CSC wins IRS' Prime contract

Following more than a decade of frustrated modernization efforts, the IRS last week
recommitted itself to upgrading its antiquated tax systems by awarding the 15-year Prime
contract—potentially worth $5 billion—to Computer Sciences Corp.

The award kicks off the latest chapter of what has been one of the federal
government’s most expensive and drawn-out information technology efforts. It is an
early victory for IRS commissioner Charles Rossotti and his new chief information officer,
Paul J. Cosgrave.

The IRS has set aside $10.5 million for projects during the first six months. Congress
has approved a $506 million special Information Technology Investment Account that the
service plans to use for the initial stages of the Prime contract.

CSC leads a team that includes IBM Corp., KPMG Peat Marwick of New York, Lucent
Technologies Inc. of Murray Hill, N.J., Northrup Grumman Corp., Science Applications
International Corp. of San Diego and Unisys Corp. CSC beat out a team led by Lockheed
Martin Corp. that included Arthur Andersen & Co., Electronic Data Systems Corp. and
Intuit Inc. of San Diego.

“This was a tough decision to make, but we felt this group offered the best match
for what we need for such an important endeavor,’’ Cosgrave said.

The IRS based its selection on six criteria: strategic technical approach, strategic
business approach, customer service and compliance pilot proposals, management overview,
past performance and input on the request for comments.

The decision to hire a vendor to oversee the modernization represents a dramatic shift
in the IRS’ mind-set. Just a few years ago, IRS officials viewed the project as an
IRS-run effort. But after 10 years and $4 billion with little noticeable improvement and
intense scrutiny by lawmakers, the IRS decided to shift its focus and hand over the
project’s management to what its calls the Prime contractor.

“This marriage of the private and public sectors offers the best approach for our
new computer systems,’’ Rossotti said.

“This is a massive job we are about to undertake,’’ the commissioner
said last week. “People shouldn’t expect to see changes from this project
immediately. But for the long term, it will replace inefficient technology from the 1960s
with systems that will improve service to the taxpayers and the nation.’’

The request for proposals was delayed nearly a half year—from January to
April—amidst infighting between Rossotti and former CIO Arthur A. Gross, who left the
agency on April 1. The new RFP outlined what the agency wanted to achieve, but left it up
to the bidders to propose ideas on meeting the IRS’ goals. Gross had wanted to set
basic functional requirements, demanding that bidders propose a mainframe-centric

With Rossotti’s revisions, the IRS will play a prominent oversight role but will
leave the day-to-day management to CSC. The contract lets the service shift projects from
the prime contractor to subcontractors if it is dissatisfied with CSC’s performance.

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