IRS turns up pressure on main contractor

How IRS and CSC are meeting oversight action plan


  • Moved toward more effective management discipline by adopting criteria of the Software Acquisition-Capability Maturity Model

  • Set limit on the number of simultaneous modernization projects
  • Put business units that will use new systems in charge of modernization projects instead of IT managers

  • Revised the software development lifecycle to accurately account for cost estimates and to assure that workers follow appropriate methodologies


  • Bolstered its performance with improvements in its systems engineering, measurement and metrics and technical review

  • Put in place management teams to raise and resolve difficult issues more quickly

'The IRS did a lousy job documenting all the systems changes it made over the decades,' IRS commissioner Mark Everson says of one reason for yet another delay in rolling out a new financial system.

Hans Ericsson

The IRS and Computer Sciences Corp. vow that they are making painstaking progress in righting the tax agency's massive Business Systems Modernization. But the IRS also has taken a new approach to holding its Prime contractor accountable for systems delivery failures by making good on its intention to look elsewhere for work on the project.

The agency and contractor are two-thirds through fulfilling an action plan to be completed in April that is designed to improve management on both sides. The effort is built on recommendations made in December by the IRS Oversight Board following several reviews of the modernization projects.

But two issues continue to hamper the project: CSC still faces problems in linking new systems to legacy data, and daunting challenges remain for the IRS in hiring more experienced managers.

Continuing a trend on a program that has been riddled with schedule delays and cost overruns, CSC will miss its latest modernization delivery date in April for releasing the Integrated Financial Systems. As a consequence, IRS commissioner Mark Everson said CSC could not compete for contracts slated for next year to modernize tax enforcement and compliance systems.

The rollout for IFS, the agency's new core accounting system, is now slated for Sept. 30, Everson recently told the House Ways and Means Subcommittee on Oversight.

'CSC encountered data conditions unknown to us in the legacy systems. So we have to go back and redesign and retest,' Paul Cofoni, the company's federal sector president, told lawmakers.

Making new systems compatible with legacy data has been particularly vexing for both the IRS and CSC.

'The IRS did a lousy job documenting all the systems changes it made over the decades,' Everson said. 'Every time you try to patch back to your human resources, financial or procurement systems, or try to go back to the code and see what changes were made when the code was revised year after year'this has been one huge stumbling block that's being addressed.'

Figuring out how to link to the legacy system 'is like an archaeological dig,' Cofoni said.

Everson said he would carefully assess CSC's performance before awarding the company any follow-on work. And if CSC doesn't deliver the first releases this year of IFS and the new taxpayer database, the Customer Account Data Engine, he said he 'will impose more draconian measures.'

The IRS expects to have the initial version of CADE working this summer for filers of Form 1040EZ. 'While that will clearly be too late to process any significant number of tax year 2003 1040EZ returns, it will enable us to launch CADE in a low-risk setting and gain valuable operational experience,' Everson said.

CSC is testing 2003 tax law changes it made in the code and is planning for 2004 changes so CADE will be ready for the 2005 filing season, Cofoni said.

Steven Palmquist, chief engineer of the Software Engineering Institute at Carnegie Mellon University and part of the team that conducted an independent technical assessment of CADE last fall, gave the database a 60 percent chance of being released this year.

Changes needed?

Despite the problems CSC has had, changing contractors is not the answer, many witnesses said.
'The modernization plan is sound, and a firm foundation and architecture are in place,' said Larry Levitan, chairman of the oversight board's Business Transformation Committee.

A change in contractors would mean a tremendous loss of experience, Palmquist said. The team in place is capable, 'if they make corrections,' he said.

The contractor is not the only problem. The IRS needs to build its capabilities to manage the contract no matter who is the contractor. The agency has search firms working to help hire new managers.

'The IRS just does not have the numbers of people with the depth of experience managing programs of this scale to command these programs,' Levitan said. 'It is doing the right steps, but that effort is moving glacially slow and needs to move more quickly.'

About the Author

Mary Mosquera is a reporter for Federal Computer Week.


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