Tax Systems Modernization: Results of Review of IRS' August 2000 Interim Spending Plan
Published: 2000-11-08T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: The Internal Revenue Service (IRS) has tried unsuccessfully to modernize its information systems. To prevent a repeat of past mistakes, Congress legislated explicit controls over IRS spending on systems modernization. Congress did so by creating Senate and House appropriations subcommittees, which specified four conditions. IRS has satisfied some, but not all, of the conditions set out by its appropriations subcommittees; however, it has moved aggressively and made important progress in advancing many projects and addressing modernization management weaknesses. Until these weaknesses are fully addressed, key controls will be missing, thereby increasing the risk that projects will not perform as intended or cost more and take longer to complete.

section_title: Letter
paragraphs: Throughout the 1990s, the Internal Revenue Service (IRS) has tried  unsuccessfully to improve taxpayer service and IRS internal management  by modernizing its inefficient information systems. To prevent a repeat of  past mistakes, the Congress legislated explicit controls over IRS systems  modernization spending. Specifically, the Department of the Treasury’s  fiscal year 1998 and 1999 appropriations acts limit the obligation of  modernization funds until IRS submits to the Congress for approval an  expenditure plan—which IRS commonly refers to as a spending plan—that  (1) implements the IRS Modernization Blueprint, (2) meets Office of  Management and Budget (OMB) investment guidelines for information  systems, (3) is reviewed and approved by IRS’ Investment Review Board,  OMB, and Treasury’s IRS Management Board and is reviewed by GAO,  (4) meets the requirements of IRS’ system life cycle management program,  and (5) complies with acquisition rules, requirements, guidelines, and  systems acquisition management practices of the federal government.  These legislative conditions are consistent with systems modernization  recommendations that we made to IRS in 1995. Currently, however, our  recommendations have yet to be fully implemented.
In March 2000, IRS submitted its second spending plan, requesting  $176.3 million from its systems modernization appropriations account  referred to as the Information Technology Investments Account (ITIA). In  April 2000, IRS’ Senate and House appropriations subcommittees approved  $148.4 million of that request and, on the basis of our findings on IRS’  management of the program, specified several conditions for IRS to satisfy.  Recognizing that the $148.4 million would be obligated before another  spending plan was submitted, IRS submitted in late August 2000 what it  called an interim spending plan for $32.8 million as a stopgap funding  measure.
As agreed, our objectives were to (1) determine whether IRS satisfied the  conditions that the subcommittees specified in their April 2000 letters  approving the interim plan and (2) provide any other observations relating  to the agency’s management of the program.
The four conditions specified by the subcommittees were: adhere to the March 2000 spending plan as approved and funded or seek  approval to do otherwise; meet the commitments made in the March 2000 spending plan; address modernization management weaknesses and establish the  capability to build systems by hiring an individual to lead the Business Systems Modernization  Office (BSMO), developing mature software acquisition capabilities, clearly defining and applying IRS and contractor roles and creating performance-based task orders, and fully implementing IRS’ life cycle management methodology— Enterprise Life Cycle (ELC)—and completing and using its enterprise  architecture—Blueprint 2000—to define, direct, and control future  modernization activities; and establish more reliable cost and schedule estimates for the initiatives  outlined in the March 2000 plan.
On September 21, 2000, we briefed senior IRS officials, including the Chief  Information Officer and the Business Systems Modernization Executive, on  the results of our work. They stated that our briefing was fair, objective,  and helpful. They also provided clarifying points that were incorporated  into the briefing as appropriate. On September 22, 2000, we briefed the  subcommittees’ offices. As requested by your offices, this report transmits  and summarizes the briefing. The briefing slides are in appendix I.
