The Internal Revenue Service modified a $103 million contract for the management of paper tax returns in November, according to a published report.According to the Washington Post, the original plan to turn over the filing, storage and retrieval activities at seven IRS centers to a contractor Dec. 1 was altered so that, for now, the outsourcing will occur at just two centers. In a statement, the IRS said the conversion was scaled back "to ensure that a sufficient number of employees with the required training and security clearances are in place to manage the files during the upcoming filing season."

The contract has been awarded to IAP Worldwide Services six months ago and the National Treasury Employees Union, which represents most of the agency's rank-and-file workers, has already been complaining that the IRS chose to rely on a contractor rather than its employees.

In 2003, the IRS began the process of putting the work of the approximately 1,500 workers up for a public-private competition. By 2005, the agency decided that its employees had won the competition, before some discrepancies were discovered in the bidding process. The contract was terminated and later awarded to IAP. Since then, reports say the number of workers performing the filing and storing is closer to a head count of 850.

The agency has projected savings at upwards of $25 million over the five-year life of the contract.

IAP will take over paper file management responsibilities Dec. 1 at centers in Kansas City, Mo., and Ogden, Utah. The handful of remaining centers are scheduled to begin work on the contract in June.

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