Treasury Inspector General for Tax Administration
November 21, 2013
TIGTA - 2013-47
Contact: Voneka Bennett
WASHINGTON – The Internal Revenue Service (IRS) paid for information technology hardware maintenance services it neither needed nor received, according to a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).
The IRS spent $47.8 million on hardware maintenance contracts in Fiscal Year 2012. These contracts are managed by acquisition teams that include employees responsible for monitoring contractor performance and ensuring that the contractor delivers what is called for in the contract. Coordination among acquisition team members is key to ensuring that the contractor is meeting the Government’s interest in terms of providing deliverables that are of high quality, complete, timely, and cost-effective.
TIGTA assessed whether the IRS has adequate controls over its hardware maintenance contracts and is actively mitigating contract fraud risks. TIGTA selected seven maintenance contracts for review, identified the roles and responsibilities of acquisition team members, and reviewed contract files.
TIGTA found several weaknesses in the oversight of selected information technology hardware maintenance contracts. Specifically, TIGTA found instances where IRS contracting personnel were not always effectively monitoring the contracts.
In one of the contracts reviewed, TIGTA identified 10 pieces of hardware that were retired six months prior to the expiration of the maintenance contract. The IRS continued to pay for the service rather than submit a contract modification.
In another contract, 22 of 54 storage devices had been retired prior to the end of the service contract or were migrated to a separate storage contract as part of the IRS’s efforts to consolidate data storage. The same contract stipulated 34 different performance standards, such as keeping the system in working order and providing an inventory list, along with associated deliverables. TIGTA found that reports required by the contract were no longer needed. As a result of the lack of coordination and oversight, the IRS paid for services it did not receive or need.
“While we did not identify any potentially fraudulent activity among the contracts reviewed, the IRS paid for services it either did not need or did not receive,” said J. Russell George, Treasury Inspector General for Tax Administration. “This is not a good use of the public’s fisc,” he added.
TIGTA made three recommendations to the IRS’s Chief Technology Officer to ensure that contracts are modified when IT hardware is retired or removed from service or changes to performance requirements are made. The IRS agreed with TIGTA’s recommendations and plans to emphasize with managers the need to following IRS policies regarding the administration and oversight of hardware maintenance contracts.
Read the report.
Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws.
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