December 5, 2021

News

News Network

Information Technology: Cost and Schedule Performance of Selected IRS Investments

15 min read
<div>What GAO Found The Internal Revenue Service (IRS) reported that the five investments GAO reviewed met most of the performance goals set by the agency for fiscal years 2019 and 2020. Specifically, IRS reported that most of the three investments in development were within 10 percent of performance goals, a variance the Office of Management and Budget considers not to be significant. An exception was the Customer Account Data Engine (CADE) 2, a program intended to modernize tax processing, that reportedly spent about 15 percent less than budgeted for 2020. For the two investments in operations and maintenance, IRS reported that for fiscal years 2019 and 2020 one investment met all five operational performance goals established by the agency, while the other met three of five goals in fiscal year 2019 and four of five in fiscal year 2020. While CADE 2 had lower reported costs than expected for 2020 and was within 10 percent of schedule goals for 2019 and 2020, its longer term performance and outlook are troubling. IRS began developing CADE 2 in 2009 to replace its 60-year-old Individual Master File (IMF)—IRS's authoritative data source for individual tax account data. Since 2009, IRS has revised the program's cost, schedule, and scope goals on numerous occasions, including seven times between 2016 and 2019. Accordingly, a key major program milestone for replacing selected IMF functions, known as transition state 2, has slipped 9 years—from 2014 to 2023. Further, CADE 2 is now expected to replace core functions of IMF, rather than the entire system. The CADE 2 delays and IRS's continued use of IMF are troubling given, that IMF (1) is one of the oldest systems in the federal government; (2) has software written in an archaic language that IRS stated is no longer taught in school; and (3) is supported by a workforce with specialized skills that are increasingly harder to find. In June 2021, IRS reported that it planned to replace and fully retire IMF by 2030. Accordingly, IRS will continue to face IMF challenges for several more years. For its agency-wide modernization plan, IRS reported completing most of its activities intended for fiscal years 2019 and 2020 within cost and on or ahead of schedule. The updated plan identified 59 activities for completion in fiscal years 2019 and 2020. IRS reported that, by the end of fiscal year 2020, it had completed 54 of the 59 activities early or on schedule and the remaining five activities 3 to 7 months later than initially planned. Regarding cost, IRS reported that it spent $9 million less than the $300 million planned for fiscal year 2019 and $19.9 million less than the $271 million planned for fiscal year 2020. To respond to the pandemic, IRS took a number of information technology (IT)-related actions to maximize telework capabilities for its employees, including deploying IT equipment, such as laptops, and upgrading its network infrastructure bandwidth. For fiscal year 2020, IRS spent $104 million for these actions from emergency appropriations included in pandemic-related legislation. According to IRS officials, the long-term impact of sustaining an increased level of telework on the budget had not been determined. In contrast, IRS said the actions to maximize telework capabilities delayed plans for IT modernization and operations. For example, IRS reported that staffing resources initially allocated for CADE 2 had been reassigned to support COVID-19 responsibilities, resulting in a 7-month delay in the scheduled completion of key development activities. Why GAO Did This Study IRS relies extensively on IT investments to annually collect more than $3.5 trillion in taxes, distribute more than $450 billion in refunds, and carry out its mission of providing service to America's taxpayers in meeting their tax obligations. For fiscal year 2020, the agency reported spending approximately $2.8 billion for these investments. The Joint Explanatory Statement accompanying the Financial Services and General Government Appropriations Act, 2020 included a provision for GAO to annually review the status of IRS's IT investments. GAO's specific objectives were to (1) summarize IRS's reported performance for selected IT investments, including CADE 2; (2) identify IRS's reported progress in implementing its 2019 IT modernization plan; and (3) identify the IT-related actions IRS has taken to maximize telework and operate during the COVID-19 pandemic, and any impacts of those actions. GAO obtained IRS's reported performance information for a nonprobability sample of five investments, and compared performance to agency targets. GAO also compared modernization activities that IRS reported completing to those identified in the agency's 2019 IT modernization plan. Further, GAO reviewed agency documentation to identify reported IT actions taken to continue to operate during the pandemic and reported associated impacts. GAO also interviewed cognizant IRS officials. For more information, contact David B. Hinchman at (214) 777-5719 or hinchmand@gao.gov.</div>

