IRS walks fine line on modernization cost, schedule, budget: GAO

The IRS is trying to balance getting its Business Systems Modernization projects delivered on time and within cost on a lean budget, while meeting additional congressional mandates for performance accountability to gain access to its funds.

Even if the tax agency stays on top of cost and schedules, tighter budgets may mean delaying functionality in some versions later this year, contributing to delays and higher costs, according to the Government Accountability Office.

The IRS needs to use more recent and complete status information on which to base its annual expenditure plan for Business Systems Modernization. The tax agency, however, satisfied the conditions set by Congress to gain access to funds for its modernization program last year and has improved the risk management of the program, GAO said in a new report.

The IRS must submit proof to Congress that it has met requirements for capital planning and investment control review, enterprise architecture, and systems acquisition management practices before it can spend budgeted funds for its modernization projects.

The provisions were put in place as the result of management problems that put the program at risk. IRS has taken corrective actions to put the program on track.

Congress appropriated $199 million for fiscal 2006 for IRS' Business Systems Modernization program.

The IRS deployed some of its BSM releases in 2005 within cost and on schedule, including versions of its taxpayer database, the Customer Account Data Engine, the e-Services portal for tax practitioners, and Modernized e-File, an electronic filing system for corporate returns. Others, however, were delayed or incurred more costs, such as the Integrated Financial System initial release.

The tax agency has identified significant risks and issues with its future planned system deliveries, GAO said. For example, schedule delays for one CADE version and contention for limited resources between version releases has resulted in deferring some functionality to later releases. Requirements deferrals may mean higher costs and schedule delays for the next two releases in August and December, GAO said.

'The agency, however, recognizes the potential impact of these project risks and issues on its ability to deliver planned functionality within cost and schedule estimates and, to its credit, has developed mitigation strategies to address them,' said David Powner, director of GAO's IT management issues team, in the report.

The IRS also has initiated prioritization of its BSM issues and challenges to tackle them more effectively. IRS also is updating its modernization vision and strategy and will have that in place by mid-March.

The IRS said in response earlier this month that since the GAO audited the expenditure plan, its Integrated Financial System returned up to $5 million to the BSM management reserve, reducing its reported cost overrun because of improvements in controlling costs.

The IRS is focusing more on updated program information and notifying stakeholders in near real-time of changes, said IRS commissioner Mark Everson. The IRS also is working with the Treasury Department and the Office of Management and Budget to resolve timeline and process issues.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.


  • Records management: Look beyond the NARA mandates

    Pandemic tests electronic records management

    Between the rush enable more virtual collaboration, stalled digitization of archived records and managing records that reside in datasets, records management executives are sorting through new challenges.

  • boy learning at home (Travelpixs/

    Tucson’s community wireless bridges the digital divide

    The city built cell sites at government-owned facilities such as fire departments and libraries that were already connected to Tucson’s existing fiber backbone.

Stay Connected