Let TSM emerge from black cloud of criticism


No one likes paying taxes, and public opprobrium for tax collectors can be read in the
Old and New testaments. In this election year, IRS is a politically vulnerable agency, and
within IRS, the most vulnerable portion is the Tax Systems Modernization program.

TSM will let IRS replace its legacy systems with modern hardware and software and
communications. It has evolved from one of the grandest of grand-design systems to a
chastened and smaller program that is fighting for its life.

Congress has enough reports to read regarding TSM. In the past year, the National
Research Council has issued an extensive analysis of TSM's problems. The General
Accounting Office has spent an enormous chunk of time co-habiting with IRS and has been
highly critical of the agency in a number of reports. Reportedly, the Commerce inspector
general is looking at part of the TSM program on which a Commerce agency is working. IRS'
own internal audit unit is reviewing issues, as is an IRS-sponsored R&D organization.

Everyone knows that mistakes have been made along the way. One problem has been IRS'
decision to act, essentially, as its own integrator. Lots of contractors have worked on
TSM, but political accountability rests solely on IRS as a result of its decision not to
outsource the integration work. Critics have raised substantive concerns about IRS'
capability to be an integrator.

A second concern has been IRS' past unwillingness to acknowledge that it will reduce
the number of agency employees as TSM comes on line. A third problem is IRS' perceived
failure to have completed all business process re-engineering before beginning new

Of late, and somewhat uncharacteristically, both the Treasury Department and IRS have
issued their mea culpas and sought to refocus on what needs to be done to save those
portions of TSM that promise real and immediate returns.

New personnel have come aboard, including CIO Arthur Gross, who led the equivalent of
TSM for New York State. His immediate superior is the associate commissioner for
modernization, Judy Van Alfen, a career IRS manager. The combination of two such
individuals, one from the outside and one from the inside, probably is necessary.

IRS has turned to TRW Corp. to fill more of the systems integration role, using an
existing contract. IRS will continue doing things it does well, such as keeping its
antiquated legacy system running, while turning over new system development to

The interesting public policy question is whether a program like TSM, which dwells
under a black cloud of criticism, ever can emerge from that shadow. The program may be
doomed to such a continuous barrage of scorn and criticism that it will lead to its
cascading failure--the political equivalent of Three Mile Island. This would be
unfortunate because the taxes still need to get collected.

To keep modernizing the tax systems, IRS needs to make a clearer case for continued
funding and tie funds to specific milestones so progress can be checked. Recent reports to
the Congress defining such milestones are a good start.

Members of Congress need to be told that if they kill off TSM funding, it will be
years, for example, before electronic filing of tax returns will reach the level that
could actually occur April 15, 1997, if that portion of TSM goes forward. The members need
to be reminded how much will be saved every time a taxpayer files a return electronically
rather than on paper.

Privately, IRS officials acknowledge that they must cut the payroll as the benefits of
TSM are achieved. It's time to talk honestly and more publicly about this issue.

For GAO, the test will be whether its bully pulpit can continue to be used
constructively, given the political fragility of the program at this time. GAO has been
very critical of TSM. These past criticisms may have helped IRS recognize some of TSM's
problems. But the TSM project cannot be started over, and there is a danger that desire
for the best may crowd out the merely good.

Now is not the time to argue over how TSM should have been accomplished. Instead, the
focus must be on how to fix it. In the current climate, any GAO criticism will reverberate
and be amplified. GAO should choose its characterizations of the revamped program

IRS should continue using the streamlined procurement process and the broader authority
provided by new procurement laws to avoid long contracting delays in bringing forth its
slimmed-down vision of TSM. For the vendors, it is time to rally around their IRS
customer. The vendors should refrain from activities designed to win a bigger place at the
table if their ambitions would exceed IRS' ability to deliver.

Congress should not write any blank checks for TSM. But Congress should fund the
program sufficiently. Throwing the baby out with the bathwater may be good political
fodder, but it is not good policy.

Stephen M. Ryan is a partner in the Washington law firm of Brand, Lowell &
Ryan. He has long experience in federal information technology issues.

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