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Treasury Inspector General for Tax Administration

Press Release

October 13, 2016
TIGTA - 2016-24
Contact: Karen Kraushaar, Director of Communications
(202) 622-6500

Review of the IRS Enterprise E-Mail System Acquisition

WASHINGTON — The Internal Revenue Service (IRS) spent $12 million for subscriptions for an enterprise e-mail system that, as it turned out, it could not use, according to an audit report that the Treasury Inspector General for Tax Administration (TIGTA) released today.

The IRS currently maintains an on-premises e-mail environment that does not have archive capability. The existing system hardware is approaching manufacturer end-of-support and is experiencing numerous failures resulting in a significantly increased workload for enterprise e-mail support staff. If the IRS does not efficiently upgrade its e-mail environment, it could adversely affect the IRS’s ability to effectively perform tax administration. In order to comply with an Office of Management and Budget directive that requires Federal agencies to manage both permanent and temporary e-mail records in an accessible electronic format by December 2016, the IRS plans to procure a new enterprise e-mail system.

The overall objective of TIGTA’s audit was to determine whether the IRS properly procured a new enterprise e-mail system. TIGTA found that the IRS authorized the $12 million purchase of subscriptions over a two-year period between June 2014 and June 2016. IRS Information Technology organization executives made a management decision to consider the enterprise e-mail project an upgrade to existing software and not a new development project or program. Therefore, the Information Technology organization did not follow the Internal Revenue Manual Enterprise Life Cycle guidance.

The purchase was made without first determining project infrastructure needs, integration requirements, business requirements, security and portal bandwidth, and whether the subscriptions were technologically feasible on the IRS enterprise. The IRS never deployed the software to be used via the purchased subscriptions, and it may have violated the bona fide needs rule when it purchased the subscriptions using Fiscal Years 2014 and 2015 appropriations and did not deploy the software subscriptions in those years. In addition, the IRS violated Federal Acquisition Regulation requirements by not using full and open competition to purchase these subscriptions.

TIGTA recommended that the Chief Information Officer ensure that 1) appropriate Internal Revenue Manual sections are followed before the subscription requisition process and throughout the subscription project development life cycle for new subscriptions or managed services procurements and 2) the IRS Chief Counsel conduct a review to determine if the purchased subscriptions violated the bona fide needs rule and take any actions required by law. TIGTA also recommended that the Chief Information Officer and Chief Procurement Officer ensure that, if the IRS intends to purchase a cloud solution in the future, it acquires the products through competitive procedures outlined in the Federal Acquisition Regulation.

The IRS agreed with two recommendations and plans to have a review conducted by Chief Counsel and to collaborate and follow the Federal Acquisition Regulation. The IRS partially agreed with one recommendation because it does not believe the Enterprise Life Cycle was applicable. The IRS also disagreed that it wasted taxpayer dollars. TIGTA maintains that the Enterprise Life Cycle was applicable and funds were wasted as explained in the report.

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.