What GAO Found

The Internal Revenue Service (IRS) reported that the five investments GAO reviewed met most of the performance goals set by the agency for fiscal years 2019 and 2020. Specifically, IRS reported that most of the three investments in development were within 10 percent of performance goals, a variance the Office of Management and Budget considers not to be significant. An exception was the Customer Account Data Engine (CADE) 2, a program intended to modernize tax processing, that reportedly spent about 15 percent less than budgeted for 2020. For the two investments in operations and maintenance, IRS reported that for fiscal years 2019 and 2020 one investment met all five operational performance goals established by the agency, while the other met three of five goals in fiscal year 2019 and four of five in fiscal year 2020.

While CADE 2 had lower reported costs than expected for 2020 and was within 10 percent of schedule goals for 2019 and 2020, its longer term performance and outlook are troubling. IRS began developing CADE 2 in 2009 to replace its 60-year-old Individual Master File (IMF)—IRS’s authoritative data source for individual tax account data. Since 2009, IRS has revised the program’s cost, schedule, and scope goals on numerous occasions, including seven times between 2016 and 2019. Accordingly, a key major program milestone for replacing selected IMF functions, known as transition state 2, has slipped 9 years—from 2014 to 2023. Further, CADE 2 is now expected to replace core functions of IMF, rather than the entire system. The CADE 2 delays and IRS’s continued use of IMF are troubling given, that IMF (1) is one of the oldest systems in the federal government; (2) has software written in an archaic language that IRS stated is no longer taught in school; and (3) is supported by a workforce with specialized skills that are increasingly harder to find. In June 2021, IRS reported that it planned to replace and fully retire IMF by 2030. Accordingly, IRS will continue to face IMF challenges for several more years.

For its agency-wide modernization plan, IRS reported completing most of its activities intended for fiscal years 2019 and 2020 within cost and on or ahead of schedule. The updated plan identified 59 activities for completion in fiscal years 2019 and 2020. IRS reported that, by the end of fiscal year 2020, it had completed 54 of the 59 activities early or on schedule and the remaining five activities 3 to 7 months later than initially planned. Regarding cost, IRS reported that it spent $9 million less than the $300 million planned for fiscal year 2019 and $19.9 million less than the $271 million planned for fiscal year 2020.

To respond to the pandemic, IRS took a number of information technology (IT)-related actions to maximize telework capabilities for its employees, including deploying IT equipment, such as laptops, and upgrading its network infrastructure bandwidth. For fiscal year 2020, IRS spent $104 million for these actions from emergency appropriations included in pandemic-related legislation. According to IRS officials, the long-term impact of sustaining an increased level of telework on the budget had not been determined. In contrast, IRS said the actions to maximize telework capabilities delayed plans for IT modernization and operations. For example, IRS reported that staffing resources initially allocated for CADE 2 had been reassigned to support COVID-19 responsibilities, resulting in a 7-month delay in the scheduled completion of key development activities.

Why GAO Did This Study

IRS relies extensively on IT investments to annually collect more than $3.5 trillion in taxes, distribute more than $450 billion in refunds, and carry out its mission of providing service to America’s taxpayers in meeting their tax obligations. For fiscal year 2020, the agency reported spending approximately $2.8 billion for these investments.

The Joint Explanatory Statement accompanying the Financial Services and General Government Appropriations Act, 2020 included a provision for GAO to annually review the status of IRS’s IT investments. GAO’s specific objectives were to (1) summarize IRS’s reported performance for selected IT investments, including CADE 2; (2) identify IRS’s reported progress in implementing its 2019 IT modernization plan; and (3) identify the IT-related actions IRS has taken to maximize telework and operate during the COVID-19 pandemic, and any impacts of those actions.

