The Office of Competitive Sourcing Needs to Improve the
Planning, Scheduling, and Costing of Projects
August 2004
Reference Number: 2004-10-146
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
Redaction Legend:
7= Predecisional staff recommendations or suggestions to agency decision makers.
August
26, 2004
MEMORANDUM FOR
CHIEF, AGENCY-WIDE SHARED SERVICES
FROM: (for) Gordon C. Milbourn
III /s/ Daniel R. Devlin
Acting Deputy Inspector
General for Audit
SUBJECT: Final Audit Report - The Office of
Competitive Sourcing Needs to Improve the Planning, Scheduling, and Costing of
Projects (Audit # 200310024)
This
report represents the results of our audit to evaluate the effectiveness of the
Internal Revenue Service (IRS) competitive sourcing program in planning, scheduling,
and costing its projects. Competitive
sourcing is one of five Government-wide initiatives outlined in the President’s
Management Agenda for improving the management and performance of the Federal
Government.
In
summary, the IRS needs to improve the planning, scheduling, and costing of its
projects. When an activity is nominated
for the competitive sourcing process, resources necessary to perform a Business
Case Analysis to evaluate the potential costs and benefits of competition are
committed. However, the IRS does not
have adequate procedures to assist in selecting activities to nominate for
competitive sourcing. Also, the Office
of Competitive Sourcing made significant revisions to original project
schedules. As a result, projects went
considerably beyond the scheduled dates for completion. Finally, the IRS did not use a reliable
method to track and compile the costs of competitive sourcing. As a result, the costs were understated in
Fiscal Year 2003 by approximately $1 million.
We
recommended the Chief, Agency-Wide Shared Services (AWSS),
develop procedures for nominating activities for a Business Case Analysis. In addition, the Chief, AWSS, should ensure
the Office of Competitive Sourcing establishes realistic milestones for
competitive sourcing projects by considering relevant factors,
responsibilities, and historical time periods for similar tasks and incorporate
the milestones into finalized project schedule guidelines. The Chief, AWSS, in coordination with the
Chief Financial Officer (CFO), should establish procedures for the reporting of
costs, savings, and other data to the Department of the Treasury and the
Congress. The procedures should include
the use of the Automated Financial System (AFS) to record and prepare cost
information for competitive sourcing.
Management’s Response: The
Director, Office of Competitive Sourcing, agreed with our recommendations. However, the Director noted disagreement with
certain facts in our report and provided additional perspective on the improvements
which have been made in the planning, scheduling, and costing of competitive
sourcing projects. The Office of
Competitive Sourcing considered the Recommendations 1 and 2 to develop
procedures for nominating activities and to establish realistic schedule
milestones to be fully implemented and will complete corrective action on the
two remaining recommendations.
Specifically, the Office of Competitive
Sourcing, CFO, and budget contacts for the business divisions have been working
since May 2003 to ensure competition costs and savings are accurately captured,
updated, standardized, and reported regularly in the AFS/Integrated Financial
System (IFS). Additional steps have been
initiated to document the procedures for AFS/IFS cost tracking. Procedures will include unique AFS/IFS
project tracking codes to correspond with the Department of the Treasury and
Office of Management and Budget data call requirements.
Office
of Audit Comment: We believe the
facts in this report are accurate as presented.
With respect to Recommendation 1, the Director, Office of Competitive Sourcing, did not differentiate between
the nominating phase and the evaluating phase of competitive sourcing. After an activity is nominated for
competitive sourcing, it is subjected to a Business Case Analysis, which
requires the IRS to evaluate whether an activity is a potential candidate for
competitive sourcing. The Office of
Competitive Sourcing noted that the Business Case Analyses have been successful
and recognized by the Government Accountability Office. However, our recommendation addresses how
activities are nominated, which occurs prior to the Business Case
Analyses. The IRS expended resources on
several Business Case Analyses that were postponed or cancelled for reasons
that could have been identified prior to beginning the Business Case Analyses,
such as ensuring the availability of resources.
The Office of Competitive
Sourcing did not provide documentation on how it applied nominating criteria
for Fiscal Years 2002, 2003, and 2004, nor has it revised its procedures to
ensure future activities are nominated based on quantifiable criteria.
