Tax Systems Modernization:

IRS Could Have Avoided Successful Protests of Major Computer Procurement

IMTEC-92-27: Published: Mar 13, 1992. Publicly Released: Apr 6, 1992.

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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) troubled procurement of the Treasury Multi-User Acquisition Contract (TMAC), focusing on what IRS: (1) did to cause the protest; (2) could have done to avoid the successful protests; and (3) needs to do to prevent similar successful protests of future Tax System Modernization (TSM) procurements.

GAO found that: (1) the TMAC procurement was successfully protested because IRS failed to justify paying $500 million for the technically superior awardee; (2) to avoid the successful protests, IRS should have done a better price/technical trade-off analysis to determine whether any offer was worth its cost in relation to the other offers; (3) IRS did not give any specific guidance to its source evaluation board on the methodologies and criteria to be used in analyzing bids where technical excellence was an important evaluation factor and IRS made award to other than the low bidder; and (4) IRS did not revise its analysis after it received advanced review comments from the Department of the Treasury questioning the validity of its price/technical trade-off analysis.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: IRS has issued Policy and Procedures Memorandum 15-6 dated September 30, 1992, which requires that comparative analyses of vendors' proposals be conducted.

    Recommendation: To help avoid similar successful protests of future TSM procurements, the Commissioner of Internal Revenue should develop guidelines, including appropriate methodologies and criteria, to be used in making price/technical trade-off analyses, and require that these guidelines be made an integral part of the planning documents for all such procurements.

    Agency Affected: Department of the Treasury: Internal Revenue Service


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