TREASURY INSPECTOR GENERAL FOR TAX
ADMINISTRATION
The Revised Private Debt
Collection Request for Quotation Adequately Addressed Prior Deficiencies in the
Solicitation Methodology
April 2006
Reference No: 2006-10-078
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
Phone Number |
202-927-7037
Email Address | Bonnie.Heald@tigta.treas.gov
Web Site |
http://www.tigta.gov
April 28, 2006
MEMORANDUM FOR COMMISSIONER, SMALL BUSINESS/SELF-EMPLOYED DIVISION
CHIEF, AGENCY-WIDE SHARED SERVICES
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final Audit Report – The Revised Private Debt Collection Request for Quotation Adequately Addressed Prior Deficiencies in the Solicitation Methodology (Audit # 200610016)
This report presents the results of our review of the revised Private Debt Collection (PDC) Request for Quotation (RFQ). The overall objective of this limited-scope review was to determine whether the revised RFQ and associated procurement selection criteria adequately addressed the deficiencies cited by the United States Court of Federal Claims. We did not review the bid evaluations or the selection of the contractors for this program; accordingly, we do not express an opinion on such.
This was a special, limited-scope audit that, together with an ongoing series of companion audits conducted by the Office of Audit’s Small Business and Corporate Programs and Information Systems Programs Business Units, provides coverage of a key initiative for which the Treasury Inspector General for Tax Administration committed resources as a high priority.
Synopsis
On October 22, 2004, the President signed the American Jobs Creation Act of 2004[1] to permit private collection agencies (PCA) to help collect Federal tax debts. The purpose of the PDC program is to help reduce the significant and growing number of uncollectible cases and enable the Internal Revenue Service (IRS) to better focus existing resources on more difficult cases. The IRS issued a detailed RFQ for solicitation of debt collection services in support of the PDC program on April 25, 2005. However, this RFQ was canceled after the United States Court of Federal Claims filed an order on July 25, 2005, informing the IRS it intended to enjoin the solicitation. The order ruled that the IRS’ restriction of the solicitation only to vendors with current Federal Government debt collection task orders was arbitrary and capricious. The IRS subsequently revised the RFQ and reissued it on October 14, 2005.
Overall, the revised RFQ adequately addressed the deficiencies cited by the United States Court of Federal Claims. The IRS deleted the requirement that PCAs must have a current Federal Government debt collection task order to be eligible for the solicitation. We did not identify any other restrictions in the RFQ which would have unnecessarily limited the procurement process. Further, the revised RFQ was reviewed by the IRS’ Office of Procurement Policy Quality Assurance Branch and General Legal Services staff as required by IRS procurement procedures.
Also, the scoring criteria and review methodology documented in the evaluation plan were consistent with the revised RFQ and similarly did not contain any restrictions which would have unnecessarily limited the procurement process. The selection evaluation factors and their relative importance were clearly outlined in the revised RFQ and were consistent with the Federal Acquisition Regulation.[2] In our opinion, the evaluation criteria and process, if rigorously followed, fairly applied, and adequately documented, should provide a reasonable basis for selecting highly qualified vendors that will meet the needs of the PDC program. We briefed the IRS on the interim results of our review on February 2, 2006.
The IRS awarded contracts to three PCAs on March 9, 2006, under the terms of the revised RFQ. The IRS planned to begin delivering delinquent tax account cases to the selected PCAs by July 2006. However, on March 23, 2006, the IRS announced it had issued stop-work orders to the three PCAs after two unsuccessful bidders filed bid protests with the Government Accountability Office.
The Treasury Inspector General for Tax Administration plans to continue evaluating the implementation of this initiative as part of a continuing series of companion audits being conducted by the Office of Audit’s Small Business and Corporate Programs and Information Systems Programs Business Units.
Recommendations
We are making no recommendations in this report; however, key IRS management officials reviewed it prior to issuance and agreed with the facts and finding presented.
Copies of this report are being sent to the IRS managers affected by the report. Please contact me at (202) 622-8500 if you have questions or Daniel R. Devlin, Assistant Inspector General for Audit (Headquarters Operations and Exempt Organizations Programs), at (202) 622-8500.
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
On October 22, 2004, President Bush signed the American Jobs Creation
Act of 2004[3] that created a new Section 6306 of the
Internal Revenue Code to permit private collection agencies (PCA) to help
collect Federal tax debts. The purpose
of the program is to help reduce the significant and growing number of
uncollectible cases and enable the Internal Revenue Service (IRS) to better
focus existing resources to address more difficult cases. Department of the Treasury officials estimate
that over the next several years the Private Debt Collection (PDC) program,
formerly the Collection Contract Support program, will result in approximately $1
billion more in revenue.
According to the IRS, the initiative to use PCAs will:
The IRS issued a detailed Request
for Quotation (RFQ) for solicitation of debt collection services from PCAs listed on the General Services
Administration Federal Supply Schedule in support of the PDC program on
April 25, 2005. The IRS planned to select three PCAs and begin issuing cases in January
2006. However, this RFQ was
canceled after the United States Court of Federal Claims filed an order on July
25, 2005, informing the IRS it intended to enjoin the solicitation. The order ruled that the IRS’ restriction of
the solicitation only to vendors with current Federal Government debt
collection task orders was arbitrary and capricious. The IRS subsequently revised the RFQ and
reissued it on October 14, 2005. The IRS now intends to begin delivering
delinquent tax account cases to the selected PCAs by July 2006.
