TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

 

 

Vital Decisions Must Be Made to Ensure Successful Implementation of Customer Account Data Engine Capabilities

 

 

 

July 13, 2007

 

Reference Number:  2007-20-080

 

 

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

 

July 13, 2007

 

 

MEMORANDUM FOR CHIEF INFORMATION OFFICER

 

FROM:                            Michael R. Phillips /s/ Michael R. Phillips

                                         Deputy Inspector General for Audit

 

SUBJECT:                    Final Audit Report – Vital Decisions Must Be Made to Ensure Successful Implementation of Customer Account Data Engine Capabilities (Audit # 200620012)

 

This report presents the results of our review of the Customer Account Data Engine (CADE).  The overall objectives of this review were to review current CADE Release 2 activities for potential issues affecting the delivery of new capabilities planned for the 2007 Filing Season and reassess long-term CADE Project (hereafter referred to as the Project) goals and objectives in light of the growing complexity and enormity of the Project’s tasks.  This review was part of our Fiscal Year 2006 audit plan for reviews of the Internal Revenue Service’s (IRS) Business Systems Modernization efforts.

Impact on the Taxpayer

The CADE will provide the foundation for managing taxpayer accounts to achieve the IRS modernization vision.  It consists of databases and related applications that will replace the IRS’ official repository of taxpayer information (the Master File).  The Information Technology Modernization Vision and Strategy plans for a phased replacement of IRS computer systems to better support today’s tax laws, policies, and taxpayer needs.  The CADE is helping the IRS realize this Strategy.

Synopsis

The IRS initiated the Project in September 1999 and delivered Release 1.1 in August 2004, which successfully processed refund and even-balance Income Tax Returns for Single and Joint Filers With No Dependents (Form 1040EZ) for single taxpayers with no pending tax issues.  Release 1.2 started processing tax returns in January 2005.  The IRS and the PRIME contractor delivered the first biannual release (Release 1.3.1) in September 2005.  The second biannual release (Release 1.3.2) was delivered in January 2006 in time for the 2006 Filing Season.  As of December 23, 2006, the CADE had processed more than 7.3 million tax returns and generated more than $3.4 billon in refunds.  This was a significant increase over the approximately 1.4 million tax returns processed in Calendar Year 2005 that generated refunds totaling more than $427 million.

The PRIME contractor was to deliver Release 2.1 by August 31, 2006, and Release 2.2 by December 31, 2006.  In June 2006, the IRS and the PRIME contractor agreed to revise the Release 2 scope.  The Release 2 requirements were revised based on the contracted goal of processing 33 million tax returns during the 2007 Filing Season and did not consider the complexity of the programming involved for processing these returns.  Subsequently, Release 2.1 was approximately $4.2 million (15 percent)[1] over budget and was not within the acceptable 10 percent budget variance tolerance.[2]  Further, the IRS deferred several Release 2.1 and 2.2 requirements to later releases.  The implementation of Release 2.2 was postponed from the start of the 2007 Filing Season, January 16, 2007, until March 6, 2007, so the IRS could make required performance improvements and complete filing season updates.

A pattern of deferring Project requirements to later releases and missing release deployment dates has continued from the Project’s beginning.  Allowing this pattern to continue will undermine the long-term success of the Project.  The IRS and the PRIME contractor have deferred Project requirements and missed target dates because they agreed to an unrealistic scope of work, did not follow the Enterprise Life Cycle[3] Preliminary Design Phase guidelines, and did not assign adequate PRIME contractor staffing.

In addition, the approach taken to implement the CADE’s architectural design will not support the Project’s long-term goals and objectives.  While the CADE is being phased in over multiple years and processing increasingly more complex tax returns, the IRS has not completed addressing (1) the need to include a database that stores historical account data, (2) essential processing requirements deferred since Release 1 (first planned for implementation in January 2002), and (3) a process to improve the efficiency of the daily processing cycle.

To meet the CADE’s long-term computer processing demands, further consideration needs to be given to alternative design approaches.  The Project design currently includes building a computer system large enough to process the highest daily volume of tax returns received by the IRS, although this processing capacity is needed for only a few days each year.  Alternative design solutions, such as obtaining additional computer resources on an interim basis or delaying the processing of some tax return types on extremely high-volume processing days, have been considered but have not been thoroughly developed.  In addition, based on the current design of the Project, meeting storage and processing demand may be cost prohibitive.

Recommendations

The Chief Information Officer should ensure the IRS negotiates a reasonable scope of work for future CADE release development that considers the amount and difficulty of the work and the filing season time constraints.  This would include ensuring the scope of work includes adequate staffing plans and ensuring the PRIME contractor and Project team follow Enterprise Life Cycle guidance in meeting Preliminary Design Phase criteria for each release and major release segment.  In planning future release activity, the Chief Information Officer should limit delivery to essential capabilities and filing season updates and consider postponing new capabilities until key business decisions are made and previously deferred essential requirements are implemented.  Finally, the Chief Information Officer should partner with the Wage and Investment Division Business Modernization Office to jointly review alternative design solutions and identify process improvements for the Project.  Alternative design solutions need to be explored to ensure the CADE can operate as efficiently and effectively as possible.

Response

The Chief Information Officer agreed with all of our recommendations.  Planned corrective actions include a new process for gathering requirements early in the process by partnering with the Business Rules and Requirements Management Program Office to conduct detailed requirements identification.  This strategy supports the IRS’ ability to adequately define the scope of work, clarify business needs, and document clearly defined requirements within established boundaries.  Since April 2007, CADE release managers review and analyze staff resources listed by the PRIME contractor on a weekly basis to ensure adequate contractor support is provided.  Enterprise Life Cycle guidelines for performing Customer Technical Reviews and Life Cycle Stage Reviews are being accomplished through a tailoring plan.  Tailoring plans will be used for each subsequent CADE release and major release segment.  Contracting and development activities are in process to implement previously deferred requirements.  Further, the Chief Information Officer is actively engaged and continues to ensure the CADE Program Office and Wage and Investment Division Business Modernization Office jointly review design solutions and identify process improvements.  In support of this issue, a joint technical assessment team is being formed to identify CADE technical constraints and improvement opportunities with regard to the architecture, performance, and software quality.  The IRS expects to have preliminary outcomes from this effort by June 1, 2008.  Management’s complete response to the draft report is included as Appendix IX.

Copies of this report are also being sent to the IRS managers affected by the report recommendations.  Please contact me at (202) 622-6510 if you have questions or Margaret E. Begg, Assistant Inspector General for Audit (Information Systems Programs), at (202) 622-8510.

 

 

Table of Contents

 

Background

Results of Review

The Customer Account Data Engine Project Has Started to Move Toward the Long-Term Information Technology Modernization Vision and Strategy

Plans for Deploying Customer Account Data Engine Releases Have Not Been Achieved

Recommendation 1:

The Approach Taken to Implement the Architectural Design Will Not Support Customer Account Data Engine Project Long-Term Goals and Objectives

Recommendation 2:

Implementing Current Technology to Support the Customer Account Data Engine’s Ultimate Computer Processing Demands May Be Cost Prohibitive

Recommendation 3:

Appendices

Appendix I – Detailed Objectives, Scope, and Methodology

Appendix II – Major Contributors to This Report

Appendix III – Report Distribution List

Appendix IV – Customer Account Data Engine Project Costs

Appendix V – Customer Account Data Engine Release Schedules

Appendix VI – Enterprise Life Cycle Overview

Appendix VII – Corrective Actions to Prior Audit Recommendations

Appendix VIII – Glossary of Terms

Appendix IX – Management’s Response to the Draft Report

 

 

Abbreviations

 

CADE

Customer Account Data Engine

IRS

Internal Revenue Service

MIPS

Millions of Instructions Per Second

 

 

Background

 

The Customer Account Data Engine (CADE) will provide the foundation for managing taxpayer accounts to achieve the Internal Revenue Service’s (IRS) modernization vision.  The CADE consists of databases and related applications that will replace the IRS’ existing Master File[4] processing systems, the IRS’ official repository of taxpayer information.

The IRS initiated the CADE Project (hereafter referred to as the Project) in September 1999 and delivered Release 1.1 in August 2004, which successfully processed refund and even-balance Income Tax Returns for Single and Joint Filers With No Dependents (Form 1040EZ) for single taxpayers with no pending tax issues.  Release 1.2 started processing tax returns in January 2005.  The IRS and the PRIME contractor delivered the first biannual release (Release 1.3.1) in September 2005.  The second biannual release (Release 1.3.2) was delivered in January 2006 in time for the 2006 Filing Season.

Through June 8, 2006, the IRS had obligated $165.7 million for the design, development, and implementation of the CADE and planned to spend an estimated $233.9 million through Fiscal Year 2007.

Congress authorized $54 million in Fiscal Year 2005 and $60 million in Fiscal Year 2006 for the Project.  Additionally, the IRS requested $85 million in Fiscal Year 2007 for the Project, but this amount has been reduced to about $58 million.  Appendix IV presents an analysis of the Project release costs through Fiscal Year 2007, which total about $233.9 million.

In July 2006, the CADE Data Architecture and Analysis Study identified alternatives to organize and manage Project data.  Also, in October 2006, the Modernization and Information Technology Services organization published the Information Technology Modernization Vision and Strategy, which established project development priorities that include the Project.  This Strategy provides a 5-year plan for developing modernization projects and processes.

This review was performed at the Modernization and Information Technology Services organization’s facilities in New Carrollton, Maryland, during the period August 2006 through February 2007.  The audit was conducted in accordance with Government Auditing Standards.  This review was part of our Fiscal Year 2006 audit plan for reviews of the IRS’ Business Systems Modernization efforts.  Detailed information on our audit objectives, scope, and methodology is presented in Appendix I.  Major contributors to the report are listed in Appendix II.