The Office of Competitive
Sourcing considered Recommendation 2 to establish realistic schedule milestones
to be fully implemented and listed several steps it takes to establish and
adjust the project schedules. It also
noted that the IRS completes projects in less time compared to other Federal
Government activities. However, we did
not offer an opinion on the reasonableness of the time it took the IRS to
complete competitive sourcing studies.
Our recommendation is to apply lessons learned from past projects to
develop more realistic project schedules.
The Office of Competitive Sourcing has not taken this action. For example, the draft Project Schedule
guidelines still recommend 4 months to complete the Performance Work Statement,
even though it took 12 months to complete this step for 2 of the 3 competitive
sourcing projects we reviewed.
Although we disagree that
management’s corrective actions fully address Recommendations 1 and 2, we do
not intend to elevate our disagreement concerning them to the Department of the
Treasury for resolution. Management’s
complete response to the draft report is included as Appendix VI.
Copies of this report are also being sent to the IRS managers affected by the report recommendations. Please contact me at (202) 622-6510 if you have questions or Daniel R. Devlin, Assistant Inspector General for Audit (Headquarters Operations and Exempt Organizations Programs), at (202) 622-8500.
Better
Resource Planning Is Needed Before Starting the Competitive Sourcing Process
Significant Revisions Were Made to Original Project Schedules
The Method for Compiling the Costs of Competitive Sourcing Is Not Accurate or Reliable
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix IV
– Outcome Measures
Appendix V – Timeline of Major Events
for Three Activities Reviewed
Appendix VI
– Management’s Response to the Draft Report
Competitive sourcing is the process for determining whether a commercial activity will be performed by a public or private source. It is one of five Government-wide initiatives outlined in the President’s Management Agenda for improving the management and performance of the Federal Government. The President’s Management Agenda noted that nearly one-half of all Federal Government employees perform tasks that are readily available in the commercial marketplace—tasks such as data collection, administrative support, and payroll services. Historically, the Federal Government has realized cost savings in a range of 20 to 50 percent when Federal and private sector service providers compete to perform these functions. The competitive sourcing initiative is expected to consistently generate significant savings and performance improvements.
Office of Management and Budget (OMB) Circular No. A‑76, Performance of Commercial Activities, establishes Federal Government policy for the competition of commercial activities. Agencies are required to follow the policies and procedures outlined in the Circular for competing commercial activities. In May 2003, the OMB published revisions to Circular No. A-76 to improve the competitive sourcing process and to set time periods for completing competitions.
The Internal Revenue Service (IRS) established an Office of Competitive Sourcing in September 2001. This Office centrally manages the competitive sourcing program and has the responsibility of providing oversight to ensure quality, timeliness, consistency, responsiveness, and coordination. In the Fiscal Year (FY) 2002 inventory of activities performed by its employees, the IRS estimated approximately 20 percent (19,600 of 100,700) of its full-time employees perform activities that are commercial in nature.
This review was performed at the Office of Competitive
Sourcing in
The Office of Competitive Sourcing developed the following five-step process to support the IRS in using competitive sourcing to produce cost savings and efficiencies:
1.
Planning – the compilation of the IRS-wide
inventory of commercial activities.
2.
Nominating – the selection of activities as
potential candidates for competition for the upcoming fiscal year.
3.
Evaluating – the Business Case Analysis to
determine the feasibility of subjecting the nominated activities to
competition.
4.
Selecting – based on the Business Case
Analysis, the Strategy and Resources Committee decides whether to compete or
not compete the activity.
5.
Executing – if the decision is made to
compete the activity, a Performance Work Statement is prepared, bids are
solicited, and a contract is awarded if a commercial vendor is the most
efficient provider. This step also
includes the transition phase.
Once an activity is nominated, resources are committed to perform a Business Case Analysis to evaluate the potential costs and benefits of competition. For the 3 projects reviewed, the time used by the IRS to complete the steps leading up to the actual competition was more than 1½ years. Table 1 shows the time used by the IRS for the processes leading up to the competition for the three projects reviewed. See Appendix V for timeline details for the three projects.