This limited-scope, follow-up audit focused on the IRS’ efforts to address the issues raised by the United States Court of Federal Claims. We did not review the bid evaluations or the selection of the contractors for this program; accordingly, we do not express an opinion on such.
This review was performed at the Small
Business/Self-Employed Division in New Carrollton, Maryland, in the Office of
Filing and Payment Compliance, and at the Agency-Wide Shared Services Division
in
Overall, the revised RFQ adequately addressed the deficiencies cited by the United States Court of Federal Claims. The IRS deleted the requirement that PCAs must have a current Federal Government debt collection task order to be eligible for the solicitation. Our review did not identify any other restrictions which would have unnecessarily limited the procurement process. Further, the revised RFQ was reviewed by the IRS’ Office of Procurement Policy Quality Assurance Branch and General Legal Services staff as required by IRS procedures for acquisitions of this size. The purpose of these reviews is to ensure the legal sufficiency and regulatory compliance of the RFQ.
Also, the scoring criteria and review methodology documented in the evaluation plan were consistent with the revised RFQ and similarly did not contain any restrictions which would have unnecessarily limited the procurement process. The selection evaluation factors and their relative importance were clearly outlined in the revised RFQ and were consistent with the Federal Acquisition Regulation.[4]
Specifically, the RFQ notes that in evaluating vendor proposals, the IRS will consider three key factors: 1) relevant experience and past performance, 2) technical approach to satisfying the requirements outlined in the RFQ, and 3) management plan regarding the organization of staff and work to meet the RFQ requirements. The IRS ranked relevant experience and past performance as having the highest importance, which is consistent with the extreme sensitivity of the PDC program. The IRS ranked technical approach as having the next highest importance, followed by the management plan. In our opinion, the evaluation criteria and process, if rigorously followed, fairly applied, and adequately documented, should provide a reasonable basis for selecting highly qualified vendors that will meet the needs of the PDC program. We briefed the IRS on the results of our review on February 2, 2006.
The IRS awarded contracts to three PCAs on March 9, 2006, under the terms of the revised RFQ. The IRS informed us it planned to begin delivering delinquent tax account cases to the selected PCAs by July 2006 as part of the first phase of the PDC program. The second phase will be the full-scale implementation involving up to 12 PCAs. The IRS plans to issue another RFQ after evaluating the results of the initial phase and begin the full-scale implementation in January 2008. However, on March 23, 2006, the IRS announced it had issued stop-work orders to the three PCAs after two unsuccessful bidders filed bid protests with the Government Accountability Office. The IRS also announced that during the resolution of the protests it will continue to prepare for debt collection work to begin.
The Treasury Inspector General for Tax Administration plans to continue evaluating the implementation of this initiative as part of a continuing series of companion audits being conducted by the Office of Audit’s Small Business and Corporate Programs and Information Systems Programs Business Units.
Appendix I
Detailed Objective,
Scope, and Methodology
The overall objective of this limited-scope review was to determine whether the revised Request for Quotation (RFQ) and associated procurement selection criteria adequately addressed the deficiencies cited by the United States Court of Federal Claims. We did not review the bid evaluations or contractor selections that were made. To accomplish our objective, we:
I. Reviewed the Federal Acquisition Regulation[5] regarding vendor selection procedures.
II. Determined whether the IRS has taken effective actions to address concerns regarding the unnecessary restrictiveness of the original solicitation.
A. Obtained the latest version of the RFQ and identified the changes from the initial version of the RFQ.
B. Evaluated the changes made to the RFQ to address the concerns and deficiencies cited by the United States Court of Federal Claims on the prior RFQ.
C. Analyzed the reason and justification for any other significant changes to the RFQ.
D. Determined whether the revised RFQ and evaluation plan were reviewed by IRS legal counsel.
III. Determined whether the scoring criteria and methodology to be used by the evaluation team was consistent with the revised RFQ and did not unnecessarily restrict the selection process.
Appendix II
Major Contributors
to This Report
Daniel R.
Devlin, Assistant Inspector General for Audit (Headquarters
Operations and Exempt Organizations Programs)
John R.
Wright, Director
Anthony J.
Choma, Audit Manager
Philip
A. Smith, Lead Auditor
Thomas
Dori, Senior Auditor
Chinita
Coates, Auditor
Rashme
Sawhney, Auditor
Appendix III
Commissioner C
Office of the Commissioner – Attention: Chief of Staff C
Deputy Commissioner for Services and Enforcement SE
Deputy Commissioner for Operations Support OS
Deputy Commissioner, Small Business/Self-Employed Division SE:S
Director, Collection, Small Business/Self-Employed Division SE:S:C
Director, Office of Procurement OS:A:P
Chief Counsel CC
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of
Program Evaluation and Risk Analysis
RAS:O
Office of
Management Controls OS:CFO:AR:M
Audit Liaison: Office of Procurement OS:A:P