We performed our work at IRS offices in Washington, D.C., from August  through mid-September 2000, in accordance with generally accepted  government auditing standards. See appendix II for details on our scope  and methodology. IRS provided us with written comments on a draft of this  report. Their comments are discussed in the “Agency Comments” section  of this report and reprinted in appendix III.
subsections: section_title: Background
paragraphs: Since May 1999, IRS has submitted two spending plans and two interim,  stopgap plans. On June 15, 1999, we reported on IRS’ first spending plan,  stating that the $35 million requested satisfied the legislative conditions for  the use of ITIA funds and was consistent with our open recommendations.  We also said that it was an appropriate first step but that the key to success  would be effective implementation of the plan. We recommended that  future plans specify progress against prior plan commitments and that the  next plan clarify the roles and responsibilities of IRS, its prime systems  integration services contractor (PRIME) for modernization, and other  modernization support contractors.
Because IRS was unable to submit its second plan on time, it submitted in  December 1999 a stopgap request for $33 million and additional time as an  interim measure. We reviewed the request and raised concerns about  projects that were scheduled to begin detailed design and software  development before, among other things, the enterprise architecture was  completed and the ELC was defined and implemented. Later that  December, the appropriations subcommittees approved IRS’ $33 million  funding measure but, in discussions and correspondence, directed IRS to  (1) expedite completion of the architecture and implementation of the ELC  and (2) explain in future expenditure plans how it plans to manage the risk  of performing detailed design or development work if the architecture is  not completed or the ELC is not implemented. Subsequently, IRS  reassessed its modernization program plans and decided to restructure the  program by scaling back its systems development efforts until it addressed  our concerns and put in place the requisite modernization management  capability.
On March 7, 2000, IRS submitted to the appropriations subcommittees its  second spending plan, which reflected these restructuring decisions and  sought to obligate about $176 million from ITIA. On March 31, 2000, we  briefed the subcommittee and subsequently reported that (1) the plan  satisfied the legislative conditions and was generally consistent with  recommendations contained in our earlier reports and (2) IRS met few of  the commitments in its first spending plan, even though it later received an  additional $33 million and nearly 5 months additional time to do so. We  stated that the key to success would be whether IRS effectively  implemented the second plan. We also stated that until IRS implemented  the plan, it would continue to lack key modernization and technical  controls.
In April 2000, the appropriations subcommittees approved IRS’ plan for  $148.4 million of the funds requested and underscored the need for IRS to  pursue its restructuring plans by, among other things, directing IRS to  establish modernization management capabilities and controls—including  completion and implementation of the blueprint and systems life cycle  methodology—before it began building systems.
Recognizing that it would fully obligate the $148.4 million before it was  ready to submit another spending plan, on August 25, 2000, IRS submitted  its second interim plan. This interim plan requested $32.8 million to carry  the modernization program into early fiscal year 2001.
section_title: IRS Satisfied Some, But Not All, of the Subcommittees’ Conditions
paragraphs: IRS did not fully satisfy all of the conditions that its appropriations  subcommittees established in their April 2000 letters releasing  modernization investment account funding. However, IRS has made  important progress on both modernization projects and initiatives to  address long-standing modernization management weaknesses. Our  assessment of IRS’ success in satisfying each condition is detailed below.
subsections: section_title: Condition 1: Adhere to the March 2000 Spending Plan as Approved and Funded or Seek Approval to Do Otherwise
paragraphs: IRS did not adhere to the approved and funded March 7, 2000, spending  plan and did not seek approval to deviate from the plan. IRS’ position is  that variances from the approved funding levels were small and inevitable  given the scale and complexity of the program and that because IRS is  closely managing the variances, they do not necessitate the subcommittees’  actions.
In sum, IRS varied from the approved spending levels for twelve program  projects and initiatives. These variances ranged in amount from  approximately $44,000 to $9,000,000. In our view, such variances are to be  expected given the projects’ and initiatives’ complexity and early stage in  the life cycle and the inherent uncertainty associated with  software/systems cost estimating.
section_title: Condition 2: Meet the Commitments Made in the March 7, 2000, Spending Plan
paragraphs: IRS did not meet its cost and schedule commitments on most projects and  initiatives in its March 7, 2000, spending plan. For example, Milestone III  for the Customer Account Data Engine (CADE) project slipped by 3  months, and the estimated cost for meeting Milestone III rose by about  $1.4 million (9.1 percent). Also, Milestone III for the STIR project slipped 2  months, and its cost increased about $1.4 million (17.0 percent).