 

 

Results of Review

 

The Customer Account Data Engine Project Has Started to Move Toward the Long-Term Information Technology Modernization Vision and Strategy

The Information Technology Modernization Vision and Strategy plans for a phased replacement of IRS computer systems to better support today’s tax laws, policies, and taxpayer needs.  The CADE is helping the IRS realize its Information Technology Modernization Vision and Strategy.

The IRS successfully hired 25 computer programmers to supplement the PRIME contractor’s efforts

Starting with Release 1, the IRS decided the PRIME contractor should use the C++ programming language.  The PRIME contractor has had difficulty retaining qualified C++ computer programmers needed to program the CADE, in part due to the extensive overtime the programmers were required to work.

The IRS addressed this problem by hiring 25 C++ computer programmers to work with the contractor in a codevelopment process.  The newly hired computer programmers reported to work on September 5, 2006, and formal training started the following week.  By October 16, 2006, the new computer programmers were divided into five teams and assimilated into existing work groups at the PRIME contractor’s New Carrollton, Maryland, facilities.  They gained experience about the Project by performing less complex programming assignments on Release 2.2.  They are now scheduled to assist with more complex programming assignments on the Release 3 physical design.

The Project has successfully aligned its multiyear release plan with the Accounts Management Services project

Using the Information Technology Modernization Vision and Strategy as a model, the Project team along with the Wage and Investment Division Business Modernization Office has successfully aligned its multiyear release plan with the Accounts Management Services project.  This alignment helps assure the two projects support each other’s capabilities.  The Accounts Management Services project will improve the CADE’s ability to process taxpayer address change requests and tax return math error notices.

CADE Release 2.1 began processing tax returns on September 5, 2006

Beginning with the development of Release 1.3, the IRS and the PRIME contractor planned to use a biannual release approach with one release in June of each year that would add complex capabilities and one release in January of each year that would include filing season updates.  Appendix V, Table 3, presents the revised CADE biannual release schedule including return types and account characteristics for each release.

A biannual release (Release 2.1) was delivered on September 5, 2006.  In addition to processing U.S. Individual Income Tax Returns (Form 1040 and 1040A) with no schedules, Release 2.1 added several new schedules to the CADE, including Form 1040 Itemized Deductions (Schedule A), Form 1040 Interest and Ordinary Dividends (Schedule B), and Form 1040 Credit for the Elderly or the Disabled (Schedule R).  The Release also processes Interest and Ordinary Dividends for Form 1040A Filers (Schedule 1) and Credit for the Elderly or the Disabled for Form 1040A Filers (Schedule 3), adds the Head of Household filing status (without dependents), and expands name and address change capabilities.

As of December 23, 2006, the CADE had processed more than 7.3 million tax returns and generated more than $3.4 billon in refunds.  This is a significant increase over the approximately 1.4 million tax returns processed in Calendar Year 2005 that generated refunds totaling more than $427 million.

Plans for Deploying Customer Account Data Engine Releases Have Not Been Achieved

The IRS used task orders to require the PRIME contractor to deliver Release 2.1 by August 31, 2006, and Release 2.2 by December 31, 2006.  In June 2006, the IRS and the PRIME contractor agreed to a task order modification[5] to revise the Release 2 scope and obligate funding.  The Release 2 requirements were revised based on the contracted goal of processing 33 million tax returns during the 2007 Filing Season and did not consider the complexity of the programming involved for processing these returns.

The Enterprise Life Cycle provides the direction, processes, and tools for accomplishing business change in a repeatable and reliable manner.

The Enterprise Life Cycle[6] is the internal control approach used by the IRS to manage and effect business change.  It consists of eight phases including the Preliminary Design Phase.  A phase is a broad segment of work that encompasses activities of similar scope, nature, and detail, and provides a natural breakpoint in the life cycle.  The Customer Technical Review and the Life Cycle Stage Review are internal control points within the Preliminary Design Phase that ensure all release requirements are properly identified.

A Customer Technical Review is performed by IRS stakeholders to review selected technical and business products created by a project.  The purpose of the review is to obtain early and continuous stakeholder feedback, identify and resolve issues and actions required to gain stakeholder approval, and provide a forum to resolve conflicting comments between the stakeholders and developer on the products produced.

A Customer Technical Review deals with a single or small set of related work products while a Life Cycle Stage Review deals with all work products that comprise the solution.

A Life Cycle Stage Review provides a broad look across the technical and business aspects of a project’s development to verify it is complete, consistent, and correct given its point in the life cycle.  Results of the Life Cycle Stage Review are used as input for the decision to move the project from the design phase to the development phase.

CADE Release 2 was over budget, requirements were deferred from both biannual releases (Release 2.1 and 2.2), and target deployment dates were not met

Release 2.1 was approximately $4.2 million (15 percent)[7] over budget and was not within the acceptable 10 percent budget variance tolerance.[8]  Further, the IRS deferred several Release 2.1 and 2.2 requirements to later releases.  Table 1 presents the deferred requirements and the related releases and major release segments.

Table 1:  CADE Release 2 Deferred Requirements

Requirement

Release 2.1

Release 2.2

Spousal Cross-Reference

Moved to Release 2.2

-

Married Taxpayers

Moved to Release 2.2

-

Dependents

Moved to Release 2.2

-

Continuous Processing

Moved to Future Release

-

Naming Standards

Moved to Future Release

-

Split Refunds

-

Moved to Release 3

Naming Standards

-

Moved to Future Release

Source:  The CADE Weekly Task Review.

The delivery of Release 2.2 was postponed from the start of the 2007 Filing Season, January 16, 2007, until March 6, 2007, so the IRS and the PRIME contractor could make required performance improvements and complete filing season updates.  During this period, tax returns eligible for processing by the CADE were sent back to the IRS’ current processing system (the Individual Master File).  Therefore, approximately 17.2 million potential CADE tax returns filed through February 16, 2007, did not have an opportunity for processing by the CADE.  As a result, Release 2.2 will not process its goal of 33 million tax returns, and a significant number of taxpayers will not receive the benefits of expedited refunds.

The Project continues to follow a pattern of deferring requirements and missing target release deployment dates

During the 2006 Filing Season, the Project overcame some of the setbacks that plagued its early development.  However, a pattern of deferring Project requirements to later releases and missing release deployment dates is continuing.

Ÿ         The first release of the CADE was originally designed to store historical data and be delivered in January 2002.  The IRS delivered Release 1.1 in August 2004 without the ability to store historical data, citing overall complexity as the reason for the deferral.

Ÿ         Release 1.3.2 deferred requirements such as processing prior year returns and offsets to tax overpayments to later releases because of inadequate design, coding and unit testing and insufficient staffing.[9]

Ÿ         Release 2.1 deferred requirements to later releases because all of the work related to the release requirements was not identified during the Enterprise Life Cycle Preliminary Design Phase of the Project.

Ÿ         Release 2.2 delivered several requirements after the start of the 2007 Filing Season and will postpone the delivery of other requirements because of insufficient staffing.

The pattern of deferring requirements and missing target release deployment dates, if allowed to continue, will undermine the long-term success of the Project.  The IRS and the PRIME contractor have deferred Project requirements and missed target dates because they agreed to an unrealistic scope of work for Release 2, did not follow the Enterprise Life Cycle Preliminary Design Phase guidelines, and did not assign adequate PRIME contractor staffing.  We have previously reported similar occurrences.  Appendix VII presents our prior audit findings, recommendations, and IRS corrective actions.  In addition, the IRS has documented these problems as lessons learned from prior releases; however, the problems continue to remain unresolved.

During the Customer Technical Review and Life Cycle Stage Review processes, IRS executives allowed the PRIME contractor to exit the Release 2.1 Preliminary Design Phase of the Project on May 6, 2006, with the condition it would subsequently deliver the remaining work related to the release requirements.  The Project received a waiver from the requirement of complying with all Enterprise Life Cycle guidance until the initiation of Release 2.

By late June 2006, indications surfaced that the revised Release 2.2 delivery date of December 31, 2006, was in jeopardy.  Development fell behind schedule by approximately 2 weeks to 3 weeks, trying to finish the logical design work that should have been completed during the Preliminary Design Phase.  The Project’s schedule could not keep pace with its plan, which resulted in the need for another revision in August 2006.  The August revision kept all previously agreed-to requirements, postponed the planned completion date of the application testing, but essentially left the deployment dates the same.  Leaving the deployment dates intact reduced the Release 2.2 development and testing time to 4 months; the recommended time for development and testing is approximately 11 months.

In addition to the reduced development time, the staffing practice used by the PRIME contractor was insufficient to deliver the scope of work contracted.  The PRIME contractor’s staffing practice did not treat each biannual release as a separate release.  The practice involved reassigning staff between releases to meet immediate needs, but the reassigned staff was not replaced with other staff members so the planned work could be completed.  We previously reported[10] the PRIME contractor did not have adequate staffing to fix the Release 1.3.1 defects, requiring the transfer of designers and developers assigned to Release 1.3.2.  The PRIME contractor also did not have staffing available to meet the work demands for Release 1.3.2.  This pattern of not replacing transferred staff has had a cumulative effect on the timely delivery of the contracted requirements for Release 2 and is affecting the design and development of Release 3.

The Release 3 project schedule is continuing the pattern of deferring requirements, not assigning sufficient staffing, and postponing completion dates.  Specifically, the IRS is considering revising the Release 3 scope by deferring some requirements to Release 4.  Resource assessments show the Project was understaffed by 8 percent in January 2007.  Further, the Release 3 project schedule has been revised.

Recommendation

Recommendation 1:  The Chief Information Officer should:

·         Ensure the IRS negotiates a reasonable scope of work for future CADE release development that considers the amount and difficulty of the work and the filing season time constraints.

