December 09, 1998
Selection of Prime Contractor
The Internal Revenue Service has selected a team of contractors
led by Computer Sciences Corporation to help the agency modernize
its business practices and replace its outdated technology. The
comprehensive modernization program also includes reorganization of
the agency to improve service to taxpayers.
In May 1997, IRS developed and issued its Modernization
Blueprint, a detailed plan to build a modern technology
architecture, in response to Public Law (PL) 104208, the Omnibus
Consolidated Appropriations Act. PL 104-208 also called for issuance
of a Request for Proposal (RFP) for a Prime Systems Integration
Services Contractor (PRIME) to partner with IRS to manage
implementation of the Blueprint. IRS issued the RFP to acquire a
PRIME contractor on March 26, 1998. Given the magnitude of the task,
interested contractors formed partnerships to leverage the resources
necessary to offer competitive bids.
Two teams eventually bid on the proposal. The group selected for
the contract is led by Computer Sciences Corporation and includes
Northrop Grumman, KPMG Peat Marwick, UNISYS, IBM, Lucent
Technologies and SAIC. Lockheed Martin led the other team, which
included EDS, Arthur Andersen, Robbins-Gioia, Intuit and the Gallup
Innovative Procedure Approach
From the beginning, IRS sought out industry expertise and used
the best knowledge of both private industry and government to
develop the RFP. Throughout the procurement process, IRS and the
contractor teams maintained open lines of communication, including
numerous face-to-face meetings.
Initial proposals were received on June 1, 1998. Discussions
were conducted with both teams from Sept. 4-25, 1998. These included
evaluation issues and negotiation of the terms and conditions of the
contract. Final proposal revisions were received on Oct. 14, 1998.
IRS evaluated the contractor teams in several areas: 1)
strategic technical approach, 2) strategic business approach, 3)
proposal for a customer service and compliance pilot, 4) management
overview, 5) past performance and 6) input to the request for
comments. Both teams provided very strong proposals. The Computer
Sciences team was chosen for its stronger strategic technical and
strategic business approaches.
Role of Prime Contractor
The IRS will partner with the PRIME contractor to achieve its
overall goal of modernizing business processes and systems to
improve service quality, timeliness, reliability and privacy. IRS
will rely on the PRIME to act as a systems integrator to find and
manage the best expertise and technical resources to achieve the
agency's organizational goals.
The first six months after the contract award, IRS staff and
PRIME contractors will put in place a series of management
processes, including strategic planning management, requirements
management, investment decision management, and program and project
management. This work will be funded through regular IRS
appropriation funds and is part of a Congressional requirement
before additional funds can be released from a special account.
During the subsequent 18 months, the IRS/PRIME partnership plans
to build the first releases of prioritized modernization
initiatives. The IRS/PRIME partnership plans to also complete the
development and implementation of methodologies to manage
information technology systems throughout their life cycle.
Technology modernization is a long-term program, and IRS plans to
work with the PRIME contractor over the next 10- 15 years.
Approach to Technology Modernization
The technology modernization program will be executed through a
series of projects, each of which will deliver benefits and
improvements in the near term while moving toward the long-term
architecture defined in the IRS Modernization Blueprint. Some of the
initial projects targeted for work in 1999 and 2000 include improved
service for people contacting the IRS by phone and expanded
Electronic Tax Administration projects,
Each project that comprises the technology modernization program
will be carefully evaluated for business benefits, risk and cost
before being authorized by top management. In addition, each project
will have key checkpoints to ensure that its objectives are being
met along the way.
Management and Governance
The IRS has established a top-level executive steering
committee, chaired by the Commissioner, to oversee the planning and
management of the IRS business and technology modernization. This
top-level governance approach has already been used successfully in
managing the IRS's $1 billion Y2K program, which is on schedule to
complete almost all the essential work by January 1999, allowing the
remainder of 1999 for final testing.
Working in partnership with the PRIME, the IRS will also
strengthen its Program Management and Engineering office and will
establish a Business Technology Planning office under the direction
of Deputy Commissioner for Modernization, John LaFaver. He is in
charge of IRS reorganization planning. LaFaver has successfully
developed and implemented integrated tax systems in two state
In addition, the IRS has already taken some major steps in
preparation for the modernization program. In July, a new Chief
Information Officer (CIO), Paul J. Cosgrave assumed office. Cosgrave
has 25 years of experience in the private sector in executing
large-scale technology programs. Cosgrave has also recruited several
senior technology executives from outside the agency to strengthen
the management of the CIO organization.
The IRS also recently consolidated information technology
programs across the agency so that service center and field
personnel and resources are now centrally directed by the CIO. This
centralization of management placed, for the first time, nearly all
IRS technology resources under unified control. Already, for
example, the number of e-mail systems is being reduced from 11 to 1.
And within one year, the IRS will have widespread and secure
internal access to e-mail for employees across the country.
Standardization of hardware, software and operational procedures is
a high priority, and will greatly facilitate organizational and
Technology Will Help Improve Service
The IRS is in the midst of an array of changes aimed at
improving services for taxpayers. But in the long run, many
improvements will depend on the replacement of outdated technology.
For example, the ability of IRS representatives to provide
taxpayers accurate information on their accounts is severely limited
because all taxpayer records are currently stored on tape files that
are updated only weekly and cannot be accessed directly from
Selection of a PRIME contractor is an important step in IRS's
modernization program. A PRIME contractor, in partnership with IRS
personnel, brings world-class practices to enable the IRS to
modernize the agency and provide top quality service to America's
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