Treasury Inspector General for Tax Administration
Office of Audit Recovery
Act
PREVIOUSLY REPORTED ACQUISITION
CONCERNS THAT ARE RELEVANT TO THE AMERICAN RECOVERY AND REINVESTMENT ACT OF
2009 PROCUREMENTS
Issued on September 15, 2010
Highlights
Highlights of Report Number: 2010-11-102 to the
Internal Revenue Service Deputy Commissioner for Operations Support.
IMPACT ON TAXPAYERS
The Internal Revenue Service (IRS)
received an appropriation of $203 million in American Recovery and
Reinvestment Act of 2009 (Recovery Act) funds. TIGTA analysis
of acquisitions audits conducted from Fiscal Year 1999 to June 2009 showed that
while the IRS has taken steps to address the concerns identified in those
audits, recurring problems exist which may put procurements funded by the
Recovery Act at risk. Until the IRS
implements effective internal controls, it will be unable to provide assurance
that the Federal Government is receiving
the best value for its Recovery Act procurements and/or that contractors are
meeting the procurements’ terms and conditions to deliver goods or services.
WHY TIGTA DID THE AUDIT
The
Office of Management and Budget supplemental guidance for the Recovery Act
requires Federal agencies to determine whether final action has been taken
regarding weaknesses or deficiencies disclosed by prior audits and
investigations in program areas under which Recovery Act funds are
authorized. The guidance also requires
that Recovery Act contracts be fixed-price to the maximum extent possible,
acquisitions result in meaningful and measurable outcomes, and contracts
receive the appropriate oversight to ensure that contract goals are met. The overall objective of this review was to provide observations
regarding the applicable procurement findings identified during a prior TIGTA
audit which evaluated trends identified from TIGTA audits of IRS procurements
from Fiscal Year 1999 to June 2009 that present a risk for procurements
funded under the Recovery Act.
WHAT
TIGTA FOUND
TIGTA determined that there were several repeat
findings or concerns that are relevant to procurements funded by the Recovery
Act. The most prevalent trends
identified were the recommendations that the IRS use performance-based contracts
and fixed-price contracts whenever possible.
TIGTA also identified trends where the IRS did not
have sufficient monitoring controls or processes to ensure contractors were
meeting the procurement’s terms and conditions, the IRS did not ensure funding was properly controlled and project costs were
not always charged to the appropriate accounting code, and modernization
contracts failed to achieve their objectives or intended benefits.
The IRS took corrective actions at the time the
original reports were issued to address many of the issues identified in the reports
reviewed. The IRS appears to have mitigated
risks associated with performance-based contracts. However, if contract oversight is not operating
effectively, IRS Recovery Act procurements are at risk that goods and services will
not meet Federal Government needs at the price and other contract requirements
agreed upon. In addition, when
fixed-price contract types are not used, generally there is an increased risk
to the Federal Government that the contract costs are not adequately
controlled.
In their response to the
prior trending report, IRS officials agreed that addressing the two prevalent
trends has been challenging but they have made significant progress and have
identified new initiatives to address other trends. IRS officials stated that had TIGTA performed
an analysis of corrective actions implemented, the prior report would more
accurately reflect the progress the IRS has made.
WHAT TIGTA RECOMMENDED
TIGTA
did not make any recommendations in this report. However, key IRS management officials reviewed
it prior to issuance and agreed with the facts and conclusions presented.
READ THE FULL REPORT
To view the report,
including the scope and methodology, go to:
http://www.treas.gov/tigta/auditreports/2010reports/201011102fr.html.
Email Address: inquiries@tigta.treas.gov
Phone
Number: 202-622-6500
Web Site: http://www.tigta.gov