In our view, these cost and schedule variances are to be expected because,  as we previously reported, the milestone commitments for most of the  initiatives in the March 2000 plan were not based on detailed work  breakdown structures and schedules. Rather, they were merely targets that  IRS had represented in its plan as achievable commitments. As a result,  these variances are not good measures of progress.
Most modernization initiatives, including key projects, have made  important progress since March 2000. For example, the CADE and  e-Services projects each completed the system planning and definition  phase of the ELC, including a preliminary business case showing a positive  return on investment, and both projects have met ELC criteria for  beginning preliminary design work.
However, one project, CAP, has been approved to begin the detailed design  and development phase (i.e., the system is being built) without sufficient  definition and without a compelling business case to justify treating it as a  near-term investment priority. Specifically, the CAP business case does not show a positive return on investment; the $150 million estimated total project cost does not include the cost to  define and build interfaces with projects that are yet to be defined (i.e.,  Integrated Financial Systems’ standard general ledger, CADE, and  STIR);
CAP business requirements are not yet sufficiently defined to verify
CAP was approved to begin the development phase with two important  conditions that could affect the system’s baseline requirements and  functions (and thus cost); and
CAP integration with other modernization projects is unclear because  CAP is not included in the integrated master schedule and monthly  program management reviews.
Another project, STIR, was granted approval to begin the preliminary  design phase without a risk-based approach to defining and economically  justifying its requirements (i.e. preliminary security risk assessment,  preliminary security certification package, and preliminary business case).  Such an approach, as discussed in our November 1999 guide on security  risk assessment practices of leading organizations, is a federal  requirement and a key element of successful organizations’ security risk  assessment programs.
section_title: Condition 3: Address Modernization Management Weaknesses and Establish the Capability to Build Systems
paragraphs: IRS has fully addressed two of the five modernization management  weaknesses cited by the subcommittees. Namely, it has hired a BSMO  executive, and it reports that 20 of its 22 task orders issued since June 2000  are performance based. We reviewed 3 key task orders and found that they  reflected the tenets of performance-based contracting.
IRS is also making progress in addressing other modernization  management weaknesses. For example, since March 2000, as part of the  ELC, it has defined processes, roles, responsibilities, etc. for implementing  selected Level 2 key process areas of the Software Engineering Institute  (SEI) Software Acquisition Capability Maturity Model  . IRS plans to train  staff and have all projects following these by the November 2000-to- January 2001 timeframe. In September 2001, IRS plans to conduct an  evaluation (via an independent assessor) to ensure compliance with SEI’s  Level 2 requirements. In addition, IRS has taken other steps to increase its  acquisition discipline, such as conducting monthly program management  reviews with the modernization contractor and establishing an integrated  master schedule to track the projects’ schedules and interdependencies.
In July 2000, IRS defined and baselined most parts of the ELC. Our review  of selected projects (CAP, CADE, and STIR) indicates that the ELC is  generally being followed. Further, IRS has defined IT investment  management controls and is in the process of incorporating them into the  ELC.
The initial release of IRS’ enterprise architecture was being drafted and  was not yet available for our review, however, some parts of the ELC are  still being developed and finalized (e.g., program control policies and  procedures, 75 to 80 change requests, legacy system impact supplement,  and enterprise architecture management supplement). While IRS did not  satisfy the September 30, 2000, commitments it made in the March 2000  plan for issuing the enterprise architecture and fully implementing the ELC,  it is making important progress and plans to complete both between  November 2000 and January 2001.