Table
1: Time Spent on Projects Prior to the
Competition
|
Task |
Time per Activity (in months)
|
||
Area Distribution Centers
|
|
****7**** |
|
|
5 |
5 |
****7**** |
|
|
Assemble Performance Work Statement
Team |
2 |
4 |
****7**** |
|
Complete Performance Work
Statement/Issue Solicitation |
12 |
12 |
****7**** |
|
Total Time for Preliminary Steps |
19 |
21 |
****7**** |
Source: IRS Office of Competitive Sourcing.
Once the solicitation for bids from competitors is announced, the IRS has 12 more months to complete the competition. Overall, it can take 3 years or more to complete the entire competitive sourcing process.
Because of the resources committed, nominating an activity for the competitive sourcing program is an important step in the process. The Department of the Treasury, the OMB, and IRS employees are notified of the activities nominated. In its strategic plan, the Office of Competitive Sourcing outlined the following criteria to be considered before activities are nominated as potential competitive sourcing candidates:
· Competition will not negatively affect the mission.
· The activity can be competed as a unit and not a collection of independent positions.
· Activities appear to be readily available and economical in the private sector.
· Competition would not hinder IRS modernization, budget, or workforce planning requirements.
· The potential exists for cost efficiencies and savings.
Other than these general criteria in the strategic plan, procedures have not been completed to guide this process. There are two important factors which the IRS needs to consider before nominating activities for a Business Case Analysis: 1) whether people and other resources are available to complete the competitive sourcing process and 2) how to prioritize projects based on resources and likely savings/improved service.
In FY 2002, the first year it nominated activities for competitive sourcing, the IRS identified the resources it would need to carry out the competitive sourcing process. Competitive sourcing is in process or completed for all of these projects. Table 2 shows the status of the projects that were nominated in FY 2002.
Table 2: Status of Activities Nominated for the Competitive Sourcing Program for FY 2002
|
Activity |
Number of Full-Time
Equivalents (FTE)
|
Status |
|
500 |
Active |
|
|
Architects and Engineers |
10 |
Completed |
|
Field and Headquarters Mailroom Sites |
70 |
Active |
|
Operation and Maintenance of Delegated
Buildings |
100 |
Active |
|
|
350 |
Active |
|
Total |
1,030 |
|
Source: IRS Office of Competitive Sourcing.
The IRS postponed three of the seven activities nominated for FY 2003. ****7****. Table 3 shows the status of the projects that were nominated in FY 2003.
Table
3: Status of Activities Nominated for
the Competitive Sourcing Program for FY 2003
|
Activity |
Number of FTEs
|
Status |
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
Total |
2,658 |
|
Source: IRS Office of Competitive Sourcing.
****7****.
Table 4: Status of Activities Nominated for the Competitive Sourcing Program for FY 2004
|
Activity |
Number of FTEs
|
Status
|
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
****7**** |
****7**** |
****7**** |
|
Total |
2,201 |
|
Source: IRS Office of Competitive Sourcing.
For 2 of the 6 activities postponed in FYs 2003 and 2004, the Business Case Analyses had been completed for approximately $600,000 in contractor costs. In addition, approximately $180,000 was spent for contractor support for the Performance Work Statement for 1 of the postponed projects. While the postponed projects can be resumed at a later date using much of the work already completed, additional time and resources will likely be necessary to update the information. Moreover, premature nomination of activities can negatively affect morale and job performance.
The Office of Competitive Sourcing posted a draft guide to competitive sourcing on its web site. The guide explains competitive sourcing and describes how to accomplish tasks required for the IRS competitive sourcing process. The guide also includes procedures for the appointment of competition officials, communications with and reviews by functional executive leadership, budget requests, and nondisclosure statements. However, the guide does not include any procedures about nominating activities for a Business Case Analysis. Without procedures for nominating activities, the IRS may commit resources that are not available and may not be nominating the best candidates for the program.
1. The Chief, Agency-Wide Shared Services, should establish procedures for nominating activities for a Business Case Analysis.
Management’s Response: The Office of Competitive Sourcing stated that corrective action was completed on May 17, 2004. It believes guidelines and practices for the project selection process have been established and are being followed. During the project selection process, the IRS answers the following questions:
· Is the function core to the IRS mission?
· How much does the function cost?
· Is there potential to reduce cost and/or improve productivity by competing the function?