·         Ensure the IRS analyzes the amount of staffing used during prior releases to help verify the PRIME contractor’s staffing plans are adequate to accomplish the scope of work projected for future project releases.

·         Ensure the Project follows Enterprise Life Cycle guidance for performing Customer Technical Reviews and Life Cycle Stage Reviews after completion of the design phase for each release and major release segment.

·         Not allow the PRIME contractor to exit the Preliminary Design Phase without identifying all of the work related to the release requirements.

Management’s Response:  The Chief Information Officer agreed with this recommendation and will ensure the IRS negotiates a reasonable scope of work for future CADE release development that considers the amount and difficulty of the work and the filing season time constraints.  The Chief Information Officer has begun to address the cause of scope estimation problems through implementation of a formal Business Systems Requirements Report document using IRS processes in the Business Rules and Requirements Management Program Office to conduct detailed requirements elicitation.  With these better-defined requirements early in the development life cycle, the IRS will be able to more effectively segment functionality into releases and major release segments to assure only manageable scopes of work are undertaken at Milestones 4A and 4B.  Based on having better requirements definition, the IRS was successful in putting in place a fixed-price contract for Release 3 development.  Beginning with Release 4.0, the IRS will further identify, prioritize, and approve business requirements to manage scope, mitigate business risks, and meet business needs within an improved framework.

The Chief Information Officer agreed that the IRS should analyze the amount of staffing used during prior releases to help verify the PRIME contractor’s staffing plans are adequate.  As of April 6, 2007, the IRS has mandated that PRIME contractors provide a list of employees supporting CADE releases.  CADE release managers review and analyze resources listed to ensure adequate support is provided by the contractors.  This information is provided weekly to the CADE Program Office.  If staffing issues are identified, they are addressed at the Weekly Task Review meetings.  This applies to the existing CADE Cost-Plus-Fixed-Fee and Cost-Plus-Incentive-Fee task orders.  As the IRS pursues more Firm Fixed-Price development efforts in the future, it will not have the same access to staff level details.

The Chief Information Officer agreed that the Project should follow Enterprise Life Cycle guidance for performing Customer Technical Reviews and Life Cycle Stage Reviews after completion of the design phase for each release and major release segment.  As the complexity of projects has increased, and as the IRS gains more experience in managing large complex development efforts, it has found that appropriately tailoring the Enterprise Life Cycle to ensure the effective use of contractor resources is critical to delivering within cost and schedule parameters.  This tailoring aligns with the current Enterprise Life Cycle methodology.

Finally, the Chief Information Officer agreed to not allow the PRIME contractor to exit the Preliminary Design Phase without identifying all of the work related to the release requirements.  The IRS will identify all work related to a release before exiting the Preliminary Design Phase.  It is also tailoring the Enterprise Life Cycle to align with best practices to ensure that project continuity is not lost; specifically, when low-risk activities can be implemented in parallel with Enterprise Life Cycle approvals.  As mentioned in a prior corrective action, the IRS will ensure the scope and requirements for a release are fully understood so that it will be possible to segment work into distinct builds or subreleases as it continues to mature the development process for the CADE in accordance with the Enterprise Life Cycle guidance.  Each of the builds or subreleases for new CADE functionality will complete logical and physical design before development.

The Approach Taken to Implement the Architectural Design Will Not Support Customer Account Data Engine Project Long-Term Goals and Objectives

As discussed previously, the Enterprise Life Cycle is the internal control approach used by the IRS to manage and effect business change.  The Enterprise Life Cycle is made up of layers, phases, and stages.  A phase is a broad segment of work that encompasses activities of similar scope, nature, and detail and provides a natural breakpoint in the life cycle.  Two phases included in the Enterprise Life Cycle are the Domain Architecture Phase and the Preliminary Design Phase.  Several stages are used to monitor the work in these phases, including:

·         The Business System Architecture Stage, which has the purposes to develop a system architecture that packages requirements into deliverable components to provide the guiding structure for achieving the enterprise goal.

·         The Application Requirements Stage, which has a purpose to develop a set of software requirements that follow the design of the system architecture and develop the software applications to meet this design.

The CADE Risk Management Plan is another control requiring the Project to use an organized, systematic decision-making process to identify, analyze, plan, track, control, communicate, document, and resolve risks and issues so the likelihood of achieving Business Systems Modernization Program goals is increased.

The approach taken to implement the CADE architectural design will not support the Project’s long-term goals and objectives.  While the CADE is being phased in over multiple years and processing increasingly more complex tax returns, the IRS has not completed addressing the following issues:

·         Storing Historical Data – As previously discussed, the Project planned to build a database in 2002 to store historical account data as part of Release 1.  This requirement was deferred because of the complexity of the task and its necessity was not immediate to releases that did not require reference to these data.  Currently, the CADE does not store historical taxpayer account data.  It only stores the taxpayer account data used in processing the current year returns.  The IRS indicated it will develop a plan to use historical data when Release 4 is being developed.

·         Implementing Essential Processing Requirements – Similar to the historical data issue, the Project has deferred essential processing requirements from the January 2002 Release 1 plans.  These requirements were deferred because of the focus on delivering processing requirements to meet immediate release needs.  For example, the CADE cannot process prior tax year returns for taxpayer accounts currently residing on the CADE database.  Future plans (i.e., the CADE Independent Requirements Project) call for the development and implementation of this and six other essential requirements that include processing overpayments and validating outstanding balances.  These requirements are planned for development and implementation concurrently with Release 3.

·         Improving Daily Processing Routines – The smallest unit of work performed by the CADE is the daily processing cycle, and each daily processing cycle must be successfully completed in 1 day before the next daily cycle can do any significant amount of processing.  As release complexity increases, the CADE’s ability to complete each daily processing cycle in 1 day will be affected.  While several alternative approaches have been considered and an additional day (Sunday) has been added to the processing cycle on an as-needed basis, there are no long-term plans currently in place to improve the efficiency of the daily processing cycle.

The Project team identified these deferred essential processing requirements as conditions that need resolution.  The Enterprise Life Cycle Business System Architecture Stage and Application Requirements Stage for the Project included the requirements for historical data storage processes and daily processing routines.  The IRS Risk Management process identified the need to implement the deferred processing requirements.

The Customer Technical Review compares project design products with the project’s architecture and requirements.  The Enterprise Life Cycle states (1) the Customer Technical Review can provide benefits with early identification of variances from the architecture and requirements and (2) when real problems are not exposed until late in the project (i.e., during testing), they are difficult and costly to resolve.

Unless sufficient time is provided to deliver the capabilities needed to support the long-term objectives and goals of the release scope, the CADE will be unable to process tax returns for all individual and business taxpayers as planned.  Additionally, the longer these decisions are delayed, the greater the risk of costly rework.

Recommendation

Recommendation 2:  The Chief Information Officer should limit future Project delivery to essential capabilities and filing season updates.  Further, the Chief Information Officer should consider postponing new capabilities until key business decisions are made and the following requirements are implemented:

  • Historical data are stored.
  • Requirements identified by the CADE Independent Requirements Project are developed and implemented.
  • Daily processing routines are improved.

Management’s Response:  The Chief Information Officer agreed with this recommendation and has tasks underway to develop the historical data store and the requirements that are captured in the CADE Independent Requirements Project, and has also undertaken efforts to see what improvements can be made to daily processing.  The scope of Releases 3.1 and 3.2 has been fully defined and work is well underway under a fixed-price arrangement with the PRIME contractor.  As part of scoping Releases 3.1 and 3.2, many new capabilities were deferred to ensure the above noted infrastructure improvements and previously deferred requirements were incorporated; however, some new capabilities have been included in Release 3.2.  The IRS will continue to carefully plan and approve increments of new functionality to include in future CADE releases.

Implementing Current Technology to Support the Customer Account Data Engine’s Ultimate Computer Processing Demands May Be Cost Prohibitive

The IRS has several directives to guide capacity testing for its systems including:

  • The Internal Revenue Manual, which requires capacity management planning and testing by assessing the capacity requirements of new systems to determine whether infrastructure needs (hardware, system software, network, etc.) can be met by current infrastructure components, whether procurements are necessary to supplement capacity, or whether design modifications are necessary to reduce capacity requirements.
  • The Manager’s Guide to the Enterprise Life Cycle, which states the Integration Phase may include testing system performance through a realistic simulation of peak volumes.
  • The Enterprise Life Cycle Supplement entitled “Enterprise Integration and Test,” which requires capacity testing.

The Project is currently building a computer system large enough to process the highest daily volume of tax returns received by the IRS, although this processing capacity is needed for only a few days each year.  Alternative design approaches, such as obtaining additional computer resources on an interim basis or delaying the processing of some tax return types (e.g., deferring “no refund” type returns until the next day) on extremely high-volume processing days, have been considered but have not been thoroughly developed because of the focus on delivering current Project releases.  Other potential internal solutions that have been considered to address the short-term performance demands include distributing CADE peak workload demands between the two Enterprise Computing Centers at Martinsburg, West Virginia, and Memphis, Tennessee, and prioritizing computer processing time among the various modernization applications to manage peak workload demands.

During our meetings with the Project team, we discussed other potential solutions for increasing computer processing capacity, including:

·         Use of supercomputing centers with vast computing resources by obtaining limited access to their supercomputers.  Examples of supercomputing centers include the Los Alamos National Laboratory, National Aeronautics and Space Administration Ames Research Center, National Security Agency, and Pittsburgh Supercomputing Center.

·         Use of outside vendors that offer open access, computing time, and on-demand programs to provide peak workload demand assistance on an as-needed basis.

·         Discussions with other Federal Government agencies with similarly sized programs to obtain performance-related lessons-learned information.