section_title: Condition 4: Establish More Reliable Cost and Schedule Estimates for the Initiatives Outlined in the March 2000 Plan
paragraphs: IRS has revised and validated its March 2000 spending plan cost and  schedule estimates to increase their reliability. According to IRS, it tasked  the contractor to develop, for each initiative, a detailed work breakdown  schedule of the tasks, deliverables, staff, and time needed to complete the  initiatives in accordance with the ELC. With the resulting staffing and time  requirements, the contractor applied its cost rates to determine cost and  schedule estimates and then submitted the estimates to IRS in task order  proposals. IRS validated these costs during the task order “definitization”  process by, among other things, comparing them to historical and current  contractor rates charged to IRS and other federal agencies (e.g., General  Services Administration). IRS then negotiated rates that could not be  validated. For two projects—CADE and Customer Communications—we  verified that IRS followed this process (although we did not specifically  evaluate the reliability of IRS’ cost validation).
section_title: Other Observations
paragraphs: IRS has made important progress in establishing its BSMO, although this  office is not yet fully operational. Specifically, the office is in place, staff  have been assigned, and roles, responsibilities, policies, and procedures  have been defined that include SEI Level 2 software acquisition processes.  However, IRS has not yet developed charters for the eight units (e.g., Architecture Management,  and Program Oversight) within BSMO, although IRS plans to do so by  the end of October 2000; completed training on BSMO roles, responsibilities, policies, and  procedures and the ELC, although IRS plans to do so between  November 2000 and January 2001; and filled 21 vacant positions, or 18 percent of total BSMO staffing levels,  including managers for program integration, program control, and  program planning and four staff for configuration management.
Until these tasks are completed, IRS will continue to report BSMO  readiness as a major program risk.
section_title: Conclusions
paragraphs: Although IRS has not fully met all the conditions specified by the  subcommittees, it has moved aggressively and made important progress  since March 2000 in advancing many projects and addressing  modernization management weaknesses. Nevertheless, until these  management weaknesses are fully addressed, key controls will be missing,  thereby increasing the risks that projects will not perform as intended  and/or cost more and take longer to complete. These risks are not as severe  early in a project life cycle when it is being planned, but they escalate as a  project moves into the detailed design and development phase of its life  cycle. Given that IRS plans show that several projects are scheduled to  begin detailed design and development within the next 6 months,  expeditious implementation of these program management controls is of  paramount importance.
Further, IRS’ CAP project has prematurely passed milestone III before  being economically justified and before addressing modernization  integration issues. Also, IRS’ STIR project is missing the requisite analysis  of security threats and vulnerabilities so that a meaningful risk profile can  be developed and cost effective system requirements to counter these risks  can be specified.
section_title: Recommendations for Executive Action
paragraphs: Because we have open recommendations to address IRS modernization  management weaknesses that remain applicable, we reemphasize to the  Commissioner of Internal Revenue that these recommendations should be  implemented before IRS begins building software-intensive systems.
In addition, we recommend that the Commissioner limit further investment  in CAP until IRS (1) demonstrates that CAP is of sufficient business value  to treat it as a near-term investment priority and (2) reports to the Senate  and House appropriations committees on how it is mitigating the risks  associated with beginning to build CAP before important program-level  management controls are fully implemented.
Further, we recommend that the Commissioner (1) direct the STIR project  to complete as soon as possible a security risk assessment and validate  STIR requirements against the risk assessment results and then (2) ensure  that STIR requirements and the proposed design solution are economically  justified through business case analysis.
section_title: Agency Comments
paragraphs: In commenting on a draft of this report, IRS’ Chief Information Officer  generally agreed with our findings and described, at a very high level,  actions since our September 22, 2000, briefing that are completed,  underway, and planned to address our recommendations. IRS stated that in  November 2000 it plans to report on these actions in more detail to its  Senate and House appropriations subcommittees. In closing, IRS stated  that it appreciated our overall assessment of the management of the  systems modernization program and that IRS has benefited from GAO’s  work.