· How does the function fit into other current or planned strategic projects?
Based on the responses to these questions along with other factors (analysis of current operations, market research, and the Most Efficient Organization (MEO) design), the IRS calculates and considers economic benefits of each potential alternative and the upfront and recurring investments required to achieve and maintain efficiencies. The IRS makes a decision to compete based on strategic business alignment, investment risks, return on investment, and alignment with the Federal Activity Inventory Reform Act and other President’s Management Agenda goals, including Human Capital Initiatives.
Office of Audit Comment: In responding to our report, the Director, Office of Competitive Sourcing, did not differentiate between the nominating phase and the evaluating phase of competitive sourcing. Our recommendation focuses on the second stage of the competitive sourcing life cycle (nomination), as outlined in the IRS Competitive Sourcing Strategic Plan for FYs 2002-2005. The Office of Competitive Sourcing stated it is following the above criteria for project selection; however, much of its discussion appears to be addressing steps taken during the Business Case Analysis, not during the nominating process. In addition, no documentation was available on how the Office of Competitive Sourcing applied the criteria in the nomination stage for FYs 2002, 2003, and 2004, nor have procedures been established to ensure future activities are nominated based on quantifiable criteria. Adequate procedures should ensure appropriate criteria are applied and documented and resources are available to complete the competition.
The schedule for a competitive sourcing project includes many variables that can affect the timeline for completion. The complexity of the project, the availability of internal and external resources, the cooperation of the National Treasury Employees Union (NTEU), and the number and quality of contractor proposals can all affect the schedule for conducting studies. In fact, for the three studies reviewed, these variables significantly affected the original project schedules. As a result, the project completion dates have been extended, which complicates transition planning and delays cost savings.
The Office of Competitive Sourcing develops the project schedules for competitive sourcing studies with input from each project team. For the three competitive sourcing projects reviewed, changes had to be made to the project schedule start and completion dates. Table 5 shows the project planned start dates from the August 2002 project schedules compared with the actual start dates. For purposes of project schedules, the start date is considered the date on which the IRS begins to develop its Performance Work Statement.
Table
5: Comparison of the Project Schedule Start
Dates and Actual Start Dates
|
Activity |
Start date |
Months Delayed |
|
|
Planned |
Actual |
||
|
Area
Distribution Centers |
April 22, 2002 |
April 22, 2002 |
— |
|
|
September 16, 2002 |
October 28, 2002 |
1 |
|
****7**** |
****7**** |
****7**** |
****7**** |
Source: IRS Office of Competitive Sourcing.
****7****. Because contractor support was necessary to begin the project, the start date was delayed until the contractor support could be obtained.
Project schedules also had to be revised to reflect changes to the project completion date. Table 6 shows the changes to the completion dates in the project schedules from the dates originally planned for three ongoing competitive sourcing projects.
Table
6: Revisions to the Completion Dates in
Project Schedules
|
Project |
Completion date |
Months Delayed |
|
|
Planned |
Revised |
||
|
Area Distribution Centers |
September 22, 2003 |
September 30, 2004 |
12 |
|
|
February 9, 2004 |
December 1, 2004 |
10 |
|
****7**** |
****7**** |
****7**** |
****7**** |
Source: IRS Office of Competitive Sourcing.
The Area Distribution Centers project was the IRS’ first competitive sourcing project. This is a large, complex project which involves approximately 1,300 employees. During the process, the NTEU raised issues related to employee rights that the IRS had to address. For example, the IRS had to address NTEU questions related to employees’ notification and nondisclosure letters, which caused it to delay the development of the MEO until discussions were held with the NTEU. The schedule had to be revised because the original project schedule did not include sufficient time for these discussions.
In addition, the Procurement function provided the Office of Competitive Sourcing with two possible schedules for the Area Distribution Centers project. The longer of the two schedules included time to hold discussions with bidders, while the second schedule assumed that discussions would not be necessary. The Office of Competitive Sourcing managed the project using the schedule that did not allow for vendor discussions. For example, in January 2004 the Office of Competitive Sourcing briefed the Director, Media and Publications, Distribution Division, that the contract would be awarded in April 2004, which is the schedule date without vendor discussions. The briefing did not include the possibility that the award date could be delayed until July 2004 if discussions were necessary. However, in March 2004, the Procurement function determined that vendor discussions would be necessary, and the award date was delayed.