One aspect of processing performance is related to the storage and retrieval of CADE data that are currently stored on magnetic tape cartridges.  The current magnetic tape storage pool available to the CADE at the Enterprise Computing Center in Martinsburg, West Virginia, is limited in size and will be challenged to handle future needs.  The CADE currently has access to 40 terabytes of storage.  Future plans call for the purchase of an additional 50 terabytes of storage using direct access storage devices.  In early February 2007, Release 2.2 experienced processing problems related to the tape storage pool.

Another aspect of processing performance is the number of business rules that can be efficiently processed.  Processing performance can be measured in millions of instructions per second (MIPS).  To ensure adequate computer processing capacity was available for the 2007 Filing Season, the IRS purchased an additional 550 MIPS at a cost of approximately $3.4 million.  Currently, the hardware and software cost for 1 MIPS is about $5,000, with an additional estimated annual maintenance cost of about $1,200.  Assuming the Release 3 ratio of 2 MIPS to 3 business rules remains constant, the CADE will require approximately 25,000 MIPS by 2012.  This also assumes the ratio will not increase, even though business rule volume and complexity will increase and the volume of tax returns will rise from 50 million to more than 135 million.

Table 2 presents estimated business rules and tax return volumes by year and release.

Table 2:  Business Rules and Tax Return Volume by Year and Release

 

2006

2007

2008

2009

2010

2011

2012

 

Release 1

Release 2

Release 3

Release 4

Release 5

Release 6

Release 7

Business Rules

624

2,066

6,078

15,882

31,832

34,316

38,285

Tax Return Volume

7 million

33 million

50 million

70 million

90 million

110 million

135 million

Source:  The IRS Applications Development organization.

It will cost more than $226.5 million (which includes maintenance costs of about $98.3 million) to fund the MIPS required to support the CADE processing through 2012.  Further, this projection includes only individual taxpayers and not business taxpayers.

The Project has recognized the need to meet capacity requirements for current processing.  Although it has performed annual capacity assessments for current and subsequent year demand to support CADE releases, it has not thoroughly developed the estimated long-term needs as prescribed by the Enterprise Life Cycle and the Internal Revenue Manual.

The IRS needs to decide whether to reduce CADE capabilities because of capacity constraints or to continue development with the hope of using new technology or alternative resources (e.g., supercomputer centers, outside vendors) to satisfy the computer processing demands.  If new technology does not emerge to more efficiently perform computer processing, CADE costs may be prohibitive.

Recommendation

Recommendation 3:  The Chief Information Officer should partner with the Wage and Investment Division Business Modernization Office to jointly review alternative design solutions and identify process improvements for the Project.  Alternative design solutions, such as delaying processing of some tax returns on extremely high-volume processing days or obtaining additional computer resources on an interim basis, need to be explored to ensure the CADE can operate as efficiently and effectively as possible.

Management’s Response:  The Chief Information Officer agreed with this recommendation and is actively engaged and continues to ensure the CADE Program Office and Wage and Investment Division Business Modernization Office jointly review design solutions and identify process improvements for the Project.  The Chief Information Officer will continue to work with the Submission Processing organization to identify alternatives for processing tax returns on high volume days, and the Wage and Investment Division Business Modernization Office will continue to work along with the Enterprise Computing Center to implement Saturday tax return processing during the filing season.  This approach avoids a backlog by allowing weekend volume to be spread across CADE cycles.  These procedures were first utilized for the 2006 Filing Season and continued in the 2007 Filing Season, and are outlined in memorandums signed by the Deputy Director, Submission Processing, dated January 26, 2006, and January 18, 2007, respectively.  The IRS remains committed to ensuring all taxpayers processed by the CADE receive the same advantages.  Additionally, the Submission Processing organization continues to evaluate potential automated routines for returns initiated through the Electronic Filing System for processing in the CADE to further balance workload throughout the day.  The IRS will also continue to explore alternative solutions for successful implementation.  In support of this issue, a joint technical assessment team is being formed to identify CADE technical constraints and improvement opportunities with regard to the architecture, performance, and software quality.  The IRS expects to have preliminary outcomes from this effort by June 1, 2008.

 

Appendix I

 

Detailed Objectives, Scope, and Methodology

 

The overall objectives of this review were to review current CADE Release[11] 2 activities for potential issues affecting the delivery of new capabilities planned for the 2007 Filing Season and reassess long-term CADE Project goals and objectives in light of the growing complexity and enormity of the Project’s tasks.  This review was part of our Fiscal Year 2006 audit plan for reviews of the IRS’ Business Systems Modernization efforts.

To accomplish our objective, we identified the internal control systems used as guidance for the Project’s development.  These systems include the Enterprise Life Cycle[12] and the Internal Revenue Manual.  We assessed the adequacy of Project development activities in relation to the guidance provided by these internal control systems.  We also assessed the adequacy of Project development and program plans by reviewing Business Systems Modernization Program and project documentation and data provided by the IRS and by interviewing personnel in the Applications Development and Enterprise Services organizations.  Specifically, we:

I.                   Determined whether the Applications Development organization and the PRIME contractor delivered all agreed-to Release 2.1 and 2.2 requirements.

A.    Reviewed CADE task order modifications identifying the requirements included in Release 2 and determined the adequacy of documentation tracing business rules to project requirements.

B.     Reviewed documentation identifying the Release 2 staffing levels to determine the adequacy of resources assigned to meet delivery plans.

C.     Reviewed the processes implemented for Release 2 to improve the design quality, computer code development, and application testing over the work performed for Release 1.3.

II.                Assessed the IRS’ ability to successfully realize the long-term Project goal of retiring the Individual Master File in 2012.

A.    Reviewed the CADE Data Architecture and Analysis Study to assess plans for long-term logical and physical designs, the process for loading and storing historical data, and transforming the CADE from a batch processing operation to a real-time processing operation.

B.     Reviewed the Information Technology Modernization Vision and Strategy concepts and assessed the effect on the Project’s long-term program goals and objectives.

C.     Reviewed the CADE’s data storage and processing requirements estimates to determine the resources and associated costs the IRS needs to commit to process and manage taxpayer accounts.

1.      Reviewed the estimates of processing capabilities in measurement terms of MIPS and the related costs to provide necessary MIPS capacity to meet processing requirements.

2.      Reviewed estimates of the number of business rules to estimate the MIPS and related costs necessary to support the CADE release schedule in 2012.

D.    Reviewed the Project’s current status and program goals and objectives to identify potential alternatives in system development and release plans.

 

Appendix II

 

Major Contributors to This Report

 

Margaret E. Begg, Assistant Inspector General for Audit (Information Systems Programs)

Gary V. Hinkle, Director

Edward A. Neuwirth, Audit Manager

Mark K. Carder, Senior Auditor

Bruce Polidori, Senior Auditor

 

Appendix III

 

Report Distribution List

 

Acting Commissioner  C

Office of the Commissioner – Attn:  Chief of Staff  C

Deputy Commissioner for Operations Support  OS

Associate Chief Information Officer, Applications Development  OS:CIO:AD

Associate Chief Information Officer, Enterprise Services  OS:CIO:ES

Director, Procurement  OS:A:P

Director, Stakeholder Management  OS:CIO:SM

Deputy Associate Chief Information Officer, Applications Development  OS:CIO:AD

Deputy Associate Chief Information Officer, Business Integration  OS:CIO:ES:BI

Deputy Associate Chief Information Officer, Systems Integration  OS:CIO:ES:SI

Director, Test, Assurance, and Documentation  OS:CIO:AD:TAD

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 Internal Control  OS:CFO:CPIC:IC

Audit Liaisons:

Associate Chief Information Officer, Applications Development  OS:CIO:AD

Director, Procurement  OS:A:P

Director, Program Oversight  OS:CIO:SM:PO

 

Appendix IV

 

Customer Account Data Engine Project Costs

Table 1:  Project Task Order[13] Costs Through Release 2

Task Order Number

Period of Performance

Cost

0019

1999 – 2000 (specific dates not available)

$2,166,234

0037

April 24, 2000 – August 31, 2000

$3,011,000

0054

September 1, 2000 – April 30, 2001

$13,971,165

0069

June 1, 2001 – August 31, 2001

$5,700,000

0071

May 1, 2001 – June 30, 2001

$1,534,012

0073

September 1, 2001 – August 31, 2004

$60,458,154

0123

October 1, 2004 – June 8, 2006

$78,862,590

 

 

Total  $165,703,155

Source:  CADE contract task orders from the IRS Procurement Office.

Table 2:  Estimated Project Costs and Schedule Through Release 2

Release Project Phases

Completed/Scheduled

Cost/Estimate

Milestone 1

December 31, 1999

$5,116,000

Milestones 2 and 3

June 30, 2001

$19,267,000

Milestone 4

July 30, 2004

$58,838,000

2003/2004 Filing Seasons (Release 1.1)

August 5, 2004

$24,550,000

2005 Filing Season (Release 1.2)

December 31, 2004

$23,403,000

Milestone 5

June 30, 2005

$17,450,000

2006 Filing Season (Release 1.3)

December 31, 2005

$28,300,000

2007 Filing Season (Release 2)

Mid-May 2007 (estimate)

$56,959,000

 

 

Total  $233,883,000

Source:  Business Systems Modernization Expenditure Plans for Fiscal Years 2004, 2005, 2006, and 2007.

Table 3:  Project Cost and Schedule Variance Summary

Release

Milestone

Cost Variance

Cost Variance Percentage

Schedule Variance
(in months)

Schedule
Variance
(percentage)

1

Operations and Maintenance[14]

$7,510,000

43%

0

0%

1.2

2005 Filing Season[15]

$10,000

0%

0

0%

1.3.1

2006 Filing Season

$668

3%

2

20%

1.3.2

2006 Filing Season[16]

$66

0%

0

0%

2.1

Mid-year Release

$4,190

15%

0

0%

2.2

2007 Filing Season

$1,225

5%

2

22%

Program
Management

2005
Calendar Year
Level of Effort

$1,935,000

24%

Not
Applicable

Not
Applicable

2006
Calendar Year
Level of Effort

$0

0%

Not
Applicable

Not
Applicable

Source:  Business Systems Modernization Expenditure Plans for Fiscal Years 2004, 2005, 2006, and 2007 and the IRS.