GAO obtained IRS’s reported performance information for a nonprobability sample of five investments, and compared performance to agency targets. GAO also compared modernization activities that IRS reported completing to those identified in the agency’s 2019 IT modernization plan. Further, GAO reviewed agency documentation to identify reported IT actions taken to continue to operate during the pandemic and reported associated impacts. GAO also interviewed cognizant IRS officials.

For more information, contact David B. Hinchman at (214) 777-5719 or hinchmand@gao.gov.

More from:

News Network

  • Secretary Blinken’s Meeting with South African Foreign Minister Pandor
    In Crime Control and Security News
    Office of the [Read More…]
  • Readout of Deputy Attorney General Lisa O. Monaco’s First Day
    In Crime News
    Today, Lisa O. Monaco was sworn in as the 39th Deputy Attorney General (DAG) of the United States. She returns to the Department of Justice where she first arrived as an intern 26 years ago, and went on to hold a variety of leadership roles at both the Department and the FBI. DAG Monaco held a series of meetings with DOJ staff and received briefings on the January 6th Capitol Attack investigation and on national security. In an all hands meeting with her immediate staff, DAG Monaco reiterated her commitment to reaffirming the Department’s foundational mission and core values, pursuing the Constitution’s promise of equal justice, and ensuring the safety of all who call America home. Late in the day she sent an email to the DOJ workforce thanking them for their dedication, and conveying how honored she is to serve alongside them.   
    [Read More…]
  • Strengthening Transatlantic Ties with Georgia
    In Crime Control and Security News
    Office of the [Read More…]
  • Forced Labor Imports: DHS Increased Resources and Enforcement Efforts, but Needs to Improve Workforce Planning and Monitoring
    In U.S GAO News
    Since 2016, U.S. Customs and Border Protection (CBP), within the Department of Homeland Security (DHS), has increased its resources to enforce a prohibition on importing goods made with forced labor, but has not determined its workforce needs. CBP formed the Forced Labor Division in 2018 to lead its efforts, and increased expenditures for the division from roughly $1 million in fiscal year 2018 to $1.4 million in fiscal year 2019. However, CBP has not assessed and documented the staffing levels or skills needed for the Forced Labor Division. For example, the division suspended some ongoing investigations due to a staff shortage and has plans to expand and train its workforce; however, the division has not assessed the number, type, locations, or specialized skills of positions it needs to achieve programmatic results. Without assessing its workforce needs, the division lacks reasonable assurance that it has the right number of people, with the right skills, in the right places. CBP has increased forced labor investigations and civil enforcement actions, but managers lack complete and consistent data summarizing cases. CBP detained shipments under 13 Withhold Release Orders (WRO) from 2016 through 2019, as shown in the figure below. However, the Forced Labor Division uses incomplete and inconsistent summary data to monitor its investigations. For example, data were missing on the sources of evidence collected for almost all active cases. Incomplete and inconsistent summary data on the characteristics and status of cases may hinder managers' effective monitoring of case progress and enforcement efforts. Figure: U.S. Customs and Border Protection (CBP) Forced Labor Withhold Release Orders, 2016 through 2019 With regard to criminal violations, DHS's U.S. Immigration and Customs Enforcement (ICE) has increased its resources to investigate allegations of forced labor, including those related to U.S. imports. ICE coordinates criminal investigations of forced labor, conducted in the U.S. and abroad. ICE reported spending about $40 million on forced labor investigations in fiscal year 2019, an increase of over 50 percent since 2016. Forced labor investigations often involve a range of criminal violations, including violations that are not related to the importation of goods. As such, reported expenditures include costs for cases on related issues, such as human trafficking. Forced labor is a global problem in which individuals are exploited to perform labor or services. The International Labour Organization estimates that forced labor generates profits of $150 billion a year globally. CBP is responsible for enforcing Section 307 of the Tariff Act of 1930, which prohibits the importation of goods made with forced labor. CBP has authority to detain shipments when information indicates