IRS Orders Review of $3-Billion Contract
The Internal Revenue Service ordered a review of a $3-billion computer modernization contract awarded to a group headed by El Segundo-based Computer Sciences Corp. on Friday after a new system to store tax information was delayed until 2004.
“This most recent setback is a serious matter,” said IRS Commissioner Mark W. Everson, who ordered a review by the Software Engineering Institute at Carnegie Mellon University.
Everson’s announcement caps a growing sense of disappointment within the agency about the execution of the more than 4-year-old contract by CSC and other contractors, said Larry Levitan, chairman of the IRS Oversight Board. The other contractors include Lucent Technologies Inc., IBM Corp., Northrop Grumman Corp. and Science Applications International Corp.
Levitan called the delayed project, the Customer Account Data Engine -- which is just one part of the contract -- the linchpin of the agency’s efforts to overhaul its 50-year-old magnetic tape-based system, which stores information on more than 200 million taxpayers.
“It is safe to say the performance of the prime contractor has been extremely disappointing,” said Levitan, whose nine-member commission helps draft the agency’s budget and plan its strategy.
CSC and its team beat out a group led by Lockheed Martin Corp. for the 15-year contract in 1998.
At the time, the IRS called the modernization effort “the single largest systems integration undertaking in the world.”
The Customer Account Data Engine project, which Levitan said was being handled primarily by IBM, will help deliver faster refunds to taxpayers, including daily posting of transactions and updating of accounts. The first 6 million taxpayers in the master file -- those who file the simplest 1040EZ tax form -- were supposed to have been integrated with the new program in 2001.
CSC spokeswoman Janet Herin didn’t return a phone call seeking comment. Jeffrey Trinca, a lobbyist at Van Scoyoc Associates who handles government relations for the contractor, said the major problem was that the program had an error rate that was too high for the IRS.
It would take several months to fix the glitch and reduce the number of errors, he said.
Shares of Computer Sciences rose $1.45 to close at $39.70 on the New York Stock Exchange before the review announcement by the IRS.
