Report Questions IRS Oversight of Stimulus Funds

Some $203 million in funding under last year’s Recovery Act for the Internal Revenue Service to reprogram its computer systems and update tax forms, publications and customer service may be at risk due to inadequate oversight, according to a new government report.

As of April 2010, the IRS had initiated or was in the process of initiating 26 procurement actions on Recovery Act program initiatives with a total contract value of $81.9 million. But despite the influx of Recovery Act money, the IRS has not completed steps to improve contract oversight by its contracting officers’ technical representatives, who administer the technical aspects of government contracts following their award, according to a report by the Treasury Inspector General for Tax Administration.

“IRS management has implemented some of the corrective actions they planned as a result of our previous findings,” said TIGTA Inspector General J. Russell George in a statement. “However, IRS Recovery Act procurements are still at risk that goods and services received are not in compliance with the terms and conditions of the contracts or within the cost and schedule requirements.”

In a 2009 audit, TIGTA found that IRS contracting officers’ technical representatives were not always performing all of their oversight duties. Instead, they limited their involvement to administrative functions and relied on program office employees who lacked delegated authority and training required to determine whether the goods or services provided by the contractor were acceptable.

In addition, COTRs were not requesting and retaining sufficient receipts to verify contractors’ invoiced charges, including labor hours. After TIGTA’s 2009 audit, the IRS took several actions, including issuing a memo on the importance of the COTR’s role in contract administration and procurement monitoring, and updated its COTR policies.

Although TIGTA made no recommendations in this report, IRS management reviewed and agreed with the facts and conclusions presented.

TIGTA also recently issued a report criticizing other problems with the IRS’s procurement processes using Recovery Act funds (see IRS Faulted for Recovery Act Procurement Lapses). That report found that the IRS has not developed written procedures, provided formal training for those employees procuring goods and services, or dedicated sufficient resources for the tracking and reporting requirements associated with the Recovery Act.