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.
Plans for Deploying Customer Account Data Engine Releases Have Not Been
Achieved
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 |
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.
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
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 |
- |
|
|
- |
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:
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 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
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
· 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
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
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
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,
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 |
Schedule |
|
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 |
2005 |
$1,935,000 |
24% |
Not |
Not |
|
2006 |
$0 |
0% |
Not |
Not |
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
|
RELEASE
|
RELEASE
|
RELEASE
|
RELEASE
|
RELEASE
3 |
RELEASE
|
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 |
Form 1040EZ; Form 1040
Schedules A, B, and R; Form 1040A Schedules 1
and 3 |
Release 2.1 plus |
All Form 1040 family
and supporting forms without an Employer Identification Number; 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, |
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 |
RELEASE |
RELEASE |
RELEASE |
RELEASE |
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
As of January 2004 As of December 2004
As of February 2005 |
January 2002 August 2004 August 2004 August 2004/ |
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 2004 To be determined To be determined Releases
4.1/4.2 |
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 –
Form 1040A –
Form 1040EZ – Income Tax Return for Single and Joint Filers With No
Dependents
Form 2688 – Application for Additional Extension of Time To File
Form 4868 – Application for Automatic Extension of Time To File
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
|
|
2004 RELEASE 1.1 |
2005 RELEASE 1.2 |
2006 RELEASE 1.3.2 |
2007 RELEASE 2.2 |
2008 RELEASE 3.2 |
2009 RELEASE 4.2 |
2010 RELEASE 5.2 |
2011/2012 RELEASE 6.2 |
|
Tax Return Types |
Form 1040EZ |
1.2 &
1.3.1 (1.3.1
only) |
1.3.2 |
2.2 |
3.2 Form 1040 decedent returns; Form 1040 fully paid with remittance;
Form 1040 with credit elect; |
4.2 Balance-due returns; math error returns;
|
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 |
6.2 Additional Form 1040 schedules and forms
(to be determined) 7.2 Form 1040NR; |
|
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 |
|
|
2004 RELEASE 1.1 |
2005 RELEASE 1.2 |
2006 RELEASE 1.3.2 |
2007 RELEASE 2.2 |
2008 RELEASE 3.2 |
2009 RELEASE 4.2 |
2010 RELEASE 5.2 |
2011/2012 RELEASE 6.2 |
|
Account Characteristics |
Refund or even-balance returns; no
account issues (open or closed) |
Refund or even-balance returns; no
dependents; |
Refund or even-balance returns; no
dependents; |
2.2 Earned Income Tax Credit |
3.2 No open account issues. Earned Income Tax Credit no open account issues; Earned Income
Tax Credit |
No open account issues; Earned Income
Tax Credit |
Power of Attorney; Centralized
Authorization File; |
All accounts not included in previous Releases |
|
Estimated |
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 |
Source: Customer
Relationship Management Executive Steering Committee, approved October 18,
2005.
Form 1040-ES – Estimated Tax for Individuals
Form 1040NR –
Form 1040-V – Payment Voucher
Form 1040X – Amended
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 |
2007 RELEASE 2.2 |
2008 RELEASE 3.2 |
2009 RELEASE 4.2 |
2010 RELEASE 5.2 |
2011 RELEASE 6.2 |
2012 RELEASE 7.2 |
|
Tax Return Types |
2.2 3.1 |
3.2 Form 4868 with and without remittance 4.1 |
4.2 5.1 Delinquent returns; Form 1040X expanded |
5.2 6.1 |
6.2 None 7.1 Form 1040-SS self-employed Puerto Rico
Resident; additional Forms 940 and 720 payroll; unemployment and
excise tax returns for Form 1040 |
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 3.1 |
3.2 4.1 |
4.2 5.1 |
5.2 6.1 |
6.2 7.1 |
7.2 |
|
|
2007 RELEASE 2.2 |
2008 RELEASE 3.2 |
2009 RELEASE 4.2 |
2010 RELEASE 5.2 |
2011 RELEASE 6.2 |
2012 RELEASE 7.2 |
|
Estimated |
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 –
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:
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.
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.
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.
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:
|
Phase |
General Nature of Work |
Concluding Milestone |
|
Vision and
Strategy/ |
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
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 |
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 |
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
The Director, |
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 |
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 |
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 |
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 |
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 The CADE, in conjunction with the IRS Contracting Officers,
|
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
|
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.
|
||||||||||||||||||
|
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. |
||||||||||||||||||
|
|
An |
||||||||||||||||||
|
|
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. |
||||||||||||||||||
|
|
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 |
||||||||||||||||||
|
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. |
||||||||||||||||||
|
|
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 |
||||||||||||||||||
|
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.