After , a project to replace the Internal Revenue Service’s aging file-keeping computer system with modern technology is so far behind schedule that the I.R.S. has told the prime contractor that unless it improves its performance by , the government may have no choice but to fire it.
The project, which was expected to cost $8 billion when completed, has spent less than $1 billion so far, but it is already 40 percent over budget for what it has done, according to the I.R.S. Oversight Board, an independent watchdog body that Congress created in .
Most taxpayers are younger than the computer system that the I.R.S. relies on to maintain its master files on individuals and businesses — all the records of who they are, where they are, their income, taxes paid, and the amounts they still owe or are owed as refunds.
The I.R.S. says it can still process returns and send out refunds on time, but its dependence on the Assembler and CoBOL computer languages makes it difficult to investigate and resolve taxpayers’ problems. Finding a record using the existing system can take a week; the new system is supposed to do the job in seconds.
“This is not about a one-time delay,” said Larry Levitan, chairman of the Oversight Board. “Every single major project under way experienced a significant delay in time and overrun in budget — not two or three out of five, but five out of five. What we have here is a track record of absolute consistency of cost overruns and delayed deliveries.”…
Five years into the project, some aspects are as much as 27 months behind schedule.…
The I.R.S. went with the same system because two previous modernization attempts, the most recent in , failed, costing taxpayers $4 billion.…
Mr. Levitan… says a collapse is inevitable without a new system, because the few people who could keep the old system functioning are close to retiring.
Now they say “expected to cost $8 billion when completed” but back when the contract was awarded, it was called an “estimated $3 billion, 15-year project.” This was soon after Congress had cut off funding for the IRS’s previous $3.3 billion attempt in .
Back then, a report by the Computer Science and Telecommunications Board looked at the problems the IRS was having and made some recommendations. The stakes were high:
The IRS is a crucial organization in that it collects the money that fuels the government. Currently, it does this at a relatively low price — about $0.50 per $100.00 collected — in no small part because most taxpayers cooperate voluntarily in carrying out the responsibilities that U.S. tax laws impose on them. Moreover, the collection of taxes forms one of the primary points of interaction between most citizens and the federal government. Continued cooperation by taxpayers requires that they view the IRS as an efficient organization, capable of expeditiously resolving their problems or answering their questions.
The report went on to say that because their computer systems were so out-of-date and bursting at the seams with more data than they were designed for, and because the IRS’s “customers” expected more data processing efficiency in these new dot.com days, the IRS was failing to be an efficient organization. Furthermore, they were institutionally incapable of conducting a mature, large-scale software upgrade and migration of the sort that was demanded.
So the IRS came up with a new large-scale software upgrade and migration proposal, gave it the name “PRIME” and vowed “to follow more businesslike IT development processes… [and] to hire only software contractors with ‘mature software development capabilities.’” If ’s Times is any indication, that wasn’t good enough:
“If they don’t produce we will make a change,” Mark W. Everson, the I.R.S. commissioner, said of the contractor, even though experts at Carnegie Mellon University in Pittsburgh said that starting over with a new company would “probably result in different but no fewer problems along the way” — and delay the new system, which is called the Customer Account Data Engine [CADE], by two or three years.
“I would not enter lightly into rupturing the relationship,” Mr. Everson said. “It is not a desirable outcome to abandon the relationship, but that does not mean we won’t do that if we have to.”
That the IRS commissioner has been reduced to threatening to replace the head contractor, several years and a billion dollars into the project, is pretty much an admission that they’re screwed again.