Business Systems Modernization:

IRS Needs to Complete Recent Efforts to Develop Policies and Procedures to Guide Requirements Development and Management

GAO-06-310: Published: Mar 20, 2006. Publicly Released: Apr 19, 2006.

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The Internal Revenue Service's (IRS) effort to modernize its tax administrative and financial systems--Business Systems Modernization (BSM)--has suffered delays and cost overruns due to a number of factors, including inadequate development and management of requirements. Recognizing these deficiencies, IRS created a Requirements Management Office (RMO) to establish policies and procedures for managing requirements. GAO's objectives were to assess (1) whether the office has established adequate requirements development and management policies and procedures and (2) whether BSM has effectively used requirements development and management practices for key systems development efforts.

BSM does not yet have adequate policies and procedures in place to guide its systems modernization projects in developing and managing requirements. In January 2006, the RMO developed a set of draft policies that address some key areas of requirements development and management; these policies are to serve as interim guidance while the final policies and processes are being developed. At the conclusion of GAO's review, the RMO also provided a high-level plan that includes milestones for completing these policies. Since critical BSM projects continue to be pursued and completion of the policies and procedures is not expected until March 2007, it is critical that BSM immediately implement the draft policies and continue to develop the final policies. As a result of the lack of policies and procedures, the one ongoing project--Modernized e-File (MeF)--and the two completed projects--Filing and Payment Compliance (F&PC) and Customer Account Data Engine (CADE)--GAO reviewed did not consistently follow disciplined practices for systems development and management. For example, all three projects had a key element of managing requirements--a change management process that requires approvals and impact assessments to be completed when there are changes to requirements--but none met all of the practices needed for effective requirements management. In addition, two projects did not have a clear, consistent way to elicit (gather) requirements, two did not have fully documented requirements, and two could not produce fully traceable requirements (i.e., the requirements could not be tracked through development and testing), which is another key element of managing requirements. Unless IRS takes the steps needed to develop and institutionalize disciplined requirements development and management processes and implements draft policies in the interim to cover key areas of requirements development and management, it will continue to face risks, including cost overruns, schedule delays, and performance shortfalls.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the requirements development and management policies and practices of the IRS's BSM, the Commissioner of Internal Revenue should direct the Associate Chief Information Officer for BSM to ensure that BSM completes the delivery of policies and procedures for requirements development and management as planned. The policies and procedures should fully describe the processes, include a minimum set of activities required for each project, and provide detailed procedures for each of the key areas of requirements elicitation, documentation, verification and validation, and management. As part of this effort, the policies and procedures should specifically include the following: (1) a standardized process for the elicitation of requirements that ensures that projects fully investigate the requirements needed for a specific system, including gathering requirements from all relevant users and stakeholders; (2) a standardized process for the documentation of requirements that ensures full documentation of the baseline requirements; (3) a process for ensuring formal peer reviews are planned and completed for key products; (4) guidance on tracking cost and schedule impacts of changes to requirements for all projects; and (5) guidance on establishing and maintaining full bidirectional requirements traceability.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: In January 2008, IRS provided us a briefing and documentation on policies, procedures, and tools for developing and managing project requirements developed by its Business Rules and Requirements Management office in response to our recommendation. Specifically, IRS developed (1) a standardized process for the elicitation of requirements; (2) a standardized process for the documentation of requirements; (3) a process for ensuring that formal peer reviews are planned and completed for key requirements; (4) guidance on tracking cost and schedule impacts of changes to requirements; and (5) guidance on establishing and maintaining full bidirectional requirements traceability. We have reviewed these documents and found that they address our recommendations. The Business Rules and Requirements Management office has also been implementing the new policies and procedures by providing support to multiple projects throughout the IRS, including the Customer Account Date Engine (CADE), Accounts Management System (AMS), and Modernized eFile systems. For example, IRS stated that the new requirements development and management policies, procedures, and tools were used for CADE Release 5 and that the requirements office is providing support and/or consultation services to three AMS releases. By developing and implementing these policies and procedures and supporting tools, IRS will now be able to more effectively develop and manage project requirements for the acquisition of critical systems.

    Recommendation: To improve the requirements development and management policies and practices of the IRS's BSM, and since BSM has ongoing projects that are developing and managing requirements and the development of new policies and procedures is not scheduled to be complete until March 2007, the Commissioner of Internal Revenue should direct the Associate Chief Information Officer for BSM to immediately implement its draft policies while the final policies and procedures are being developed.

    Agency Affected: Department of the Treasury: Internal Revenue Service

    Status: Closed - Implemented

    Comments: The Senate Appropriations Subcommittee on Transportation, Treasury, the Judiciary, HUD and Related Agencies requested that we assess (1) whether the Requirements Management Office (RMO) has established adequate requirements development and management policies and procedures and (2) whether BSM has used effective requirements development and management practices for key systems development efforts. GAO completed this work and recommended that IRS develop and implement new policies and procedures addressing all areas of requirements development and management, and that draft policies and procedures be implemented while the detailed policies are being developed. IRS concurred with this recommendation and agreed to implement the draft policies and procedures as interim guidance while completing development of more detailed policies and procedures for requirements development and management. These interim policies and procedures are made available for BSM projects through its Business Rules and Requirements Management online repository.

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