The Office of Competitive Sourcing also underestimated the
time necessary to develop a Performance Work Statement. For the
Future project schedules should take into account the time actually required to complete these tasks. Project delays can affect employees and the cost to complete the project and can postpone cost savings. While some of these delays may not have been avoidable, consideration of these potential issues should be included in the project schedules. Instead of targeting the most optimistic dates, project schedules should plan for the most probable dates, so managers are aware of the likely time periods and can plan for them accordingly.
The Office of Competitive Sourcing developed draft
guidelines for competitive sourcing project schedules. The purpose of having project schedules is to
enable the Competitive Sourcing Project Manager and the Office of Competitive
Sourcing to monitor and evaluate the progress of the projects. However, the project schedule guidelines are
not complete and do not always consider the IRS’ experience with ongoing
projects. For example, although both the
2.
The Chief, Agency-Wide Shared Services, should
ensure the Office of Competitive Sourcing establishes realistic milestones for
competitive sourcing projects by considering relevant factors,
responsibilities, and historical time periods for similar tasks and incorporate
the milestones into finalized project schedule guidelines.
Management’s
Response:
The Office of Competitive Sourcing stated that corrective action
was completed on June 17, 2004. It is following project management disciplines, including
planning and scheduling and incorporating lessons learned for competitive
sourcing competitions. The Office of
Competitive Sourcing stated it has also taken steps to support compressing of
timelines by:
· Sharing lessons learned at monthly and biweekly meetings.
· Expanding information on its web site.
· Obtaining expert contractor support for project acceleration.
· Providing training.
· Maintaining knowledge transfer from the Business Case Analysis phase to the Performance Work Statement phase by keeping the same project leader to assist teams in meeting the “stretch schedule goals.”
The Office of Competitive Sourcing stated it would continue to refine and condense the project schedules.
Office of Audit Comment: The draft guidelines for Project Schedules in the IRS Guide to Competitive Sourcing do not appear to address lessons learned. As we noted, the Office of Competitive Sourcing acknowledges that it takes 12 months to complete a Performance Work Statement. However, the draft guidelines suggest a 4-month timeline for the Performance Work Statement. While the IRS may be informally sharing information and lessons learned, the Office of Competitive Sourcing needs to formalize this process and incorporate the results into its written guidelines.
In August 2001, the Acting Chief Financial Officer (CFO) for the Department of the Treasury issued a memorandum to all Department of the Treasury bureaus requiring the collection of costs and savings resulting from compliance with OMB Circular No. A-76. The purpose of collecting these costs is to determine the point at which the savings exceed the costs, identify additional funds needed, and identify potential areas for reducing costs. Data collection was to be implemented in whatever manner was most efficient for each bureau. In January 2004, the Consolidated Appropriations Act, FY 2004, was signed into law. The Act includes a Government-wide requirement for each agency to report to the Congress on its competitive sourcing activities, including the costs and savings, for the prior fiscal year.
The IRS began compiling and submitting reports on its competitive sourcing costs in FY 2002. The IRS reports the following quarterly costs to the Department of the Treasury:
· Cost of managing the competitive sourcing program – this includes the administrative duties of the Office of Competitive Sourcing and all work associated with the Business Case Analysis.
· Cost of conducting competitions – this includes all work conducted by the business units subsequent to the decision to compete the activity.
However, the IRS does not have adequate procedures to ensure the costs it reports to the Department of the Treasury are accurate and reliable. The IRS has a cost accounting system to collect costs; however, it is not using its system to collect all of its costs. Inadequate procedures contributed to the IRS underreporting costs to the Department of the Treasury by $1 million for FY 2003. This was due to an error in consolidating quarterly costs. The Office of the CFO corrected the error after we brought it to their attention. The costs for FYs 2002 and 2003 are shown in Table 7.
Table
7: Costs of the IRS Competitive Sourcing
Program
|
Task |
Cost (in millions)
|
|
FY 2002
|
FY 2003
|
|
|
3.8 |
4.9 |
|
|
Conducting competitions |
1.8 |
5.4 |
|
Total |
$5.6 |
$10.3 |
Source: IRS Office of the CFO.
