InformationWeek
Defining The Business Value Of Technology
Following The IRS Money Trail
Agency offers an account of its spending on the $2.8 billion modernization programBy Edward Cone
Issue date: April 15, 1996
What has the IRS bought with the approximately $2.8 billion spent so far on the Tax System's Modernization program? A fair amount of hardware and a whole lot of labor hours. "They've spent a lot on 'soft' systems development," says Marjory Blumenthal, a staff director at the National Research Council. Adds Hank Philcox, the IRS' former CIO, "There's a lot of top-down design money involved."
In fact, more than 500 people work on the tax agency's modernization project at systems integrator TRW (company officials refused several requests for comments). More than 100 others labor on the project at the Illinois Institute of Technology in Chicago, which bid successfully to be TSM's Federally Funded Research and Development Center. Former acting CIO Wally Hutton says the IRS spent nearly $350 million for some 2,700 staff-years with contractors in fiscal 1995 alone.
Overall, approximately $120 million has gone to training and travel, $560 million to contract costs (mostly staff hours), and $647 million to salaries and personnel costs. Combined totals for off-the-shelf software, telecom gear, and computer hardware come to another $570 million.
One tangible success of TSM is the IRS' new telecom infrastructure, which is necessary to support promised advances such as electronic filing. The cost for routers, switches, and other equipment, along with purchased and leased phone lines, comes to about $140 million. Its operating expenses to date have been $190 million.
Another project with visible results: consolidating the IRS' 12 computer centers into three modern installations that will house the agency's master database. Between these mainframes and the desktop will be a client-server architecture composed of workstations and LANs served by highly secure file servers. Key to this integrated system are two software projects, the Integrated Case Processing and Integrated Collections System (ICS) initiatives. They'll provide point-and-click functionality and menu-driven choices for users who are shielded from the intricacies of the overall system.
IRS officials say the ICS software, written with Loral-a defense contractor and integrator-is completed and will be deployed over the next three years. Successful deployment would be a major accomplishment for the IRS.
Also, critics argue that the IRS should rely more on outsourced development and des ign. While pointing to instances where it has relied on contractors, the IRS still guards its internal development prerogatives. Says Hutton, "Development work has to be done by organizations at a higher plane than we are."
See "On The Web, Outsiders Helped" or return to " Government Systems: The Mess At IRS "
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