrave is faced with transforming a system
from the bottom up. And there is not much time to fill that mandate.
The latest infusion of money won't move any furniture or displace any
staff. Instead, the money is being used for the design of individual proj-
ects — security technology and customer services — on drawing boards and
in computer systems. "We are laying the blueprint for the midterm period,"
The project will take so long that the 50-year-old Cosgrave said there
is no way he will be there when it is finished.
"Overall, it is a 10-plus-year program, and we have not even begun to
plan beyond years five and six," he said.
In the meantime, he is working toward 2008, the target date for when
the IRS hopes to have 80 percent of all taxpayers filing tax returns online.
In September, the IRS will release its blueprint for the next few years
and its plans to improve customer services. Next year, it will be back asking
Congress for more money.
In the meantime, tax returns are still filed by mail, clerks still input
information by typing, and a tax return takes four to six weeks to process
the old-fashioned way.
Over the horizon is 48-hour processing for e-filers and customized case
"The overall issue here is getting Congress comfortable so they start
putting trust in the IRS. The release of $148 million shows Congress' increasing
trust in our ability to manage the modernization," Cosgrave said.
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