Congress postpones mass layoffs at IRS

Though the omnibus spending package Congress approved last week gives IRS systems
employees a temporary reprieve from layoffs, it forces the agency to step up plans for
outsourcing Tax Systems Modernization.


In the appropriations bill, lawmakers ordered IRS to re-examine its staff reduction
plans before proceeding with any reductions in force. President Clinton signed the bill
into law last week.


IRS announced this spring that it intended to start laying off systems employees Oct.
1. The agency said RIFs could ultimately add up to 1,500 and most would be from the TSM
program.


Sen. Bob Kerrey (D-Neb.), ranking minority member of the Senate Appropriations
Subcommittee on Treasury, Postal Service and General Government, had tried to amend the
bill to block the RIFs altogether. But in the end, Congress directed IRS to review the
situation and provide lawmakers with a justification for any RIF plan, a Senate staff
member said.


"We do not have veto authority in that language," the staff member said.


Meanwhile, to ensure that IRS moves apace on contracting out the bulk of the TSM work,
the appropriations bill restricts the service from spending any TSM money if it does not
have a final request for proposals ready by July 31. This is nearly a year sooner than the
spring 1998 date laid out in Treasury Department plans.


The conference report says lawmakers believe TSM needs to be contracted out "long
before" spring 1998. "The intent of this action is to require an outsourcing
decision at a date earlier than that requested" by Treasury, the report accompanying
the omnibus spending package said.


Lawmakers were tough on spending for TSM, too. Although Congress relented somewhat on
the total IRS systems budget during the waning funding negotiations, it approved just $336
million for modernization this year. That's even less than the $400 million figures that
House and Senate members had been calling for in earlier versions of Treasury
appropriation bills.


Treasury originally requested $800 million for TSM this year, but then scaled the
request down to a little more than $600 million this summer in the face of severe
congressional criticism.


All told, the spending bill provides IRS with $1.3 billion for information systems.
That represents a cut from the $1.7 billion originally requested, but an increase from
what had been proposed earlier by the House and Senate [GCN, July 29, Page 8].


How the situation will play out was uncertain as the smoke cleared last week, IRS and
government union officials said.


"I think there will be substantially fewer (RIFs), but we don't know how many
yet," National Treasury Employees Union president Robert Tobias said. ""We
don't know how many. ... We don't know how soon."


IRS spokesman Steve Pyrek said the agency is trying to prioritize the funds approved
for next year. "We're just getting the language and the reports," he said.


Overall, IRS will receive $7.2 billion, a $141 million reduction from fiscal 1996 and
$1 billion less than the administration requested.


The bill includes $758 million for current system operations. Lawmakers, long bothered
by shifting definitions of TSM, made a clear delineation between operating systems and
development projects. "TSM should be considered those systems which are under
development or are being prepared for deployment," the report said.


The bill funds the TSM program with $206 million for TSM operating systems, and $130
million in development. The development funds are contingent on IRS' providing lawmakers
with a system architecture plan and later the outsourcing RFP.


The spending bill backs off from the cuts to operational systems. Because IRS' legacy
and operational systems "continue, after eight years of effort on TSM, to be the
backbone of IRS information systems," Congress said it had agreed to fund "at a
level to fully support the tax filling season."


Congressional staff members said the bill ties the TSM funds to specific projects, and
lawmakers have directed IRS to keep Congress informed of any schedule slippage or spending
overruns.


The bill also requires Treasury to provide Congress with TSM updates quarterly.


In the negotiations between the House and Senate over how IRS deficiencies should be
corrected, the House plan to turn TSM contracting over to the Defense Department died. IRS
remains in charge of its own outsourcing.


Some Capitol Hill staff members suggested the cuts were moderated by a desire to finish
up the budget negotiations this year without a government shutdown. Also, with politicians
eager to return to their districts to campaign, time simply ran out.



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