We are sending copies of this report to Senator Max Baucus, Senator  Robert C. Byrd, Senator Orrin G. Hatch, Senator Joseph I. Lieberman,  Senator Daniel Patrick Moynihan, Senator William V. Roth, Jr., Senator Ted  Stevens, and Senator Fred Thompson, and to Representative Bill Archer,  Representative Dan Burton, Representative William J. Coyne,  Representative Stephen Horn, Representative Amo Houghton,  Representative David R. Obey, Representative Charles B. Rangel,  Representative Jim Turner, Representative Henry A. Waxman, and  Representative C.W. Bill Young, in their capacities as Chairmen or Ranking  Minority Members of Senate and House Committees and Subcommittees.  We are also sending copies to the Honorable Charles O. Rossotti,  Commissioner of Internal Revenue; the Honorable Lawrence H. Summers,  Secretary of the Treasury; and the Honorable Jacob J. Lew, Director of the  Office of Management and Budget. Copies will also be made available to  others upon request.
Should you or your staff have any questions on matters discussed in this  report, please contact me at (202) 512-6240. I can also be reached by e-mail  at hiter@gao.gov. Key contributors to this report are listed in appendix IV.
section_title: Briefing Slides From September 22, 2000, Briefing of Senate and House Appropriations Subcommittee Staff
subsections: section_title: Condition 1
paragraphs: F F R D C (M IT R E )
subsections: section_title: approved funding levels and categories specified in the April 2000 Senate and House responses to IRS’ March 7, 2000, plan.
paragraphs: P ro g ra m M a n a g e m e n t O ffic e ($ 3 2 4 )
section_title: • According to IRS, the
paragraphs: E L C E n h a n c e m e n t, M a in te n a n c e & F u lly D e p lo ym e n t E n te rp ris e A rc h ite c tu re a n d B lu e p rin t 2 0 0 0 C o n fig u ra tio n M a n a g e m e n t P o lic ie s a n d P ro c e s s e s ($ 1 ,6 1 7 ) ($ 3 1 0 ) ($ 8 4 4 ) variances could not be avoided given the size and complexity of the business systems modernization program.
B u s in e s s In te g ra tio n ($ 1 ,4 0 5 )
C R M E x a m (1 1 2 0 re p la c e m e n t)
S o lu tio n s D e ve lo p m e n t L a b ($ 1 ,3 9 3 )
Amountsintablearelistedinthousands($000).
section_title: • For two initiatives with the largest amount variance from
paragraphs: approved funding levels, IRS gave the following reasons why extra funds were needed:
Customer Communications - the costs for modifying legacy systems to interface with Customer Communications were omitted from IRS’ March 2000 spending plan.
Virtual Development Environment - changes to scope of projects (e.g., CADE) required additional capabilities.
section_title: Condition 2
paragraphs: and Funding ($000)
Date and Funding ($000)
Change ($000)
subsections: section_title: • These variances were to be expected because--as stated in
paragraphs: our briefing and report on IRS’ March 2000 plan1--the milestone commitments for most of the initiatives in the March plan were not based on detailed work breakdown structures and schedules, but rather were merely targets that IRS had represented in its plan as achievable commitments. As a result, these variances are not good measures of progress.
The milestone changes are consistent with the Commissioner’s stated position that initiatives will not be “schedule-driven.” Rather, they will be “content-driven” and will not be allowed to proceed past a major ELC milestone unless they are ready to do so.
TaxSystemsModernization:ResultsofReviewofIRS’March7,2000,ExpenditurePlan (GAO/AIMD-00-175, May 24, 2000)
section_title: • Most modernization initiatives have nevertheless made
subsections: section_title: Selected Projects
paragraphs: Completed ELC Milestone II work products and received Executive Steering Committee approval to proceed to Milestone III on August 8, 2000.
Prepared preliminary business case showing positive return-on-investment.
Issued performance-based task order to PRIME to develop necessary ELC work products to get Milestone III approval.
Per ELC, conducted interim systems requirements review and produced interim systems requirements report.
Per ELC, produced interim project management plan.
Issued performance-based task order to PRIME to develop necessary ELC work products to get Milestone III approval.
Completed ELC Milestone II work products and received Executive Steering Committee approval to proceed to Milestone III on August 8, 2000.
Prepared preliminary business case showing a positive return-on-investment.
Security Certification Package received an unqualified approval.
