IRS Automation:

Procurement Practices Need Strengthening

IMTEC-90-24: Published: Jan 12, 1990. Publicly Released: Jan 16, 1990.

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Pursuant to a congressional request, GAO reviewed four Internal Revenue Service (IRS) automatic data processing (ADP) procurement issues, focusing on: (1) its procedures for noncompetitively awarding a contract for its Electronic Filing System; (2) its agreement to pay $15,000 to the contractor for withdrawing a bid protest; (3) whether the contractor's services under a prior ADP contract were within the contract's scope; and (4) whether requests for proposals for the Treasury Multiuser Acquisition Contract (TMAC) and Integrated Collection System (ICS) limited competition.

GAO found that: (1) IRS did not comply with procurement regulations when it allowed the contractor to begin performing Electronic Filing System services without a written contract, before notifying other bidders, and without proper approval; (2) IRS improperly agreed to pay $15,000 to the contractor for withdrawing a bid protest, since the protester had no reasonable basis for concluding that IRS had unfairly excluded it from competition; (3) the contractor's services under a prior ADP procurement were within the contract's scope; (4) IRS achieved full and open competition under the TMAC and ICS procurements; and (5) noncompliance with ADP procurement procedures indicated that IRS lacked adequate internal controls.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS issued memos prohibiting oral contracts. This was the procedural problem which gave rise to the finding.

    Recommendation: The Commissioner of Internal Revenue should require IRS contracting officials to take immediate steps to bring its procurement of ADP services for the Electronic Filing System in line with proper procurement practices. Specifically, IRS should determine, in accordance with the Competition in Contracting Act, whether it has adequate justification for a sole-source award to Vanguard and whether the circumstances warrant the execution of a written contract with Vanguard. Any contract with Vanguard should be limited to work that is completed, or is soon to be completed, and is essential for proper operation of the Electronic Filing System for the 1990 filing season. Any work that is not currently under way should be limited to that which can be performed only by Vanguard.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  2. Status: Closed - Implemented

    Comments: A management study of procurement processes was undertaken and completed on June 30, 1990. An implementation plan was issued July 31, 1990.

    Recommendation: The Commissioner of Internal Revenue should determine fully the nature and extent of the weaknesses in the IRS procurement process and assess whether the corrective actions planned by IRS will correct those weaknesses.

    Agency Affected: Department of the Treasury: Internal Revenue Service

  3. Status: Closed - Implemented

    Comments: The deficiencies identified in the report are currently being reported as material internal control weaknesses.

    Recommendation: The Commissioner of Internal Revenue should report the deficiencies identified in this report to the President and Congress as material internal control weaknesses under the Federal Managers' Financial Integrity Act.

    Agency Affected: Department of the Treasury: Internal Revenue Service

 

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