Tax Systems Modernization:

IRS Award to MITRE Corporation Violated the Competition in Contracting Act

IMTEC-92-28: Published: Mar 12, 1992. Publicly Released: Apr 6, 1992.

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Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) May 1990 $4.5 million contract award for engineering services to design the Tax Systems Modernization (TSM) Program, focusing on whether the noncompetitive award complied with Competition in Contracting Act (CICA) requirements concerning contracts awarded with less than full and open competition.

GAO found that: (1) IRS violated CICA, since it untimely initiated procurement planning after it became aware that the General Services Administration would not likely renew its contract with the awardee and its plan to competitively award a long-term contract could not be carried out in time to avoid awarding an interim contract; (2) although IRS justified the interim award by citing unusual and compelling urgency as its basis for avoiding full and open competition, the actual urgency resulted from its failure to conduct timely advance planning; (3) although at least one firm other than the awardee was capable of providing the services, IRS focused its efforts on justifying a sole-source interim contract award; (4) IRS originally planned to replace the interim sole-source contract with an integration support contract, but in mid-1990, it decided to establish a federally funded research and development center to conduct research and provide technical advice free from actual or potential conflicts of interest; and (5) once IRS establishes a relationship with the center, it plans to discontinue the current interim contract.