 

Appendix V

 

Customer Account Data Engine Release Schedules

 

Table 1 presents the historical development of the CADE and the original release[17] schedule.  The names of the tax forms and schedules planned for CADE processing are presented below Table 1.  All tax forms and schedules listed in Tables 1 and 2 are available at the IRS web site (IRS.gov).

Table 1:  Original CADE Release Schedule

 

RELEASE
1.1/1.2

RELEASE
1.3.1

RELEASE
1.3.2

RELEASE
2.1

RELEASE
2.2

RELEASE 3

RELEASE
4

RELEASE 5

Tax Return Types

Form 1040EZ; Single filing status;

refund or even-balance returns

Release 1.1/1.2 plus address change

Release 1.3.1 plus
Forms 1040 and 1040A with no schedules; Forms 4868 and 2688; prior year returns (2003+); limited
name-change returns

Form 1040EZ; Form 1040 Schedules A, B, and R;

Form 1040A Schedules 1 and 3

Release 2.1 plus
Form 1040 Schedules C, D, E, F, and H without an Employer Identification Number and their supporting schedules

All Form 1040 family and supporting forms without an Employer Identification Number;
Form 1040A Schedule 2; refund,

deceased

refund, or fully paid returns

All Form 1040 family and supporting forms with an Employer Identification Number;

Forms 941, 940, and 720; payroll, unemployment, and excise returns for Form 1040 taxpayers;

refund,
fully paid,
balance-due,  and
even-balance returns

All remaining individual tax returns

Filing Status

Single

 

Single

 

Single

 

Single; Married;  Head of Household, limited dependents

Single; Married; Head of Household, limited dependents

All (including Head of Household)

All

All

Account Characteristics

No account issues (open or closed)

No account issues (open or closed)

No account issues (open or closed)

No account issues (open or closed)

Married once; no open account issues

No open account issues; Earned Income Tax Credit

Power of Attorney; Centralized Authorization File; no open account issues

All accounts not included in previous Releases

 

 

RELEASE
1.1/1.2

RELEASE
1.3.1

RELEASE
1.3.2

RELEASE
2.1

RELEASE
2.2

RELEASE 3

RELEASE 4

RELEASE 5

Number of

Returns

Original Estimate

Revised Estimate -  February 2005

 

 

 

3 million

 

 

2 million

 

 

 

 

 

 

2 million

 

 

 

 

 

 

To be determined

 

 

 

 

 

 

To be determined

 

 

 

35 million

 

 

33 million

 

 

 

 

76 million

 

 

50 million

 

 

 

110 million

 

 

80 million

 

 

 

122 million

 

 

140 million

Estimated Delivery:

As of
April 2000

As of January 2004

As of December 2004

As of February 2005

 

 

 

January 2002

 

 

 

August 2004

 

 

 

August 2004

 

 

August 2004/
January 2005

 

 

 

 

 

 

 

 

 

 

July 2005

 

 

July 2005

 

 

 

 

 

 

January 2006

 

 

 

January 2006

 

 

January 2006

 

 

 

August 2002

 

 

To be determined

 

 

 

July 2006

 

 

July 2006

 

 

 

 

 

 

To be determined

 

 

 

January 2007

 

 

January 2007

 

 

July 2003

 

 

To be determined

 

 

To be determined

 

 

Releases  3.1/3.2
July 2007/
January 2008

 

 

July 2004

 

 

To be determined

 

 

To be determined

 

 

Releases  4.1/4.2
July 2008/
January 2009

 

 

July 2005

 

 

To be determined

 

 

To be determined

 

 

July 2009

Source:  CADE Individual Master File Release Content Master Plan Updates, dated June 5, 2003, and February 11, 2005.

Form 720 – Quarterly Federal Excise Tax Return

Form 940 – Employer’s Annual Federal Unemployment (FUTA) Tax Return

Form 941 – Employer’s QUARTERLY Federal Tax Return

Form 1040 – U.S. Individual Income Tax Return

Form 1040A – U.S. Individual Income Tax Return

Form 1040EZ – Income Tax Return for Single and Joint Filers With No Dependents

Form 2688 – Application for Additional Extension of Time To File U.S. Individual Income Tax Return

Form 4868 – Application for Automatic Extension of Time To File U.S. Individual Income Tax Return

Schedule A (Form 1040) – Itemized Deductions

Schedule B (Form 1040) – Interest and Ordinary Dividends

Schedule C (Form 1040) – Profit or Loss From Business

Schedule D (Form 1040) – Capital Gains and Losses

Schedule E (Form 1040) – Supplemental Income and Loss

Schedule F (Form 1040) – Profit or Loss From Farming

Schedule H (Form 1040) – Household Employment Taxes

Schedule R (Form 1040) – Credit for the Elderly or the Disabled

Schedule 1 (Form 1040A) – Interest and Ordinary Dividends for Form 1040A Filers

Schedule 2 (Form 1040A) – Child and Dependent Care Expenses for Form 1040A Filers

Schedule 3 (Form 1040A) – Credit for the Elderly or the Disabled for Form 1040A Filers

Table 2 presents the first biannual release schedule.  The names of additional tax forms and schedules planned for CADE processing are presented below Table 2.

Table 2:  First Biannual CADE Release Schedule

 


January and
June

2004

RELEASE 1.1

2005

RELEASE 1.2
1.3.1

2006

RELEASE 1.3.2
2.1

2007

RELEASE 2.2
3.1

2008

RELEASE 3.2
4.1

2009

RELEASE 4.2
5.1

2010

RELEASE 5.2
6.1

2011/2012

RELEASE 6.2
7.1/7.2

Tax Return Types

Form 1040EZ

 

1.2 & 1.3.1
Form 1040EZ

(1.3.1 only)
Address changes

 

1.3.2
Forms 1040 and 1040A, no schedules

2.2
Form 1040A Schedules 1 and 3;
Form 1040
Schedules A, B, D, and R and supporting forms;
Form 1040 Schedules C, F, and E without an Employer Identification Number and supporting forms including
Schedule SE; limited name change on return

3.2

Form 1040 decedent returns;

Form 1040 fully paid with remittance; Form 1040 with credit elect;
Form 4868 with remittance;
Form 4868 with no remittance; additional  Form 1040 schedules and forms (to be determined); Form
1040-ES;
Form 1040-V; Form 1040X; Form 1040A Schedule 2; Form 1040 Schedule EIC and  supporting forms

4.2

Balance-due returns; math error returns;
Form 6251; additional
Form 1040 schedules and forms (to be determined)

5.2

Form 1040 Schedules C, E, F with an Employer Identification Number and supporting schedules including Schedule SE; Forms 940 and 720 payroll, unemployment, and excise tax returns for Form 1040
self-employed filers; additional
Form 1040 schedules and forms (to be determined); delinquent returns

 

6.2

Additional Form 1040 schedules and forms (to be determined)

 

7.2

Form 1040NR;
Form 1040 Puerto Rico Resident; Form 1040 Self- Employed; Form 1040 Departing Alien; foreign address; additional Form 1040 schedules and forms (to be determined)

 

Filing Status

Single

(never married); no dependents

 

Single

(never married); no dependents

 

2.1

Single, Married (joint), Head of Household, Married (separate)

3.1

Single, Married (joint), Head of Household, Married (separate), Surviving Spouse

4.1

Single, Married (joint), Head of Household, Married (separate), Surviving Spouse

5.1

Single, Married (joint), Head of Household, Married (separate), Surviving Spouse

6.1

Single, Married (joint), Head of Household, Married (separate), Surviving Spouse

7.1

Single, Married (joint), Head of Household, Married (separate), Surviving Spouse

 

 


January and
June

2004

RELEASE 1.1

2005

RELEASE 1.2
1.3.1

2006

RELEASE 1.3.2
2.1

2007

RELEASE 2.2
3.1

2008

RELEASE 3.2
4.1

2009

RELEASE 4.2
5.1

2010

RELEASE 5.2
6.1

2011/2012

RELEASE 6.2
7.1/7.2

Account Characteristics

Refund or even-balance returns; no account issues (open or closed)

Refund or even-balance returns; no dependents;
no account issues (open or closed)

Refund or even-balance returns; no dependents;
no account issues (open or closed)

2.2
Married once; no open account issues 3.1
No open account issues;

Earned Income Tax Credit

3.2

No open account issues.

Earned Income Tax Credit
4.1
Power of Attorney; Centralized Authorization File;

no open account issues; Earned Income Tax Credit

No open account issues; Earned Income Tax Credit

Power of Attorney; Centralized Authorization File;
no open account issues

All accounts not included in previous Releases

Estimated
Number of Returns

 

Not applicable

Actual

1,423,517

Actual

7,372,572

2.2

33 million

3.2

50 million

4.2

70 million

5.2

90 million

6.2

110 million

7.2
135 million

Source:  Customer Relationship Management Executive Steering Committee, approved October 18, 2005.

Form 1040-ES – Estimated Tax for Individuals

Form 1040NR – U.S. Nonresident Alien Income Tax Return

Form 1040-V – Payment Voucher

Form 1040X – Amended U.S. Individual Income Tax Return

Form 6251 – Alternative Minimum Tax–Individuals

Schedule EIC (Form 1040 or 1040A) – Earned Income Credit

Schedule SE (Form 1040) – Self-Employment Tax

Table 3 presents the revised biannual release schedule as of November 16, 2006.  The names of additional tax forms and schedules planned for CADE processing are presented below Table 3.

