CSC to cut jobs on IRS contract

CSC is reducing its workforce on the Internal Revenue Service’s multimillion-dollar contract to modernize its tax collection system known as Customer Account Data Engine.

“I can confirm that we did announce that there will be staff reductions on the program starting in January,” a CSC spokesman told Washington Technology. The spokesman asked not to be named in the story and declined to provide any further details.

IRS spokesman Terry Lemons said the CADE release that will support the 2009 filing season is on track for use in January.

“We will then begin to work on the release for the 2010 filing season,” Lemons said. “Beyond that, it’s premature for us to get into specifics” about future releases.

CSC recently finished a $25 million design contract for Release 5, which is scheduled to go live January 2010.

CADE is designed as a phased rollout to replace the Master File system, portions of which date to the 1960s. IRS typically releases two CADE versions a year, one to incorporate tax law changes and one for additional capabilities.

IRS Commissioner Douglas Shulman last month appointed Terence Milholland to the newly created position of chief technology officer.

“They have asked for a review of key technology projects,” Lemons said. “This process is designed to assure effective and efficient use of taxpayer dollars.” He added that IRS is confident it will complete the transition of taxpayer accounts to a more current database platform.

“The bottom line is that CADE and related projects are moving forward,” Lemons said.

“The board is aware that the IRS is currently re-evaluating the best path to complete its modernization program,” said Paul Cherecwich, chairman of the advisory IRS Oversight Board. “In making decisions, the board expects the IRS to develop a business approach that delivers the best long-term value to taxpayers and the tax administration system.”

In a report issued in September, the Treasury Inspector General for Tax Administration said IRS needs to decide whether to reduce CADE capabilities because of capacity constraints or to continue development with the expectation of using new technology or alternative resources to satisfy its computer processing demands.

Those demands are “quickly reaching the capacity of the current system, both in the storage and retrieval of data and the processing speed for daily transactions,” the report said.

CADE costs might become prohibitive if IRS does not identify new technology to more efficiently perform computer processing, the TIGTA report said.

In the 2008 tax filing season, CADE to processed more than 30 million tax returns, or 21 percent of all individual tax returns. The system generated $44 billion in refunds, according to IRS.

CSC, of Falls Church, Va., ranks No. 9 on Washington Technology’s 2008 Top 100 list of the largest federal government prime contractors.

Federal Computer Week senior writer Mary Mosquera contributed to this story.