December 09, 1998
IRS Moves Forward with Computer Modernization,
Selects Prime Contractor
WASHINGTON - The Internal Revenue Service took a major step Wednesday toward overhauling its antiquated computer systems by
awarding a contract to a team of companies that will help modernize
the agency's technology.
The IRS selected a consortium headed by Computer Sciences
Corporation to work in a multi-year partnership with the agency on
its Prime Systems Integration Services Contract, or Prime. The goal
will be creating new IRS technology systems that will improve
taxpayer service, add new security features and carry the agency
into the new century.
"To improve service, the IRS needs to break out of its
technological time warp from the 1950s and 1960s," said Charles
Rossotti, Commissioner of Internal Revenue. "In the long run, this
new partnership will help us replace archaic technology with the
modern tools we need to deliver top-quality service to taxpayers."
Paul Cosgrave, IRS Chief Information Officer, said the
partnership of experts from the private sector and the public sector
provides the best approach for the mammoth task of updating the
agency's computer systems.
"We'll work hand-in-hand with the private sector to create a
state-of-the-art system that will keep pace with the needs of the
nation and individual taxpayers," Cosgrave said.
"This is among the many important steps taken by Commissioner
Rossotti and the IRS management team to build a modernized IRS,"
said Treasury Secretary Robert Rubin. "These efforts will begin to
transform business technology and fully integrate IRS systems and
The Prime contractor could work with the IRS for 10-15 years to
anchor the sweeping technology modernization project.
Computer Sciences leads the winning team, which includes
Northrup Grumman, KPMG Peat Marwick, UNISYS, IBM, Lucent
Technologies and SAIC.
"This was a tough decision to make, but we felt this group
offered the best match for what we need for such an important
endeavor," Cosgrave said.
A team headed by Lockheed Martin also competed for the Prime
contract. Cosgrave noted the IRS has several other ongoing projects
with Lockheed Martin, and he said he looks forward to continuing
that productive working relationship in the future.
The award culminates more than a year of preparation. During the
past six months, IRS administrators pored over the contract
During the next six months, the Prime contractor and the IRS
will work together to start putting the technology modernization
project in motion. Their initial agenda includes refining the
management structure and putting the pieces in place for the
project's early stages.
"This technology modernization project won't happen overnight,
but it will ultimately be a springboard for us to provide top-flight
taxpayer service," Rossotti said. "in many areas, improved service
hinges directly on replacing outdated technology."
Following the six-month start-up period, work on the first
technology projects will get underway. Some of the early projects
targeted for work in 1999 and 2000 include:
Improving service for people contacting the IRS by phone or the
Internet. Better technology will give taxpayers better and
quicker access to tax topics, tax forms and IRS Customer Service
Expanding projects involving Electronic Tax Administration,
including more electronic tax-filing capabilities and more
access to paying taxes electronically.
Designing a new generation of work stations that allow IRS
workers to quickly retrieve tax records electronically while
guaranteeing the security and privacy of taxpayers.
"In time, this project will touch on every facet of the IRS,"
Cosgrave said. "It will cover everything from updating our core data
systems for tax records to helping process taxpayer refund checks."
Rossotti emphasized that it will take time for the full
technological benefits to emerge.
"This is a massive job we are about to undertake," Rossotti
said. "People shouldn't expect to see changes from this project
immediately. But for the long term, it will replace inefficient
technology from the 1960s with systems that will improve service to
the taxpayers and the nation."
The project will provide the technological foundation to assist
the restructuring of the IRS into four operating divisions, which is
designed to improve service to taxpayers.
"The technology modernization program will directly support the
revamping of all IRS business operations," Rossotti said.
The total cost for the Prime contract's lifespan has not yet
been determined. For the project's first six months, the IRS has set
aside $10.5 million. In addition, Congress has $506 million in a
special Information Technology Investment Account that the IRS plans
to use for the initial stages of the Prime contract.
Cosgrave and Rossotti emphasized that each part of the
multi-pronged project will be carefully evaluated for business
benefits, technological risks and potential cost before being given
the green light to proceed. An IRS executive steering committee will
oversee the process.
"We want to do this carefully; we want to do this right,"
Spearheading the project will be Cosgrave, who joined the IRS
team in July. He brings 25 years of private-sector experience with
managing large-scale technology programs. Cosgrave also has
recruited several senior technology executives to strengthen IRS
"Overhauling our system is a daunting task," Rossotti said. "But
we have assembled a top- notch team of computer experts inside and
outside the IRS to tackle this project. This marriage of the private
and public sectors offers the best approach for our new computer
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