The Customer Communications Project (CCP) is intended to increase telephone and communication service levels to taxpayers comparable to those of similar customer service operations in the private sector. CCP expectations can be traced back to May 1997, when the Internal Revenue Service (IRS) issued its Modernization Blueprint to define, direct, and control investments in modernized systems and related infrastructure. The Modernization Blueprint identified the CCP as its intended first accomplishment.

The CCP plans to provide a centralized national telephone call management capability so that the more than 150 million yearly taxpayer calls can be directed to available taxpayer assistors at any location. The project also proposes improved self-service telephone and Internet services to taxpayers.

The overall objective of this audit was to assess the IRS’ project management process for implementing the CCP. Our review included work completed by the CCP’s executives, managers and project team members through October 26, 2000.

The IRS is in the early stages of its systems modernization process. In addition to delivering needed improvements in telephone and communication service levels to taxpayers, the IRS considers the CCP as a "test bed" to help develop and institute critical project management and systems modernization processes. The IRS has demonstrated significant progress in implementing project management capabilities by beginning to establish some repeatable processes in developing the CCP. Lessons learned during the initial stages of the CCP should improve the effectiveness and efficiency of developing the CCP and other ongoing and planned modernization projects.

However, the CCP has been scaled back and fallen behind schedule since it first received congressional funding in mid-1999. Heroic efforts by the IRS and the modernization contractor will be needed to meet the commitment of improved telephone service to taxpayers for the 2001 Filing Season. Delays in the delivery of the CCP benefits will impact the IRS’ expectation of answering an additional 9.6 million taxpayer calls during the 2001 Filing Season. In addition, delays in deploying telephone enhancements could postpone the IRS’ plans to free up telephone assistors for other work, which was an estimated $5.67 million benefit to the IRS in Fiscal Year 2001.

In May 1999, the IRS submitted its first Information Technology Investment Account (ITIA) expenditure plan. The expenditure plan showed that for the 2001 Filing Season, the CCP would deliver: 1) centralized call management, systems management, administrative, and management information consolidation and reporting capabilities; and 2) telephone and Internet automated self-service applications.

Since the initial design and development, the IRS significantly modified the scope and schedule of the CCP. The IRS acknowledged that it would not be able to provide taxpayers all of the enhancements and benefits that it originally proposed in its first ITIA expenditure plan. The telephone and Internet self-service applications were postponed until 2002, and the remaining capabilities were rescheduled for deployment during the latter part of the 2001 Filing Season. The CCP fell behind schedule, in part, because some key work products were not timely completed, and several identified barriers to deployment had not yet been overcome.

Although immediate benefits to taxpayers associated with the CCP may be at risk, it is our opinion that the IRS will eventually deploy most, if not all, of the project capabilities. However, the growing pains experienced on this project are indicative of an organization that may continue to overestimate its ability to acquire modernized systems in line with its original schedule and cost estimates.

The IRS has adopted the Enterprise Life Cycle (ELC) process to manage systems modernization projects. CCP managers decided not to complete several significant ELC work products and asked for waivers from IRS executives to move into the next phase of the development process. Examples of work products that were not timely completed include a cost, benefit and risks analysis; investment technology assessment and strategy reports; acquisition management strategy plans; budget, capacity and investment analysis; the System Operations Concept; and the System Validation and Verification Plan.

Although several key work products were not completed, IRS executives gave a qualified approval for the project to continue as long as the work products were completed by specific dates. CCP managers expected to make up the time lost completing the work products in the next ELC phase. However, the project never did catch up, and in fact, fell further behind. The absence and delay in coordinating and completing work product delivery prior to exiting project milestones negatively impacts project direction and the subsequent ability to meet expectations.

By the completion of our fieldwork in October 2000, the CCP managers had identified three significant issues that could affect the CCP’s ability to deliver improved telephone service to taxpayers in 2001:

• The completion date for the software design was delayed due to unexpected technical issues. The CCP has an extremely aggressive schedule with no reserve or recovery time for unplanned events. If this delay cannot be overcome, the CCP will not be tested and deployed until April 2001, and taxpayer benefits will not begin to be realized until 2002.
• The CCP should meet all security and privacy requirements before it can be deployed. The security certification process usually requires about 3 months after systems testing is completed, which could further delay full deployment until June or July 2001.
• The database in the Integrated Tracking System, used to track modernization project risks, is inadequate due to the errors and inconsistencies contained in the risk status reports. The IRS discusses risks with the contractor on a periodic basis to identify and reduce known and anticipated risks. However, the ability to track and report project risks, as well as monitor risk reduction efforts, may be severely hampered until an adequate risk tracking system is fully implemented.

The IRS has made progress in developing the ability to establish some repeatable processes needed for future project successes. These processes relate to using the ELC at the project level and incorporating requirements for overall program management.

For instance, the IRS has improved or standardized many processes related to project reporting, project schedules and tasks, Memoranda of Agreement, proposal reviews, and the Executive sign-off process. In addition, the IRS’ active involvement and participation with activities such as weekly and monthly Project Status meetings is fostering tangible improvements in project oversight capabilities. Lessons learned during the initial stages of the CCP should improve the effectiveness and efficiency of developing the CCP and other ongoing and planned modernization projects.

To properly manage the CCP and all other ongoing and future modernization projects, the Chief Information Officer (CIO) needs to ensure that project managers timely complete all ELC recommended work products and not allow projects to exit ELC milestones when significant work products are incomplete. Further, the CIO needs to ensure that project managers develop and communicate realistic project schedules, timely incorporate necessary security considerations, and ensure that risk tracking and reporting is timely, complete and accurate.

Management's Response: Management's response was due on March 6, 2001. As of March 9, 2001, management had not responded to the draft report.