June 30, 1999
Money Released for Computer Modernization,
IRS Strategy Wins Support
WASHINGTON - Congress on Wednesday approved releasing
$35.1 million as the first installment for modernizing the Internal Revenue Services
massive computer system. The move follows a rigorous review process, which included a new
General Accounting Office report praising the IRSs initial effort on computer
This represents a vote of confidence in our efforts to overhaul IRS computers and
create a state-of-the art system designed to deliver top-quality service to
taxpayers, IRS Commissioner Charles O. Rossotti said. Senate and House
Appropriations Committees leaders released the $35.1 million, which will be used to
finalize IRS technology modernization plans as part of the Prime contract.
This partnership approach with Congress has helped us clear the early hurdles of
technology modernization and puts us on track for creating a new system that works,
Rossotti said. We look forward to continuing this productive relationship with
Congress and other groups in the review process. This first release of technology
funds followed a multi-step review process by several government boards and agencies,
GAOs report delivered a favorable review of the IRSs early efforts on the
technology project. The GAO endorsed IRSs incremental, step-by-step budgeting
approach as a way of reducing risk in the complex computer project. IRS
initial expenditure plan is an appropriate first step toward successful systems
Moreover, the plan is consistent with our past
recommendations, GAO said in a June report to Congress.
The GAO also recommended the IRS needs to take additional steps in several areas,
including outlining for Congress the agencys progress on its computer goals and
budget as well as detailing the IRSs working partnership with the Prime contractor.
Rossotti agreed with the agencys findings, and he said the IRS would provide the
information in future requests.
The $35.1 million released Wednesday will be used for key early steps in the computer
modernization process, including continuing work on the intricate IRS technology
blueprint. The money will be divided among several areas:
$14.6 million for completing the technology blueprint and related initiatives. The work
includes determining the timing and cost of new modernization projects during the next
three to five years.
$11.6 million to develop management and engineering capabilities needed to build and
run the complex project.
$8.9 million for several areas, including validating systems requirements and assisting
efforts to improve telephone call routing of taxpayers contacting the IRS. This area will
also lay the foundation for efforts to improve electronic taxpayer services, such as
easier electronic filing and expanded Internet service.
This stage will give us important building blocks for the rest of the computer
modernization process, said IRS Chief Information Officer Paul Cosgrave. This
is an early step in a potential 10-15 year project to replace the agencys antiquated
computer systems, some of which date back to when John Kennedy was president.
The IRS embarked on the project in December, when it selected a group headed by
Computer Sciences Corporation to assist in the sweeping technology modernization project.
The joint project is known as the Prime, which stands for Prime Systems Integration
Services contract. The long-term goal will be revolutionizing nearly every aspect of the
IRS, with the new technology touching everything from the agencys core data systems
to the processing of tax returns.
The $35.1 million comes from $506 million set aside in Fiscal Year 1998 and 1999 by
Congress in the Information Technology Investment Account. Before Congress formally
released any of the money, the IRS had to undergo a special multi-layered review process
designed to ensure a proper approach to technology modernization.
Each IRS request faces review from several oversight groups: an internal IRS review
group, the Treasury Department, the Office of Management and Budget and GAO. Leaders of
the House and Senate Appropriations Committees have the final say on each release.
This partnership process forms a vital part of our computer modernization effort,
and we look forward to working together in the months ahead, Cosgrave said.
IRS expects to seek release of additional money from the investment account this fall.
Rossotti emphasized the Prime contract is a long-term project, and it will take time
for the full technological benefits to emerge.
Change wont happen to our computer systems overnight, Rossotti said.
In the long run, this new technology will be a springboard for us to improve
The $35.1 million will help bring some short-term changes next year, such as improved
telephone service for taxpayers. In the long term, the project will help taxpayers in
Improving service for people contacting the IRS, whether by telephone or Internet.
Better technology will give taxpayers better and quicker access to tax help, account
information and Customer Service Representatives.
Expanding projects involving Electronic Tax Administration, including more electronic
tax-filing capabilities. The array of changes will help taxpayers get refunds in days
instead of weeks and help the IRS meet its goal of 80 percent electronic filing by
taxpayers in 2007.
Using new technology to allow IRS workers to quickly retrieve tax records
electronically while guaranteeing the security and privacy of taxpayers.
To improve service to taxpayers, we need this new technology to be the backbone
of the nations tax system, Rossotti said.
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