For FY 2002, the Office of the CFO identified these costs by asking the IRS divisions to provide information on costs for salary, travel, and training related to competitive sourcing and by asking the contractor to provide the costs billed to the IRS for the fiscal year. In FY 2003, the Office of the CFO began capturing salary, travel, and training costs by using its cost accounting system. However, the Office of the CFO did not use the system to capture and report the contractor costs. Instead, it asked each contractor to provide this information each quarter. In the beginning of FY 2002, only one contractor was working on competitive sourcing initiatives. In FY 2003, 9 contractors worked on various aspects of the competitive sourcing program and accounted for $4.8 million (47 percent) of the $10.3 million, which increases the importance of recording this information on the IRS cost accounting system as costs are incurred. Proper use of the IRS cost accounting system would eliminate the need to manually compile these costs.
In the future, the IRS will also be expected to report on savings resulting from competitions, which will be calculated by comparing the previous cost of performing the activity with Federal Government resources with the price of the winning contractor or Federal Government team offer. As of March 2004, there had been no savings; the IRS standard competitions were still in process and no awards had been announced. According to the Office of the CFO, savings are expected to begin in FY 2005.
The Chief, Agency-Wide Shared
Services, and the CFO should:
3.
Use the Automated Financial System (AFS) to
record and prepare cost information for competitive sourcing.
4.
Establish written procedures for reporting
costs, savings, and other required competitive sourcing data to the Department
of the Treasury and to the Congress.
Management’s Response: The Office of
Competitive Sourcing, CFO, and budget contacts for the business divisions have
been working since May 2003 to ensure competition costs and savings are
accurately captured, updated, standardized, and reported regularly in the
AFS/Integrated Financial System (IFS).
Additional steps have been initiated to document the procedures for
AFS/IFS cost tracking. Procedures will
include unique AFS/IFS project tracking codes to correspond with the Department
of the Treasury Department and Office of Management and Budget data call requirements.
Appendix I
Detailed
Objective, Scope, and Methodology
The overall objective of our review was to evaluate the effectiveness of the Internal Revenue Service (IRS) competitive sourcing program in planning, scheduling, and costing its projects. To accomplish our objective, we:
I. Assessed the process the IRS developed for selecting and competing commercial activities.
A. Reviewed the IRS competitive sourcing plan, minutes of the Competitive Sourcing Coordination Group, and other documents related to the IRS competitive sourcing program.
B. Obtained criteria established by the Office of Management and Budget (OMB) and the Department of the Treasury for developing a competitive sourcing plan and compared the IRS competitive sourcing program plan with the criteria.
C. Discussed the competitive sourcing process with the Director and staff of the Office of Competitive Sourcing and with project leaders, team leaders, and team participants in the Wage and Investment (W&I) Division, Modernization and Information Technology Services (MITS) organization, and Agency-Wide Shared Services (AWSS) organization.
D. Selected a judgmental sample of three of the eight projects undergoing a full competitive sourcing study from the W&I Division, MITS organization, and AWSS organization; reviewed the steps taken to select the activities for competition; and evaluated the process. We judgmentally selected the sample to obtain one project from each of the above divisions.
II. Reviewed the steps the IRS has taken to meet the standards established for the President’s Management Agenda competitive sourcing initiative.
A. Identified the President’s Management Agenda standards and goals and compared IRS performance with the standards and goals.
B. Discussed the President’s Management Agenda competitive sourcing initiative with the Director and staff of the Office of Competitive Sourcing.
III. Assessed the method used by the IRS for tracking costs related to the competitive sourcing program to determine whether IRS reported costs were accurate.
A. Obtained the Department of the Treasury’s criteria for tracking costs and compared the IRS methodology for tracking costs with the criteria.
B. Discussed the methodology for tracking competitive sourcing programming costs with representatives of the Chief Financial Officer organization.
C. Reviewed documentation related to costs.
IV. Reviewed the IRS plans to comply with OMB Circular No. A-76, Performance of Commercial Activities, including transition issues.
Appendix II
Major Contributors to This
Report
Daniel R.