Exited ELC Milestone III and received Executive Steering Committee approval to proceed to Milestone IV.
Pilot on track for timely completion by September 28, 2000.
Issued performance-based task order to PRIME to develop ELC required workproducts to get Milestone IV/V approval. * AccordingtoTreasuryInspectorGeneralforTaxAdministration(TIGTA)
section_title: • However, one project, CAP,3 has been approved for post-
paragraphs: CAP is one of a collection of systems comprising IRS’ Integrated Financial System project. CAP is to provide tax receipt and receivable analysis and reporting. Standard general ledger and other financial/administrative reporting as required by federal management directives are to be provided by other future projects. determine impact of enterprise data warehouse architecture standards on CAP baseline. identify whether ongoing legacy enhancements to masterfile will create new interfaces for CAP.
CAP integration with other modernization projects is unclear because CAP is not included in the integrated master schedule and monthly program management reviews.
section_title: • Another project, STIR, was granted milestone II approval
paragraphs: without a risk-based approach to defining and economically justifying its requirements. Such an approach, as discussed in our November 1999 guide4 on security risk assessment practices of leading organizations, is a federal requirement and a key of element of successful organizations’ security risk assessment programs.
InformationSecurityRiskAssessments:PracticesofLeadingOrganizations(GAO/AIMD-00-33, November 1999).
IRS plans to address these issues before milestone III.
section_title: • BSMO Leadership
paragraphs: In March 2000, BSMO planned to hire a full-time business systems modernization executive.
In June 2000, IRS hired this executive.
These are Acquisition Planning, Solicitation, Requirements Development and Management, Project Management, Contract Tracking and Oversight, Evaluation, and Transition to Support.
subsections: section_title: • The BSMO plans to train staff and have all projects following
paragraphs: these by the November 2000-January 2001 timeframe.
The BSMO’s plans also includes evaluation in September 2001 by independent assessor to ensure compliance with SEI’s level 2 requirements.
The BSMO has also taken other steps to increase its acquisition discipline. For example, it and the PRIME contractor started conducting Monthly Program Management Reviews established an integrated master schedule to track the projects’ schedules and interdependencies.
However, neither of these two management steps included the CAP project.
section_title: • Defined IRS and contractor roles and responsibilities
paragraphs: In March 2000, IRS was in the process of defining IRS, PRIME, and other support contractor roles and responsibilities.
As part of plan for establishing BSMO, IRS has defined IRS and PRIME contractor roles/responsibilities. In doing so, IRS has clearly differentiated between its role as the acquirer and the PRIME’s role as the developer in such areas as program leadership, architecture management, acquisition management, and program oversight and assurance, quality assurance, testing, risk management, and requirements management.
IRS plans to implement these roles/responsibilities by December 2000.
IRS has not yet defined roles and responsibilities for other modernization support contractors (e.g., Integrated Support Contractor for CAP project development).
subsections: section_title: In March 2000, IRS planned to implement performance-based task orders.
paragraphs: Since then, IRS reports that 20 of its 22 task orders issued since June 2000, were performance-based.
Our review of 3 of these task orders showed that IRS was implementing the concepts of performance-based contracting.
section_title: • While IRS will not satisfy the September 30, 2000, commitment for
paragraphs: ELC implementation stated in the March 2000 plan, IRS has developed an ELC deployment plan to provide detailed training on ELC processes and procedures by the November 2000 to January 2001 timeframe.
Review of selected projects (CAP, CADE, and STIR) indicates that ELC is generally being followed. Exceptions reflect:
ELC tailoring whereby projects are allowed to delete applicability of selected work products.
CAP and STIR initially followed another life-cycle management methodology because the ELC was not yet available for use. CAP and STIR have since been subjected to ELC requirements.
section_title: In addition, IRS has defined IT investment management controls and is in the process of incorporating them into the ELC. The controls include the development of business case guidance and enforcement of business case management reviews. IRS also defined controls for:
paragraphs: business case assessment, portfolio prioritization, investment approval, investment monitoring, in-process evaluation, and post-implementation review.
