Skip to Highlights
Highlights

The Internal Revenue Service's (IRS) Business Systems Modernization (BSM) program is a multi-billion-dollar, high-risk, highly complex effort that involves the development and delivery of a number of modernized systems that are intended to replace the agency's aging business and tax processing systems. As required, IRS submitted its fiscal year 2009 expenditure plan in August 2008 to the congressional appropriations committees, requesting $222 million from the BSM account. GAO's objectives in reviewing the expenditure plan were to (1) determine whether it satisfies the applicable legislative conditions, (2) determine IRS's progress in implementing prior expenditure plan review recommendations, and (3) provide additional observations about the plan and the BSM program. To accomplish the objectives, GAO analyzed the plan, reviewed related documentation, and interviewed IRS officials.

Skip to Recommendations

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Internal Revenue Service 1. The Commissioner of Internal Revenue should direct that procedures be defined for determining when to grant conditional milestone exits. Such guidance would help ensure that IRS's process for granting milestone exit approvals is not used to mask cost and schedule overruns and that projects are not exiting milestones prematurely thereby introducing cost, schedule, and performance risks.
Closed - Implemented
In March 2009, we reported that IRS's use of conditional milestone exits (whereby projects are allowed to continue with outstanding issues needing to be addressed) was not supported by documented procedures and, as a result, the conditional exit process could potentially be used to mask cost and schedule overruns and result in projects exiting milestones prematurely. Accordingly, we recommended that such procedures be defined. IRS agreed with our recommendation and, in response, developed a Milestone Exit Review (MER) Procedure to emphasize the prevention of premature milestone exits with outstanding issues. The MER procedure describes the activities required for a project to enter and exit the MER process. It also requires that the governance board members review the project's cost, schedule, performance, risks, and conditions, in addition to the MER artifacts, to determine whether to (1) grant a conditional exit, (2) grant an unconditional exit, (3) disapprove the exit, (4) recommend suspending the project, or (5) terminate the project. By developing this procedure, IRS has reduced the likelihood that the conditional exit process will be used to mask cost and schedule overruns or result in projects exiting milestones prematurely.

Full Report