that forced labor produced the goods. ICE is responsible for investigating potential crimes related to forced labor, and importers may be subject to prosecution. GAO was asked to review the status of DHS resources for implementing the Section 307 prohibition on forced labor imports, following an amendment of the law in 2016. This report examines (1) the extent to which CBP assessed agency needs for the enforcement of the prohibition on forced labor imports, (2) the outcome of CBP enforcement activities and monitoring of such efforts, and (3) ICE resources for investigations on forced labor. GAO reviewed CBP and ICE documents and data, and interviewed agency officials. This is a public version of a sensitive report GAO issued in July 2020. Information that CBP deemed sensitive has been omitted. GAO is making three recommendations, including that CBP assess the workforce needs of the Forced Labor Division, and improve its forced labor summary case data. CBP concurred with all three recommendations. For more information, contact Kimberly Gianopoulos at (202) 512-8612 or gianopoulosk@gao.gov.
    [Read More…]
  • Owner of Food Service Firm Operating in Government Buildings Throughout the D.C. Area Sentenced to Prison for Payroll Tax Fraud
    In Crime News
    A Potomac, Maryland, owner of companies providing food services in government buildings was sentenced to 21 months imprisonment for not paying more than $10 million in employment and sales tax, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and Acting U.S. Attorney Michael R. Sherwin for the District of Columbia.
    [Read More…]
  • Follow Sentinel-6 Michael Freilich in Real Time As It Orbits Earth
    In Space
    With NASA’s Eyes [Read More…]
  • Two Texas Men Plead Guilty in Odometer Fraud Scheme
    In Crime News
    Two Texas men pleaded guilty today to for their roles in an odometer tampering scheme.
    [Read More…]
  • Four Ohio Individuals Charged with Gambling and Tax Offenses
    In Crime News
    A federal grand jury in Cleveland, Ohio, returned a superseding indictment on May 13, 2021, that was unsealed yesterday, charging three Ohio men and one woman with conspiring to operate illegal gambling businesses and to defraud the IRS, among other criminal offenses.
    [Read More…]
  • Justice Department Announces $5.3 Million in Awards to Support Operation Legend
    In Crime News
    At a roundtable with law [Read More…]
  • The Jones/Hill Joint Venture
    In U.S GAO News
    A joint venture protested the solicitation cancellation of a Department of the Navy contract for base operations and support services, contending that the Navy's (1) study resulting in its decision to cancel the solicitation was biased by a conflict of interest, (2) study was unjustified, (3) in-house management plan was misevaluated, and (4) assertion that in-house performance was comparable to contracted performance was unreasonable. GAO held that the Navy's study was flawed in several areas and could not be used as a reason to cancel the solicitation. Accordingly, the protest was sustained and GAO recommended that the Navy (1) issue a new solicitation drafted by individuals who will not also be drafting the in-house management plan, (2) prepare a new management plan with supporting documentation, (3) present the new plan for private sector solicitation, and (4) reimburse the protester for all expenses associated with filing the protest.
    [Read More…]
  • DRL Strengthening Democracy and Human Rights in Thailand
    In Human Health, Resources and Services
    Bureau of Democracy, [Read More…]
  • Deputy Secretary Sherman’s Meeting with Pakistani Foreign Minister Qureshi
    In Crime Control and Security News
    Office of the [Read More…]
  • Louisville Gas & Electric Company to Permanently Limit Harmful Air Pollution
    In Crime News
    In a proposed consent decree lodged today in U.S. District Court, Louisville Gas & Electric Company (LG&E) has agreed to permanent emission limits for the sulfuric acid mist that it emits from its Mill Creek Station, located in Jefferson County, Kentucky.
    [Read More…]
  • Post-Government Employment Restrictions: DOD Could Further Enhance Its Compliance Efforts Related to Former Employees Working for Defense Contractors
    In U.S GAO News
