Summary
The Internal Revenue Service's (IRS) Business Systems Modernization (BSM) program is a multibillion-dollar, high-risk, highly complex effort that involves the development and delivery of a number of modernized information systems intended to replace the agency's aging business and tax processing systems. As required by law, IRS submitted its fiscal year 2005 expenditure plan in April 2005 to congressional appropriations committees, requesting about $203 million from the BSM account. GAO's objectives in reviewing the plan were to (1) determine whether it satisfied the conditions specified in the law, (2) determine what progress IRS had made in implementing our prior recommendations, and (3) provide any other observations about the plan and IRS's BSM program.
IRS's fiscal year 2005 expenditure plan, which requested about $203 million for the BSM program, satisfies the conditions specified in the law. These conditions include meeting the Office of Management and Budget's capital planning and investment control review requirements and complying with federal systems acquisition requirements and management practices. IRS has made progress in implementing GAO's recommendations to improve its modernization management controls and capabilities. However, certain controls and capabilities related to configuration management, human capital management, cost and schedule estimating, contract management, and post-implementation reviews have not yet been fully implemented or institutionalized. Weaknesses in these controls and capabilities have contributed, at least in part, to project cost and schedule shortfalls. GAO's observations on the expenditure plan and BSM program include the following: (1) during the past year, IRS has made progress implementing BSM, but much work remains. While IRS has deployed initial versions of several modernized tax processing and business systems, these deliveries only represent the initial steps toward modernization. For example, initial deliveries of the Customer Account Data Engine (CADE) project will process less than 1 percent of all tax returns filed this year; (2) IRS has not met long-term cost and schedule estimates, but its new incremental approach contributed to short-term improvements. In the second quarter of fiscal year 2004, systems modernization projects were rebaselined, and IRS adopted a new strategy to develop and deploy more manageable project segments. Since that time, IRS has met its short-term cost estimates and delivery dates for the initial releases of CADE and the Custodial Accounting Project. However, concerns remain about IRS's ability to continue meeting cost and schedule targets; (3) IRS has made progress toward addressing issues raised in independent BSM assessments and implementing program improvement initiatives, but high-priority issues and challenges remain in areas such as quality assurance, the change request process, and integrated schedule and baseline management; and (4) the BSM vision and strategy need revision in order to clearly show what the modernization program will consist of, when it will be completed, and at what cost. For example, the latest modernization strategy referenced in an expenditure plan dates back to fiscal year 2002, and its planned delivery dates no longer reflect reality.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
David A. Powner
Government Accountability Office: Information Technology
No phone on record
Recommendations for Executive Action
Recommendation: To address the many changes associated with the BSM and to clearly describe what the modernization program is intended to accomplish, when it will be completed, and at what cost, the Commissioner of Internal Revenue should direct the Chief Information Officer to fully revisit the vision and strategy for the BSM program and develop a new set of long-term goals, strategies, and plans that are consistent with the budgetary outlook and IRS's management capabilities.
Agency Affected: Department of the Treasury: Internal Revenue Service
Status: In process
Comments: In response to this recommendation, during fiscal year 2006 IRS conducted the initial cycle of a new IT Modernization Vision and Strategy (MV&S) activity. The MV&S initiative established a 5-year plan (also known as the Enterprise Transition Strategy) to guide IT investment decisions during fiscal years 2007 through 2011 and address priorities around modernizing front-line tax administration functions and the supporting technical capabilities provided by the infrastructure and security. Key characteristics of the new vision and strategy include a partnership among IRS's IT and business leadership; an emphasis on delivering smaller, more frequent incremental releases; the leveraging of existing systems (or components of existing systems) where appropriate; and a unified, portfolio-level view of investments. The agency's Enterprise Transition Strategy describes the overall IRS vision and strategy and how existing and proposed investments align to it. IRS's MV&S initiative is intended to be an annual process through which the agency integrates the strategic plans, business concepts of operations, IT planning roadmaps, and proposed investments into a set of integrated strategies and investment proposals for each functional domain and ultimately into a proposed IT investment portfolio. The new IT MV&S represents a significant step towards defining IRS's future plans for the modernization program; however, more work remains for the agency to fully develop the long-term strategy for completing BSM, including establishing time frames for consolidating and retiring legacy systems. IRS recognizes this and intends to conduct further analyses and update its vision and strategy to address the full scope of tax administration functions and provide additional details and refinements regarding the agency's plans for legacy system dispositions.