Table 3:  Revised Biannual CADE Release Schedule

 

January and
June

2007

RELEASE 2.2

3.1

2008

RELEASE 3.2

4.1

2009

RELEASE 4.2

5.1

2010

RELEASE 5.2

6.1

2011

RELEASE 6.2

7.1

2012

RELEASE 7.2

Tax Return Types

2.2
Form 1040
Schedules C, F, and E without an Employer Identification Number and supporting forms including
Schedule SE;
Form 1040 Schedule D and its supporting forms;
Form 8880

 

3.1
Form 1040 fully paid with remittance;
Form 1040-ES, Form 1040-V, Schedule EIC, and their supporting forms

3.2
Form 1040 Descendent Returns;
Form 1040 with credit elect;
Form 1040A Schedule 2;

Form 4868 with and without remittance

 

4.1
Balance-due returns; math error returns

4.2
Form 1040X;
Form 6251

 

5.1

Delinquent returns; Form 1040X expanded

5.2
None

 

6.1
Additional
Form 1040 schedules and forms (to be determined);
Form 1040 Schedules C and F with an Employer Identification Number and supporting schedules including
Schedule SE

6.2

None

 

7.1
Form 1040NR;
Form 1040 Puerto Rico Resident;

Form 1040-SS self-employed Puerto Rico Resident;
Form 1040 foreign address;

additional
Form 1040 schedules and forms (to be determined);

Forms 940 and 720 payroll; unemployment and excise tax returns for Form 1040
self-employed filers

7.2

None

Filing Status

Not included in plan

Not included in plan

Not included in plan

Not included in plan

Not included in plan

 

Account Characteristics

2.2
Clean dependents; married filing jointly and separately (married once)

 

3.1
Dependents expanded

3.2
Deceased taxpayers; name change (last name)

 

4.1
None

4.2
None

 

5.1
Power of Attorney; Centralized Authorization File

5.2
None

 

6.1
Taxpayers with a history of multiple marriages

6.2
None

 

7.1
All open issues

7.2
None

 

 

 


January and
June

2007

RELEASE 2.2

3.1

2008

RELEASE 3.2

4.1

2009

RELEASE 4.2

5.1

2010

RELEASE 5.2

6.1

2011

RELEASE 6.2

7.1

2012

RELEASE 7.2

Estimated
Number of Returns

 

Not included in plan

Not included in plan

Not included in plan

Not included in plan

Not included in plan

Not included in plan

Source:  The IRS Applications Development organization.

Form 1040-SS – U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico)

Form 8880 – Credit for Qualified Retirement Savings Contributions

 

Appendix VI

 

Enterprise Life Cycle Overview

 

The Enterprise Life Cycle[18] is the IRS’ standard approach to business change and information systems initiatives.  It is a collection of program and project management best practices designed to manage business change in a successful and repeatable manner.  The Enterprise Life Cycle addresses large and small projects developed internally and by contractors.

The Enterprise Life Cycle includes such requirements as:

·         Development of and conformance to an enterprise architecture.

·         Improving business processes prior to automation.

·         Use of prototyping and commercial software, where possible.

·         Obtaining early benefit by implementing solutions in multiple releases.

·         Financial justification, budgeting, and reporting of project status.

In addition, the Enterprise Life Cycle improves the IRS’ ability to manage changes to the enterprise; estimate the cost of changes; and engineer, develop, and maintain systems effectively.  Figure 1 provides an overview of the layers, paths, phases, and milestones (shown as “MS” in Figure 1) within the Enterprise Life Cycle Framework.

Figure 1:  Enterprise Life Cycle Framework

Figure 1 was removed due to its size.  To see Figure 1, please go to the Adobe PDF version of the report on the TIGTA Public Web Page.

 

Enterprise Life Cycle Layers

The Enterprise Life Cycle is a framework for organizing and using IRS directives, processes, procedures, templates, and standards to accomplish business change.  It is organized as a set of six interacting layers.

·         The Management Layer specifies how to plan and control business change programs, projects, acquisitions, and solutions throughout the Enterprise Life Cycle.

·         The Governance Layer specifies additional controls imposed from outside the project or program.

·         The Solution Life Cycle Layer specifies what should be done, but not how to do it.

·         The Solution Layer manages the solution as it is produced, including providing standards for consistent solution specification and formal review of solution content.  This Layer provides control over work products that may be produced by multiple internal and external developers using differing methodologies.

·         The Methodology Layer details how to do the work and specifies a unique set of work products to be produced.  Specific methodologies are not part of the Enterprise Life Cycle Framework.

·         The Specialty Areas Layer provides additional guidance for areas of particular importance within the IRS.  These areas include Enterprise Integration, Test, and Evaluation; Business Rules Harvesting and Management; Transition Management; Enterprise Architecture; Capital Planning and Investment Control; Security and Privacy; and Requirements Development and Management.

Enterprise Life Cycle Paths

A path specifies a unique “philosophy” or orientation for performing the work.  Although the Enterprise Life Cycle specifies a standard for the work required to produce and operate business change solutions, there are multiple ways to approach and accomplish the required work.  Paths are like alternate roads, each of which crosses different terrain, but all of which lead to the same destination.  The Enterprise Life Cycle provides five distinct paths or approaches to developing systems:

·         The Large Custom Path is for large projects.

·         The Small Custom Path is for small projects.

·         The Commercial-Off-the-Shelf Path is a commercial software-based approach.

·         The Joint Application Development/Rapid Application Development Path is a highly accelerated, prototyping-based approach for very small, standalone solutions or solution components.

·         The Iterative Custom Path is a hybrid approach that combines elements of the other approaches.

Enterprise Life Cycle Phases and Milestones

A phase is a broad segment of work encompassing activities of similar scope, nature, and detail and providing a natural breakpoint in the life cycle.  Each phase begins with a kickoff meeting and ends with an executive management decision point (called a milestone) at which IRS executives make “go/no-go” decisions for continuation of a project.  Project funding decisions are often associated with milestones.

Figure 2:  Enterprise Life Cycle Phases and Milestones

Phase

General Nature

of Work

Concluding Milestone

Vision and Strategy/ Enterprise Architecture Phase

High-level direction setting.  This is the only phase for enterprise planning projects.

0

Project Initiation Phase

Startup of development projects.

1

Domain Architecture Phase

Specification of the operating concept, requirements, and structure of the solution.  

2

Preliminary Design Phase

Preliminary design of all solution components.

3

Detailed Design Phase

Detailed design of solution components.

4A

System Development Phase

Coding, integration, testing, and certification of solutions.

4B

System Deployment Phase

Expanding availability of the solution to all target users.  This is usually the last phase for development projects.

5

Operations and Maintenance Phase

Ongoing management of operational systems.

System

Retirement

Source:  The Enterprise Life Cycle Guide.

 

Appendix VII

 

Corrective Actions to Prior Audit Recommendations

 

Table 1 presents the findings reported by the Treasury Inspector General for Tax Administration and the IRS’ subsequent planned corrective actions and implementation status.  The report titles are presented below Table 1.

Table 1:  Status of Treasury Inspector General for Tax Administration Report Findings and IRS Corrective Actions Related to the CADE Project

Report Number
and Date

Finding and Recommendation

Corrective Action

Status

2003-20-018

November 2002

The Pilot Plan Needs to Include Adequate Defect Reporting Procedures.

To ensure the defect reporting databases provide reliable information for the pilot defect reports, the Business Systems Modernization Office should require the PRIME contractor[19] to provide written procedures directing that the IRS approve defect report resolution actions prior to defect report closure.

The IRS monitors Information Technology Asset Management System use and requires the PRIME contractor to develop procedures to include defect report resolution.  Under the draft procedures, the PRIME contractor initiates the recommendation to close in the Information Technology Asset Management System and the IRS is responsible for the final closure.  Those procedures are currently under review.  Approval and distribution of the procedures is planned for November 30, 2002.

Closed

2003-20-018

November 2002

(continued)

The Pilot Plan Needs to Include Adequate Defect Reporting Procedures.

To ensure the defect reporting databases provide reliable information for the pilot defect reports, the Business Systems Modernization Office should require the PRIME contractor to provide detailed procedures for reconciling defect reports in the ClearQuest® database and the Information Technology Asset Management System.

The PRIME contractor has drafted procedures that document the process the IRS will use when interfacing defect reporting information between the ClearQuest® database and the Information Technology Asset Management System defect tracking tools.  These procedures contain specific information on the reconciliation of these reports.  The procedures are currently under review and are scheduled to be approved and distributed by November 30, 2002.

Closed

2003-20-089

March 2003

File and Job Names Need to Be Compatible With Current Tax Processing Systems.

The Deputy Commissioner for Modernization and Chief Information Officer need to ensure development of job and file naming standards is expeditiously completed by the IRS Enterprise Operations Services organization.  The Business Systems Modernization Office needs to work with the PRIME contractor to ensure these naming standards are used in the development of future CADE releases and all other IRS modernization projects.

The Business Systems Modernization Office agreed with the recommendation and is developing naming standards.  Key naming standards will be published and available for use by the current processing and modernization environments by August 1, 2003.

 

 

 

 

 

 

Closed

2003-20-089

March 2003

(continued)

The Balancing, Control, and Reconciliation Process Needs to Be Completed and Tested Prior to Release 1.

The Business Systems Modernization Office should monitor the completion of the remaining work contained in the detailed schedule to assess the progress in completing the balancing, control, and reconciliation process development.

The Business Systems Modernization Office should require the PRIME contractor to complete the remaining work on the balancing, control, and reconciliation process and fully test these processes to ensure they meet the design requirements.

The Business Systems Modernization Office agreed with the recommendation and will continue to monitor the actions taken in balancing, control, and reconciliation in preparation for Release 1 deployment.

 

 

 

 

The Business Systems Modernization Office will continue to work with the PRIME contractor to ensure the remaining work for the balancing, control, and reconciliation process for
Release 1 is tested and completed.