    What GAO Found Situations in which senior and acquisition officials leave the Department of Defense (DOD) and go to work for defense contractors can lead to conflicts of interest and affect public confidence in the government. There are federal laws that place limitations on the employment of former DOD officials. The 14 major defense contractors GAO reviewed hired about 1,700 recent former DOD senior civilian and military officials, such as a general or admiral, or former acquisition officials (see table). 2019 Employment of Former Department of Defense (DOD) Personnel by the 14 Contractors GAO Reviewed Category of former DOD personnel potentially subject to post-government employment restrictions Number of personnel who left DOD service from 2014 through 2019 Number employed in 2019 by the 14 contractors GAO reviewed Military and civilian senior or acquisition officials 100,660 1,718 All other military and civilian employees 1,397,222 35,314 Total 1,497,882 37,032 Source: GAO analysis of DOD and Internal Revenue Service data. | GAO-21-104311 GAO found that DOD has improved certain practices to help ensure compliance with post-government employment (PGE) restrictions, including: processes for issuing and maintaining ethics opinion letters (written opinions DOD provides to its former officials seeking private sector employment), and training to increase DOD employee awareness about and understanding of PGE restrictions. In 2011, DOD modified its acquisition regulations to require that contractors—when submitting proposals in response to DOD contract solicitations—represent their employees' compliance with several PGE restrictions. DOD has not considered incorporating a recent restriction on lobbying activities into that regulation. DOD officials noted that the restriction was not identified for potential regulatory action when it was enacted, and they have not considered doing so. Instead, DOD has issued guidance to defense personnel informing them of their responsibilities. However, without assessing whether to update the regulation to require that contractors represent their employees' compliance with the lobbying provision, DOD may be missing an opportunity to create a shared sense of accountability between the employees and the contractors who hire them, and a means of ensuring that DOD does not do business with companies whose employees violate the lobbying restriction with their employers' knowledge. The 14 defense contractors GAO reviewed reported that they use various methods to comply with PGE restrictions. GAO found that the specific practices differed by type of contractor. Contractors that develop and produce weapon systems reported having more practices in place to promote compliance with PGE restrictions than did contractors that generally provide commercial products and services. Why GAO Did This Study Each year, civilian and military personnel leave DOD and go to work for contractors that do business with DOD. These individuals are potentially covered by laws restricting their new employment activities. The laws—some of which include penalties for violations—seek in part to protect against conflicts of interest and to promote public trust in the integrity of the government's decision-making processes, which facilitate the award of contracts worth hundreds of billions of dollars annually. The conference report accompanying the National Defense Authorization Act for Fiscal Year 2020 included a provision for GAO to update its 2008 report on major defense contractors' recent employment of former DOD officials. This report (1) identifies the extent to which major defense contractors employed potentially covered ex-DOD officials in 2019, and (2) examines practices DOD and contractors use related to contractors hiring former DOD officials. GAO reviewed and surveyed 14 selected defense contractors with obligations above a certain dollar threshold. GAO also reviewed DOD documentation, and interviewed agency officials and contractor representatives.
    [Read More…]
  • Alice man admits to distributing meth
    In Justice News
    A 29-year-old local [Read More…]
  • Two Former Correctional Officers Charged with Accepting Bribes and Smuggling Contraband into Federal Prison
    In Crime News
    As part of the Justice Department’s continuing efforts against prison corruption, a federal grand jury in the District of Kansas returned two indictments on Sept. 22 charging two former correctional officers with smuggling drugs and other contraband into Leavenworth Detention Center.
    [Read More…]
  • Department Renews Charter of Overseas Schools Advisory Council
    In Crime Control and Security News
    Office of the [Read More…]
  • Comments Invited on Regulations for Bankruptcy Trustee Payments
    In U.S Courts
    The bench, bar, and public have been asked to provide comments on proposed interim regulations for the administration of a new payment for trustees serving in Chapter 7 bankruptcy cases under the Bankruptcy Administration Improvement Act of 2020. The comment period runs from Aug. 30, 2021 to Sept. 17, 2021.
    [Read More…]
  • Department of Justice and Partner Departments and Agencies Conduct Coordinated Actions to Disrupt and Deter Iranian Malicious Cyber Activities Targeting the United States and the Broader International Community