As defined, IRS’ investment management approach appears consistent with our IT investment management framework.
While these processes have been defined and IRS has begun using the business case procedure, it has not yet fully implemented all investment management controls.
section_title: • Blueprint 2000/enterprise architecture completion and use
paragraphs: In March 2000, IRS had defined a high-level framework (consisting of approximately 60 notional work products) for developing its enterprise architecture and had begun to define “key concepts” that transcend individual architectural work products.
Since then, IRS has determined that it will develop and complete its enterprise architecture in 3 phases--referred to as Releases 1.0, 1.1, and 2.0. Release 1.0 is referred to as Blueprint 2000.
section_title: Enterprise Architecture Being Developed in Phases
paragraphs: Applications (e.g. collections, exam, etc.) (e.g. user authentication, data access, image access, etc.) (e.g. messaging services, networks, hardware, operating systems, database management systems, etc.)
subsections: section_title: Enterprise Architecture Being Developed in Phases
paragraphs: Applications Infrastructure (lower pyramid) defined the framework’s 60 work products and the process/management controls for populating these work products with the content associated with each release.
Management and Other Work Products 57-Current Production Environment Release Plan Description(1 - 3 years)
58-Near-Term Sequencing and Sequencing and Release Plan (4 - 6 years)
60-Long-Term Sequencing and Release Plan (7+ years)
section_title: • expanded its list of “key concepts” to 23. They include computing
paragraphs: platforms, backup/recovery, development environment and languages, data warehouse framework, and data base management. Nine have been completed, and IRS officials told us they plan to complete the remaining 14 by mid-November 2000. been drafting the 60 enterprise architecture products comprising Release 1.0. They are to be submitted for review to IRS business and other stakeholders by October 1, 2000. IRS estimates this review and approval process will take a month. IRS then plans to obtain Core Business Systems Executive Steering Committee approval in early November 2000. established structures and processes for developing, implementing, and monitoring the enterprise architecture. For example,
Program Architecture Integration Team - provides forum for identifying and resolving enterprise architecture issues raised by ongoing projects.
Program Integration Board - reviews projects at ELC milestones to ensure conformance with draft architecture work products and key concepts. required the PRIME to review the quality of each product to establish an enterprise architecture quality assurance function, and tasked the Federally Funded Research and Development Center (FFRDC) contractor (MITRE) with assessing release 1.0 completeness and adequacy.
section_title: Condition 4
paragraphs: It tasked the contractor to develop for each initiative a detailed work breakdown structure/schedule of the tasks, deliverables, staff, and time needed to complete initiatives in accordance with the ELC.
With the staffing and time requirements, the contractor applied its cost rates to determine how much the effort would cost and then submitted the cost and schedule estimates to IRS in a task order proposal. IRS validated these costs during the task order “definitization” process by, among other things, comparing them to historical and current contractor rates charged to IRS and other federal agencies (e.g., GSA) to assess their reasonableness.
subsections: section_title: • For two projects--CADE and Customer Communications--
paragraphs: we verified that IRS did follow this process.
section_title: Other Observations
subsections: section_title: Summary of IRS’ Interim Release Request for ITIA Funds
paragraphs: Proposed Modernization Initiatives Program Level Activities 4,567 (1,941)
Program Management Office ELC Enhancements, Maintenance, and Full Deployment Federally Funded Research and Development Contractor (MITRE) Management Reserve (324) (1,617) (2,559)
Enterprise Architecture and Blueprint 2000 Configuration Management Policies and Procedures Business Integration (310) (844)
Vision and Strategy, Tax Admininistration Vision and Strategy, Internal Management (1,405) (30)
Customer Communications Customer Relationship Management Exam (1120 Replacement)
Amountsintablearelistedinthousands($000).
