TREASURY INSPECTOR GENERAL FOR TAX
ADMINISTRATION
THE MODERNIZATION AND INFORMATION TECHNOLOGY SERVICES
ORGANIZATION’S COMPETITIVE SOURCING PROGRAM NEEDS IMPROVEMENT
Issued on January 16, 2008
Highlights
Highlights of
Report Number: 2008-20-028 to the
Internal Revenue Service Chief Information Officer.
IMPACT ON TAXPAYERS
The Internal Revenue Service (IRS) implemented a redesigned Campus
Operations organization (a competitive sourcing initiative) as a result of
winning a competition with private industry for its work. However, the redesigned Campus Operations
organization is not fully complying with operational performance standards, and
actual costs and savings are not being determined and reported. As a result, the IRS cannot assure taxpayers
that the redesigned Campus Operations organization efficiently uses resources and
fully achieves the expected benefits and savings from the competition of its
work.
WHY TIGTA DID THE AUDIT
This audit
was initiated to determine the effectiveness and efficiency of the Modernization
and Information Technology Services (MITS) organization in supporting the
competitive sourcing program and whether the competitive sourcing initiatives
yielded positive and measurable results.
The Competitive Sourcing Initiative is one of the five
Governmentwide initiatives in the President’s Management Agenda for improving
the management and performance of the Federal Government. The goal of this Initiative is to achieve
efficient and effective competition between public and private sources. Office of Management and Budget Circular
Number A-76, Performance of Commercial
Activities, requires agencies to identify commercial activities that are
performed by Federal Government personnel and determine which of them are suitable for competition.
On October 1, 2005, the IRS implemented
a redesigned Campus Operations organization as a result of winning a
competition with private industry for its work.
WHAT TIGTA FOUND
The identification and reporting of costs and savings
from the redesigned Campus Operations Program needs improvement. For example, the estimated and actual
financial savings and nonfinancial benefits reported externally were not
supported by documentation, and the MITS
organization was unaware of the financial savings that were reported. Also, estimated and actual costs were
not consistently reported. As a result,
the IRS cannot accurately compute cost savings/overruns and other benefits and
effectively evaluate compliance with the Letter of Obligation.
Also, the
redesigned Campus Operations organization has not met the operational
performance standards and has exceeded the budget in the Letter of
Obligation. Our review of management
reports determined the number of errors made by employees had generally
declined, but the rate of noncompliance with operational performance standards
showed minimal improvement. Also, review
of the actual costs determined the redesigned Campus Operations organization
exceeded the estimated costs for Fiscal Year 2006 by $607,587 (11
percent). As a result of continuing to
print more than 300 additional files not included in the original estimates,
future fiscal year costs might exceed the estimated
costs in the Letter of Obligation.
WHAT TIGTA RECOMMENDED
The Chief Information Officer should ensure all MITS
organizations consistently identify the actual costs, determine the source for
the estimated costs, and assure consistent data pull for external reporting
purposes; assign responsibility for comparing actual costs to the baseline, the
Standard Competition Form, and the Letter of Obligation; and ensure the MITS
organization reviews the savings and benefits for accuracy and concurs with the
information to be reported externally. The Chief Information Office should also provide additional training for employees with
unsatisfactory performance and/or take appropriate personnel actions; continue
to work with the business units to reduce the number of files printed and
obtain agreement on a schedule for converting the remaining print files to
electronic files for online viewing; determine what
actions should be taken if the performance standards continue to be unmet
and/or the actual costs continue to exceed the estimated costs; and ensure
future Most Efficient Organization proposals meet the IRS business units’ requirements.
In their response to the report,
IRS officials agreed with the recommendations and plan to take appropriate
corrective actions.
READ THE
FULL REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2008reports/200820028fr.html.
Email Address: inquiries@tigta.treas.gov
Phone Number: 202-622-6500
Web Site:
http://www.tigta.gov