TREASURY INSPECTOR GENERAL FOR TAX
ADMINISTRATION
WHILE IMPROVEMENTS CONTINUE IN
CONTRACT NEGOTIATION METHODS AND MANAGEMENT PRACTICES, INCONSISTENCIES NEED TO
BE ADDRESSED
Issued on July 27, 2007
Highlights
Highlights of
Report Number: 2007-20-123 to the
Internal Revenue Service Chief, Agency-Wide Shared Services and Chief
Information Officer.
IMPACT ON TAXPAYERS
The Internal
Revenue Service (IRS) awarded 21 Business Systems Modernization task orders
during Fiscal Years 2005 and 2006 with a total contract funding amount of
approximately $115 million. TIGTA determined
the IRS needs to further refine contract negotiation and management practices
for its Modernization and non-Modernization systems development task
orders. The IRS has already achieved savings of nearly $3.7 million from implementing one
of our prior recommendations. Further improvements from applying consistent
contract negotiation and management practices will assist the IRS in assuring
taxpayer funds are being spent wisely.
WHY TIGTA DID THE AUDIT
The
Modernization and Information Technology Services organization and the Office
of Procurement have recognized the need to improve management of task orders
for the Modernization program and have been emphasizing the increased use of
performance-based contracting as one approach toward this improvement. Since our prior review, the IRS has made
significant improvements such as preparing independent Federal Government cost
estimates, documenting negotiation priorities and strategies, and completing negotiations timely.
In the past,
the IRS approach to modernizing was an enormous development effort aimed at
replacing its non-Modernization systems. The IRS is now focusing on a flexible, more
realistic approach that seeks to use non-Modernization systems, as well as
current and future information technology investments, to accomplish
modernization. This audit determined
whether the IRS has established and is following adequate contract negotiation
and management practices for systems development task orders.
WHAT
TIGTA FOUND
While
the Modernization and Information Technology Services organization and the
Office of Procurement continue to make improvements to contract negotiation and
management practices, further improvements can be made to select and document
appropriate contract types. In addition,
further improvements can be made to contract negotiations and management
practices. Now that the IRS is using
both Modernization and non-Modernization systems to accomplish modernization as
part of the Information Technology Modernization Vision and Strategy Framework,
there is a need determine whether some of the Modernization contract
negotiation and management internal controls should be expanded to non-Modernization
systems development activities.
WHAT TIGTA RECOMMENDED
TIGTA recommended the Chief Information Officer and the
Chief, Agency-Wide Shared Services, ensure an appropriate balance of risk
between the IRS and its contractors; improve preaward processes; improve monitoring
of contractor performance; and improve consistency of contract negotiation and
management practices between Modernization and non-Modernization systems
development task orders.
In their response
to the report, IRS officials agreed with the recommendations. Corrective actions planned or taken include
continuing to evaluate the use of firm fixed-price contracts; emphasizing the
use of performance-based acquisitions; providing training opportunities;
collecting and reviewing lessons learned from the use of independent estimates
developed by the Estimation Program Office; tailoring the Total Information
Processing Support Services Performance Work Statement template to meet each of
the Enterprise Life Cycle milestones based on customers’ needs; ensuring
Modernization projects consistently prepare performance monitoring plans and
all organizations are aware of the information available on the Office of
Procurement Intranet site; assessing the need for multiyear funding and adding
the appropriate amount of Information Technology Modernization Vision and
Strategy funds into the 2-year budget appropriation; and establishing criteria
for applying Modernization contract negotiation and management practices to non-Modernization
systems development activities.
READ THE FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2007reports/200720123fr.html.
Email
Address: Bonnie.Heald@tigta.treas.gov
Phone Number: 202-927-7037
Web Site:
http://www.tigta.gov