Closed

 

 

 

 

 

 

 

 

Closed

2003-20-089

March 2003

Improvements to the Computer Handbook Will Help to Ensure an Effective Release 1 Deployment.

The Business Systems Modernization Office should work with the PRIME contractor to incorporate minimum documentation standards and the Documentation Task Force’s findings into Release 1 and future releases.

The Business Systems Modernization Office agreed with the recommendation and will work with the PRIME contractor to incorporate minimum documentation standards and the Documentation Task Force’s findings into the CADE.

Closed

2003-20-089

March 2003

(continued)

Improvements to the Computer Handbook Will Help to Ensure an Effective Release 1 Deployment.

The Business Systems Modernization Office should work with the PRIME contractor to incorporate these documentation standards into the Enterprise Life Cycle.  Incorporating standards into the Enterprise Life Cycle will provide guidance in developing documentation for current and future CADE releases, as well as all other IRS modernization projects.

The Business Systems Modernization Office is working with the PRIME contractor and Information Technology Services organization as a task group to define standard deliverables that will facilitate improved transition of modernization systems into the current processing environment.  The computer operations handbook subtask group is working to define gaps and requirements for standard deliverables needed by the Information Technology Services organization for operations and maintenance support.

Closed

2005-20-005

November 2004

 

 

 

 

 

 

 

2005-20-005

November 2004

(continued)

Significant Software Changes Were Added to CADE Release 1.1.

The Chief Information Officer should direct the Business Systems Modernization Office to work with the PRIME contractor to ensure future project development changes undergo appropriate performance testing, simulating high-volume processing, before deploying the system.

The Business Systems Modernization Office is planning a semiannual release of the CADE in July and January each year.  The July delivery will involve higher risk, more complex functionality, and the January delivery will include filing season changes combined with additional changes as capacity permits.  Because the returns from earlier in the filing season will be available for testing, the IRS can conduct performance testing on the July release using the highest volume periods.  The IRS will determine whether to conduct additional performance testing on the January release based on the likelihood of the changes affecting performance.

Closed

2005-20-005

November 2004

The CADE Program Does Not Have a Dedicated System Architect.

The Chief Information Officer should ensure the Business Systems Modernization Office makes the system architecture resources being acquired available to the CADE program on a full-time basis.

During Calendar Year 2004, the Business Systems Modernization Office has been actively searching for qualified engineering resources.  While the Business Systems Modernization Office has had success recruiting a few candidates (some of which are dedicated to the CADE), it is very difficult to attract qualified individuals to work for the Federal Government.  The Business Systems Modernization Office’s recruiting efforts will continue.  In the interim, MITRE Corporation employees and members from the Enterprise Architecture team are providing CADE engineering and architecture support.  The PRIME contractor is continuing to provide full-time architecture support to the Project.

Closed

2005-20-005

November 2004

 

 

2005-20-005

November 2004

(continued)

Disaster Recovery Capabilities Were Not Tested Prior to CADE Release 1.1 Implementation.

To ensure the ability of the IRS to restore the CADE after a disaster with the least disruption to the IRS mission, the Chief Information Officer needs to ensure disaster recovery capabilities for future releases of the CADE are fully tested prior to implementation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

To ensure the ability of the IRS to restore the CADE after a disaster with the least disruption to the IRS mission, the Chief Information Officer needs to ensure all aspects of the CADE disaster recovery capabilities are tested during the Annual IRS Disaster Recovery Test.

Disaster recovery for the CADE needs to be periodically tested.  However, it should be part of an enterprise disaster recovery and testing strategy for mainframe computing operations and databases at the Enterprise Computing Center.  The IRS generally deploys major functionality enhancements for future CADE releases in July and deploys filing season changes and smaller system enhancements as part of CADE filing season releases in January.  The Systems Integration Enterprise Architecture Office will work with the Enterprise Operations Service organization and the Enterprise Computing Center to ensure CADE disaster recovery testing is included in the annual disaster recovery testing performed each fall.  Because most new functionality will be deployed in the July release, the fall testing would be timely prior to the start of the new filing season when the IRS will be encountering high volumes.

 

The Director, Enterprise Computing Center, will test the recovery and restoration of key components of CADE processing to ensure a high confidence level in the IRS’ ability to recover the CADE in the event of a disaster.  The CADE was part of the annual Enterprise Computing Center Master File Disaster Recovery test.  The test was conducted during the weeks of
October 18, 2004, and
October 25, 2004.

Closed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Closed

2005-20-005

November 2004

(continued)

Improvements to the CADE Operator’s Guide Need to Be Completed.

The Chief Information Officer should direct the Business Systems Modernization Office to ensure pilot and production operational documentation for future CADE releases is reviewed, tested, and approved before both the pilot test and live production are allowed to proceed.  This review should also ensure the corrective action to our March 2003 report is incorporated in this review and the IRS’ minimum documentation standards are completed and met in current and future CADE releases.

The Business Systems Modernization Office made the required changes to the operational documentation for
Release 1.1; however, the final copy with “no markup” was not available for a few weeks following initial operation.  Going forward, the Business Systems Modernization Office plans to have full documentation available at implementation.  There are no plans for additional CADE pilots.

Closed

2005-20-005

November 2004

Manual Processes Within CADE Release 1.1 Need to Be Automated for Future Releases.

The Chief Information Officer should direct the Business Systems Modernization Office to ensure inefficient manual processes are automated in future CADE releases.

Changes will be included in the January 2005 and July 2005 deliveries addressing the specified operational inefficiencies.

Closed

2006-20-076

June 2006

 

 

2006-20-076

June 2006

(continued)

The PRIME Contractor’s Inadequate Testing Resulted in Reduced Capabilities for CADE Release 1.3

The IRS and the PRIME contractor agreed to defer eight Release 1.3.2 requirements to help ensure the CADE would process tax returns in time for the 2006 Filing Season.  This occurred because the PRIME contractor did not effectively and efficiently use computer language (coding practices).  Also, the PRIME contractor’s unit testing did not adequately identify programming defects.

Prior to Federal Government testing, the PRIME contractor will be required to provide the IRS with notification regarding the completion of unit testing.  The Project team has placed this requirement of formal notification regarding the completion of unit testing in the Release 2 task order and will continue to do so in future task orders.

This corrective action will be incorporated into the ongoing Test Process Improvement Project, which addresses Corrective Actions from Treasury Inspector General for Tax Administration audit
System Requirements Were Not Adequately Managed During the Testing of the Custodial Accounting Project (Reference Number 2005-20-019, dated December 2004).  The Test Process Improvement Working Group of Stakeholders will review existing test guidance and make the appropriate modification to ensure unit testing was adequately performed by the PRIME contractor and the application being provided to the IRS is ready for integration and testing.  The recommendations of the Working Group will be vetted through the formal IRS document review processes, and revised guidance will be posted to the Process Asset Library after executive approval.

 

Closed

 

 

 

 

 

 

 

Closed

2006-20-076

June 2006 (continued)

Successful Development of the CADE Is Dependent Upon Its Ability to Serve As an Efficient and Effective Foundation for Modernized Systems and Applications

The CADE’s design for managing taxpayer accounts is not fully developed to provide a foundation for the IRS’ current and planned modernized systems.  In
April 2005, the Business Systems Modernization Office initiated the CADE Data Architecture and Analysis Study to enable the Project team to adapt a flexible release strategy by establishing a long-term plan to organize and manage Project data.  Also, the Modernization and Information Technology Services organization is forming the Modernization Vision and Strategy to establish project development priorities with the IRS business operations.  The Strategy will provide a 5-year plan for developing modernization projects and processes.  Until these efforts are completed, successful deployment of a long-term CADE release strategy cannot move forward and the future releases may not be deployed when planned.

The Modernization and Information Technology Services organization will review the deliverables of the CADE Data Study to serve as the basis for developing data models that will guide the logical and physical designs for Releases 3 and 4.  The Modernization and Information Technology organization will review Modernization and Vision project strategies for extracting operational and analytical data and develop a high-level data strategy for data warehousing.  Building upon the CADE data models and the high-level data warehousing strategy, the Modernization and Information Technology organization will develop a data access strategy and transition plan.

Closed

 

 

 

 

 

 

 

 

 

 

2006-20-076

June 2006 (continued)

Controls to Manage CADE Requirements Do Not Allow Ready Access for Project Team Use

Adequate procedures were not in place to ensure all CADE release requirements are timely controlled.  As of February 23, 2006, an interim process to control Release 2 requirements was in development.  The Business Systems Modernization Office will use this process until a vendor able to develop a repository meeting the IRS needs is identified.

As an interim measure, a project repository has been developed within the CADE to track and control requirements for each release.  This vehicle will remain in place until the implementation of the planned Enterprise Services organization repository.

 

Closed

2006-20-076

June 2006

 

 

 

 

 

 

 

 

 

2006-20-076

June 2006 (continued)

Defining CADE Project Release Requirements Will Help Enable the Use of Fixed-Price Contracts

The Business Systems Modernization Office implemented contracting guidance on
April 30, 2004 (entitled “Enabling Fixed-Price Contracting for Business Systems Modernization Task Orders”), which requires contracts and task orders for Business Systems Modernization Office acquisition projects be
fixed price at the appropriate
life cycle development phase, unless the Federal Government’s interest is best served by other contract types.  The IRS is not using fixed-price contracts for Release 1.3 development activities or for Release 2 design work performed by the PRIME contractor.  The IRS recognized challenges in working with the PRIME contractor to use
fixed-price contracts.  The benefits of fixed-price contracting will be realized only when the CADE Project requirements are fully developed and agreed to, when comprehensive estimates of effort to perform the contract tasks are made, and when meaningful negotiations are held.