    In Crime News
    Unsealing of [Read More…]
  • Medicare Part B: Payments and Use for Selected New, High-Cost Drugs
    In U.S GAO News
    Hospital outpatient departments perform a wide range of procedures, including diagnostic and surgical procedures, which may use drugs that Medicare considers to function as supplies. If the drug is new, and its cost is high relative to Medicare's payment for the procedure, then hospitals can receive a separate “pass-through” payment for the drug in addition to Medicare's payment for the procedure. These pass-through payments are in effect for 2 to 3 years. When the pass-through payments expire, Medicare no longer pays separately for the drug, and payment for the drug is “packaged” with the payment for the related procedure. The payment rate for the procedure does not vary by whether or not the drug is used. Medicare intends this payment rate to be an incentive for hospitals to furnish services efficiently, such as using the most cost-efficient items that meet the patient's needs. Examples of Types of Drugs that Medicare Considers to Function as Supplies GAO's analysis of Medicare data showed that higher payments were associated with six of seven selected drugs when they were eligible for pass-through payments versus when their payments were packaged. For example, one drug used in cataract removal procedures was eligible for pass-through payments in 2017. That year, Medicare paid $1,824 for the procedure and $463 for the drug pass-through payment—a total payment of $2,287. If a hospital performed the same cataract removal procedure when the drug was packaged the following year, there was no longer a separate payment for the drug. Instead, Medicare paid $1,921 for the procedure whether or not the hospital used the drug. Of the seven selected drugs, GAO also reviewed differences in use for four of them that did not have limitations on Medicare coverage during the time frame of GAO's analysis, such as coverage that was limited to certain clinical trials. GAO found that hospitals' use of three of the four drugs was lower when payments for the drugs were packaged. This was consistent with the financial incentives created by the payment system. In particular, given the lower total payment for the drug and procedure when the drug is packaged, hospitals may have a greater incentive to use a lower-cost alternative for the procedure. Hospitals' use of a fourth drug increased regardless of payment status. The financial incentives for that drug appeared minimal because the total payment for it and its related procedure was about the same when it was eligible for pass-through payments and when packaged. Other factors that can affect use of the drugs include the use of the drugs for certain populations and whether hospitals put the drugs on their formularies, which guide, in part, whether the drug is used at that hospital. The Department of Health and Human Services reviewed a draft of this report and provided technical comments, which GAO incorporated as appropriate. Medicare makes “pass-through” payments under Medicare Part B when hospital outpatient departments use certain new, high-cost drugs. These temporary payments are in addition to Medicare's payments for the procedures using the drugs. They may help make the new drugs accessible for beneficiaries and also allow Medicare to collect information on the drugs' use and costs. The Consolidated Appropriations Act, 2018 included a provision for GAO to review the effect of Medicare's policy for packaging high-cost drugs after their pass-through payments have expired. This report describes (1) the payments associated with selected high-cost drugs when eligible for pass-through payments versus when packaged, and (2) hospitals' use of those drugs when eligible for pass-through payments versus when packaged. GAO reviewed federal regulations on pass-through payments and Medicare payment files for all seven drugs whose pass-through payments expired in 2017 or 2018 and that were subsequently packaged. All of these drugs met Medicare's definition for having a high cost relative to Medicare's payment rate for the procedure using the drug. GAO also reviewed Medicare claims data on the use of the drugs for 2017 through 2019 (the most recent available). To supplement this information, GAO also interviewed Medicare officials, as well officials from 11 organizations representing hospitals, physicians, and drug manufacturers, about payment rates, use, reporting, and clinical context for the drugs. For more information, contact James Cosgrove at (202) 512-7114 or cosgrovej@gao.gov.
    [Read More…]

Crime

Network News © 2005 Area.Control.Network™ All rights reserved.