Washington (Feb. 17, 2004) -- The gremlins that have bedeviled the Internal Revenue Service’s attempts to modernize its 1960s-era computer system for a generation continue to undermine those efforts, government and industry insiders told Congress last Thursday.

In testimony before the House Ways and Means Oversight Subcommittee, IRS Commissioner Mark Everson suggested that his agency might have bitten off more than it could chew.

“We expected to achieve some key milestones in the summer and fall, such as the initial delivery of the system that would start to replace our antiquated tax accounting system, called the Customer Account Data Engine,” he explained. “Before the summer was through, it became clear two very significant modernization projects, CADE and the Integrated Financial System, would experience substantial delays.”

Calling both failures “major setbacks” for the IRS, Everson attributed at least part of the problem to the fact that “the scope of the projects was far too large” for IRS and its “PRIME” industry contractors responsible for spearheading the modernization effort. 

“The IRS management team and the PRIME contractors had taken on too much and been stretched too thin,” he acknowledged. “We did not have the capacity to properly manage such a large portfolio,” and “the result is that we have been unable to devote the resources, energy and attention to meeting our primary goals.”

One of the key contractors involved in the project also told Congress that they had under estimated the complexities associated with modernizing the IRS’s computer system. Computer Sciences Corp. vice president Paul Cofoni testified that his company “did not understand the complexity of the current systems environment; nor did we understand what it would take to build a new database platform for the IRS.”

During “my 30 years of working in the technology field, I have never encountered any program of the size and complexity as the business systems modernization program at the IRS,” he said.

Both Everson and other witnesses at the hearing told Congress that progress was being made toward overcoming the problems of the past five years. But an independent review of the modernization effort blamed many of the current difficulties on top officials at the IRS and its outside contractors.

That review, conducted for the IRS by Carnegie Mellon University’s Software Engineering Institute cited ineffective “management discipline” by both tax service officials and execs at the agency’s industry partners.

Not all of their activities are “effectively executed, and many are not backed by sufficient technical expertise and experience,” SEI chief engineer Steve Palmquist told the subcommittee. “Risk management, requirements management, staffing and talent retention, communications management and creating accurate budgets and schedules all remain areas of concern.”

-- Ken Rankin

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