The Projects will continue to work with the IRS Procurement Office to ensure the task orders awarded are segregated to include Milestones 2, 3, and 4A as well as separate task orders for
Milestone 4B.  This separation of the Milestone 4B task order positions the IRS with the ability to award firm fixed-price contracts in
accordance with the firm fixed-price guidance established on April 30, 2004.  This leads to more cost-effective acquisitions, better value, and greater competition.  The Acquisition Development organization will continue to work with the Enterprise Services organization to establish requirements earlier in the life cycle, using the interim suite of policies and procedures that address the core disciplines of requirements development and management.  This documentation is available to all projects through the Business Rules and Requirements Management web site.

The CADE, in conjunction with the IRS Contracting Officers,
reevaluated the benefits of using a fixed-price contract for the remaining work (Milestone 4B) on Release 2.  The risk profile that was presented by the PRIME contractor was much higher than the risk the Federal Government was ready to assume.  After full review, negotiations, and consideration, the IRS made a business decision to continue with the cost-plus-award-fee contract.  The primary drivers were maintaining the current task order end dates and dollar values
.

Closed

 

 

 

 

 

 

 

 

 

 

 

Source:  Treasury Inspector General for Tax Administration audit reports and IRS management responses.

2003-20-018 - Improvements in the Customer Account Data Engine Pilot Plan Need to Be Considered to Help Ensure the Pilot’s Success (Reference Number 2003-20-018, dated November 2002).

2003-20-089 - Adhering to Established Development Guidelines Will Help to Ensure the Customer Account Data Engine Meets Expectations (Reference Number 2003-20-089, dated March 2003).

2005-20-005 - To Ensure the Customer Account Data Engine’s Success, Prescribed Management Practices Need to Be Followed (Reference Number 2005-20-005, dated November 2004).

2006-20-076 - Focusing Management Efforts on Long-Term Project Needs Will Help Development of the Customer Account Data Engine Project (Reference Number 2006-20-076, dated June 2006).

 

Appendix VIII

 

Glossary of Terms

 

Term

Definition

Best Practice

A best practice is a technique or methodology that, through experience and research, has proven to reliably lead to a desired result.

Business Rule

A business rule is a statement that defines or constrains some aspect of the business.

Business Rules Harvesting

Business rules harvesting is a general term used to broadly describe the entire set of activities involved in gathering, formalizing, analyzing, and validating business rules for a particular scope.

Byte

A byte is commonly used as a unit of storage measurement in computers, regardless of the type of data being stored.  It is also one of the basic integral data types in many programming languages.  Generally, a byte is a contiguous sequence of eight binary digits.

Popular Use and
Standard Meaning

Name

Symbol

Quantity

kilobyte

KB

210 (103)

megabyte

MB

220 (106)

gigabyte

GB

230 (109)

terabyte

TB

240 (1012)

C++ Programming Language

Programmers can write or code software programs using several different programming languages.  C++ is an object-oriented, high-level programming language developed by Bell Labs.

CADE Independent Requirements Project

The CADE Independent Requirements Project objective is to complete requirements the PRIME contractor was unable to deliver in prior CADE releases.

Centralized Authorization File

The Centralized Authorization File contains information about the type of authorizations taxpayers have given their representatives for their tax returns.

Clean Dependent

A clean dependent has the following characteristics for acceptance in CADE tax return processing:  the dependent was claimed on the Calendar Year 2005 tax return submitted by the taxpayers, and was also claimed on the taxpayers’ Calendar Year 2004 and Calendar Year 2003 tax returns.  The dependent must also have a valid Taxpayer Identification Number.

ClearQuest®

ClearQuest® is a defect and change tracking system that captures and manages all types of change requests throughout the development life cycle, helping organizations quickly deliver higher quality software.

Contracting Officer

A contracting officer is an agent of the Federal Government empowered to execute contracts and obligate Government funds.

Deferral

A deferral is an approved request for verification of a requirement or set of requirements to be moved to another phase of testing.

Direct Access Storage Device

A direct access storage device is a peripheral device that is directly addressable, such as a disk or drum.  The term is used in the mainframe world.

Enterprise Computing Center

An Enterprise Computing Center supports tax processing and information management through a data processing and telecommunications infrastructure.

Enterprise Integration, Test, and Evaluation

Enterprise Integration, Test, and Evaluation includes processes for integrating multiple components of a solution and conducting various types and levels of testing on the solution.

Enterprise Life Cycle

The Enterprise Life Cycle is a structured business systems development method that requires the preparation of specific work products during different phases of the development process.

Executive Steering Committee

An Executive Steering Committee oversees investments, including validating major investment business requirements and ensuring that enabling technologies are defined, developed, and implemented.

Filing Season

The filing season is the period from January through mid-April when most individual income tax returns are filed.

Firm Fixed-Price Task Order

A firm fixed-price task order sets a price that is not subject to any adjustment because of cost overruns incurred by the contractor.

Forms 1040, 1040EZ, and 1040A

Forms 1040, 1040EZ, and 1040A are the series of IRS forms that include individual income tax returns.

Individual Master File

The Individual Master File is the IRS database that maintains transactions or records of individual tax accounts.

Information Technology Asset Management System

The Information Technology Asset Management System delivers an inventory system that enables tracking, reporting, and management of information technology assets.

Information Technology Modernization Vision and Strategy

The Information Technology Modernization Vision and Strategy establishes a 5-year plan that drives investment decisions; addresses the priorities around modernizing front-line tax administration and supporting technical capabilities; and leverages existing systems (where possible) and new development (where necessary) to optimize capacity, manage program costs, and deliver business value on a more incremental and frequent basis.

Infrastructure

Infrastructure is the fundamental structure of a system or organization.  The basic, fundamental architecture of any system (electronic, mechanical, social, political, etc.) determines how it functions and how flexible it is to meet future requirements.

Level of Effort Contract

A level of effort contract is a contract form that describes the scope of work in general terms and requires the contractor to provide a specified level of effort (number of hours or percentage of effort) over a stated period of time.

Logical Design

 

Logical design describes the functions required of a system; that is, what is to be done, not how it will be done.  Logical design is concerned with the processes to be performed.

Magnetic Tape

Magnetic tape contains a magnetically coated strip of plastic on which data can be encoded.  Storing data on tapes is considerably cheaper than storing data on disks.  Tapes also have large storage capacities, ranging from a few hundred kilobytes to several gigabytes.  Accessing data on tapes, however, is much slower than accessing data on disks.

Master File

The Master File is the IRS database that stores various types of taxpayer account information.  This database includes individual, business, and employee plans and exempt organizations data.

Milestone

Milestones provide for “go/no-go” decision points in a project and are sometimes associated with funding approval to proceed.

MITRE Corporation

The MITRE Corporation was hired by the IRS as a Federally Funded Research and Development Center to assist with the IRS’ systems modernization effort.

Physical Design

Physical design describes how the processing will be performed; for example, whether data are input by a person or read by a bar code reader, whether a file is electronic or print. Tools to represent the physical design include system flowcharts and structure charts.

PRIME Contractor

The PRIME contractor is the Computer Sciences Corporation, which heads an alliance of leading technology companies brought together to assist with the IRS’ efforts to modernize its computer systems and related information technology.

Process Asset Library

The Process Asset Library is a web-based repository that contains process content for the IRS.  The contents include policy, directions, procedures, templates, and standards used by the IRS to define, implement, and manage business change for the IRS Business Modernization Program.

Release

A release is a specific edition of software.

Split Refund

A split refund lets a taxpayer divide his or her refund, in any proportion, and directly deposit the funds among two or three different accounts with United States financial institutions.

Task Order

A task order is an order for services planned against an established contract.

Unit Testing

Unit testing ensures program modules perform in accordance with requirements.

Vision and Strategy

The Vision and Strategy phase translates the fundamental business strategy into a transformation strategy for business processes, information technology, and organizational change.

 

Appendix IX

 

Management’s Response to the Draft Report

 

The response was removed due to its size.  To see the response, please go to the Adobe PDF version of the report on the TIGTA Public Web Page.



[1] CADE Release 2.1 was budgeted to use $27,049,000 and required $31,239,000 for completion.

[2] Business Systems Modernization 2006 and 2007 Expenditure Plan, dated August 2006.

[3] Appendix VI presents an overview of the Enterprise Life Cycle.

[4] See Appendix VIII for a glossary of terms.

[5] Task Order 123, Modification 29.

[6] Appendix VI presents an overview of the Enterprise Life Cycle.

[7] CADE Release 2.1 was budgeted to use $27,049,000 and required $31,239,000 for completion.

[8] Business Systems Modernization 2006 and 2007 Expenditure Plan, dated August 2006.

[9] Focusing Management Efforts on Long-Term Project Needs Will Help Development of the Customer Account Data Engine Project (Reference Number 2006-20-076, dated June 2006).

[10] Focusing Management Efforts on Long-Term Project Needs Will Help Development of the Customer Account Data Engine Project (Reference Number 2006-20-076, dated June 2006).

[11] See Appendix VIII for a glossary of terms.

[12] Appendix VI presents an overview of the Enterprise Life Cycle.

[13] See Appendix VIII for a glossary of terms.

[14] CADE Release 1 (Operations and Maintenance) was initially referred to as “CADE Release 1, Milestone 5” in the Business Systems Modernization Expenditure Plan.

[15] CADE Release 1.2 was initially referred to as “CADE Filing Season 2005” in the Business Systems Modernization Expenditure Plan.  The IRS did not provide cost and schedule data for this release in subsequent Expenditure Plans.

[16] CADE Releases 1.3.1 and 1.3.2 were initially combined and referred to as “CADE Filing Season 2006” in the Business Systems Modernization Expenditure Plan.

[17] See Appendix VIII for a glossary of terms.

[18] See Appendix VIII for a glossary of terms.

[19] See Appendix VIII for a glossary of terms.