IBM Awarded $1B IRS Contract for Modernization of Aging IT Systems
IBM announced this week that it is one of four organizations chosen to support the Internal Revenue Service’s massive, seven-year, technology modernization program.
The IRS’ aging and overburdened IT systems are well documented, and in 2019, the IRS released a multi-year IRS Modernization Plan designed to improve the way the agency interacts with both taxpayers and the tax community. The plan implements an overarching mandate to strengthen cybersecurity protections and IT systems while enhancing taxpayer service and enforcement activities.
However, in February 2023, the IRS came under the scrutiny of the US Government Accountability Office (GAO) for those plans. According to the government watchdog, several of the plans did not indicate a timeline for disposing of legacy systems, a category which includes “33 percent of the applications, 23 percent of the software instances in use, and 8 percent of hardware assets.”
The report is unsparing, detailing “applications ranging from 25 to 64 years in age, as well as software up to 15 versions behind the current version. As GAO has previously noted, and IRS has acknowledged, these legacy assets will continue to contribute to security risks, unmet mission needs, staffing issues, and increased costs.”
The GAO also noted that the IRS had suspended six operations, including two which are essential to replacing the 60-year-old Individual Master File (IMF), the authoritative data source for individual tax account data.
Nor is the watchdog happy about the tax agency’s continued use of COBOL, which they note, could lead to “difficulty finding employees with such knowledge,” adding that this “shortage of expert personnel available to maintain a critical system creates significant risk to an agency’s mission.”
It’s unclear whether the IRS has implemented the GAO’s recommendations into its current IT modernization plans. However, the contract with IBM empowers the company to manage, integrate, and maintain IBM Z systems mainframe and related hardware and software for the IRS with a one-year base period and seven option years.
“The IRS is arguably one of the federal agencies with the most direct and crucial touch points with the American public, and IBM is honored to continue helping its team provide the modern, efficient digital experience that taxpayers expect and deserve,” said Susan Wedge, managing partner, U.S. Public and Federal Market at IBM Consulting. “This award underscores IBM’s deep understanding of the IRS’ current technology challenges and our company-wide commitment to its vital mission.”
DLA Transitions From Mainframe to New Warehouse Management System
The Defense Logistics Agency has moved from an aging mainframe system established in the 1990s to a new Warehouse Management System (WMS) that employs commercial, off-the-shelf software.
The stated goal of the transition to WMS is “to raise the agency up to the industry standards for managing warehouses.” According to Karyn Runstrom, the DLA’s acting Chief Information Officer, the move was long overdue:
“We were coming from DSS, the distribution standard system, and this was a 30-year-old antiquated system. And we were having difficulty recruiting, retraining, and retaining qualified people for the COBOL mainframe that we used. So moving to commercial-off-the-shelf system moves into this century and also allows us to integrate with newer technology.”
The agency cites the benefits of the new system as ranging from improved productivity and streamlined processes that help achieve audit readiness to reporting capabilities between DLA and customers.
The DLA also emphasizes the increased predictability and efficiency gained through automation tools (such as robots that pick items off shelves) and computer-controlled systems that automatically place and retrieve loads from storage locations in DLA warehouses.
But Runstrom cited costs as one of the key drivers of the move: “The cost to host and operate a mainframe-based system is really considerably more than hosting one of the common commercial off-the-shelf software warehouse management solutions so therefore our costs will go down, once we actually decommission when we roll that all those 123 sites.”