Devlin, Assistant Inspector General for Audit (Headquarters
Operations and Exempt Organizations Programs)
Michael E. McKenney, Director
Carl L. Aley, Audit Manager
Joan
R. Floyd, Lead Auditor
Susan
A. Price, Senior Auditor
Michael J. Della Ripa, Auditor
Appendix III
Commissioner C
Office of the Commissioner – Attn: Chief of Staff C
Deputy Commissioner for Operations Support OS
Chief
Financial Officer OS:CFO
Chief Information Officer OS:CIO
Commissioner, Wage and Investment Division SE:W
Associate Chief Financial Officer for Performance Budgeting OS:CFO:PB
Director, Customer Assistance, Relationships, and Education SE:W:CAR
Director, Competitive Sourcing OS:A:C
Director, Procurement OS:A:P
Director, Media and Publications SE:W:CAR:MP
Chief Counsel CC
National Taxpayer Advocate
TA
Director, Office of Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk
Analysis RAS:O
Office of Management Controls OS:CFO:AR:M
Audit Liaison: Agency-Wide Shared Services OS:A:F
Appendix IV
This appendix presents detailed information on the measurable impact that our recommended corrective action will have on tax administration. This benefit will be incorporated into our Semiannual Report to the Congress.
Type and Value of Outcome Measure:
· Reliability of Information – Actual; $1 million understatement in costs of the competitive sourcing program reported to the Department of the Treasury for Fiscal Year 2003 (see page 13).
Methodology Used to Measure the Reported Benefit:
We reviewed the consolidated and quarterly cost reports the IRS sent to the Department of the Treasury for Fiscal Years 2002 and 2003. We also reviewed the process for assembling the reports and determined that inadequate procedures contributed to the understatement.
Appendix V
Timeline of Major Events for Three
Activities Reviewed
Area Distribution Centers
|
Date |
Event
|
|
September 2001 |
Business Case Analysis
(BCA) team began its work. |
|
February 22, 2002 |
Results of the BCA were
presented to the Competitive Sourcing Executive Steering Committee. The Committee approved the recommendation
to conduct a competition. |
|
April 2002 |
Performance Work
Statement (PWS) team began its work. |
|
November 2002 |
Management Plan team
informally began its work. |
|
November 13, 2002 |
Request for Information
and the draft PWS were issued. |
|
December 13, 2002 |
Comments to the draft PWS
were due and received. |
|
February 2003 |
Management Plan team
formally began its work. |
|
April 25, 2003 |
Request for Proposal or
solicitation was issued. |
|
Original due date for
proposals that was established in the solicitation. |
|
|
September 17, 2003 |
Independent Review
Officer startup meeting was held. |
|
November 18, 2003 |
Independent Review
Officer certified the Internal Revenue Service’s (IRS) cost comparison form. |
|
November 25, 2003 |
Revised due date for
proposals that was changed by amendments to the solicitation. Also the received date for proposals and
the date the IRS’ bid was sealed. |
|
April 2004 |
The award decision was
expected. |
|
August 2004 |
The revised date for
the award decision. |
|
Date |
Event
|
|
January 2002 |
The BCA team began its
work. |
|
June 17, 2002 |
Results of the BCA were
presented to the Competitive Sourcing Executive Steering Committee. The Committee approved the recommendation
to conduct a competition. |
|
October 2002 |
The PWS team began its
work. |
|
April 28, 2003 |
Request for Information
and the draft PWS were issued. |
|
May 12, 2003 |
Comments to the draft
were due and received. |
|
June 2003 |
Most Efficient
Organization (MEO) team began its work. |
|
October 1, 2003 |
Request for Proposal or
solicitation was issued. |
|
Original due date for
proposals that was established in the solicitation. |
|
|
February 26, 2004 |
Revised due date for
proposals that was changed by an amendment to the solicitation. Also the received date for proposals. |
|
July – September 2004 |
The performance
decision is expected. |
****7****
|
****7**** |
****7**** |
|
****7**** |
****7**** |
|
****7**** |
****7**** |
|
****7**** |
****7**** |
|
****7**** |
****7**** |
Appendix VI
Management’s Response
to the Draft Report
The response was
removed due to its size. To see the
response, please go to the Adobe PDF version of the report on the TIGTA Public
Web Page.