Customer Account Data Engine (CADE)
Integrated Financial System (IFS)
Collections Subledger Tax Account Subledger Security And Technology Infrastructure Release (STIR) Enterprise Systems Management (ESM) Telecommunications Enterprise Strategic Program (TESP) Solutions Demonstration Lab (SDL) Virtual Development Environment (VDE) Enterprise Integration and Test Environment (EITE)
Customer Communications Customer Relationship Management Exam (1120 Replacement)
Amountsintablearelistedinthousands($000).
section_title: Objectives, Scope, and Methodology
paragraphs: Pursuant to the mandate in Treasury’s fiscal year 1998 and 1999  appropriations acts and requests by the Senate and House appropriations  subcommittees, our objectives were to (1) determine to what extent IRS  has satisfied the subcommittees’ conditions regarding the ITIA funds and  (2) provide any other observations about IRS’ management of the program.  The conditions specified by the subcommittees were: adhere to the March 7, 2000, spending plan as approved and funded or  seek approval to do otherwise; meet the commitments made in the March 7, 2000, spending plan; address modernization management weaknesses and establish the  capability to build systems by hiring a person to lead the business systems modernization office developing mature software acquisition capabilities, clearly defining and applying IRS and contractor roles and creating performance-based task orders, and fully implementing IRS’ system life cycle management  methodology—the Enterprise Life Cycle—and completing and using  its enterprise architecture—Blueprint 2000—to define, direct, and  control future modernization activities; and establishing more reliable cost and schedule estimates for the initiatives  in the March 7, 2000, plan.
To accomplish our objectives we took several steps. To understand the  scope and content of each, we reviewed IRS’ August 2000 interim ITIA  funding request and other IRS documentation associated with the  initiatives identified in the request. Then, to identify variances, we analyzed  the interim request in relation to the conditions specified in the Senate and  House responses to the March 7, 2000, spending plan. We compared  progress on selected program and project initiatives-as reported in the  request and other modernization documentation and supplemented by  interviews of IRS and contractor officials-against deliverables promised  and commitments made in the March 7, 2000, spending plan. The program  initiatives we compared were Blueprint 2000 and the ELC and the project  initiatives were CAP, CADE, and STIR. We selected (1) the Blueprint 2000  and ELC program initiatives because both are intended to address open  GAO recommendations and (2) the CAP, CADE, and STIR project initiatives  because our reviews of these projects were already under way for the  subcommittees. In addition, we analyzed relevant documentation  concerning the operational status of the Business System Modernization  Office (BSMO), such as plans, status reports, policies and procedures, and  descriptions of IRS and contractor roles and responsibilities. We also  analyzed progress in definitizing task orders and making them performance  based. To do this, we selected three task orders and compared them to  performance-based contracting criteria. The task orders selected were for  CADE, STIR, and the PRIME’s program management office. We selected  (1) the CADE and STIR task orders because the subcommittees had asked  us to review these two projects and (2) the program management office  task order to include one program-level task order in our scope.
We analyzed the process that IRS and the contractor undertook to revise  and validate cost and schedule estimates in the March 2000 spending plan  and verified for two projects-CADE and Customer Communications- whether IRS adhered to its process. We selected these projects because  they had the highest funding requirements. We collaborated with the  Treasury Inspector General for Tax Administration (TIGTA) to avoid  duplication of effort in reviewing program and project initiatives and  incorporated the TIGTA results in this briefing where appropriate.  Initiatives addressed by TIGTA included the Customer Communications  and e-Services projects, ELC, BSMO, and Blueprint 2000.
In order to meet the 30-day reporting requirement, we did not  independently validate planned initiatives’ cost estimates or confirm  through review of system and project management documentation the IRS  information provided on the initiatives’ content and progress. We  performed our work from August through mid-September 2000 in  accordance with generally accepted government auditing standards.
section_title: Comments From the Internal Revenue Service
section_title: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Acknowledgments
paragraphs: In addition to those named above, other key contributors were Bernard  Anderson, Lorne Dold, Nancy DeFrancesco, Timothy Hopkins, Larry Korb,  Karlin Richardson, Jay Pelkofer, Sherrie Russ, Tuyet Quan Thai, Aaron  Thorne, and Teresa Tucker.
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