Rossotti Adds Can-Do Spirit to Taxed IRS

Rossotti Adds Can-Do Spirit to Taxed IRS

Michael Carpenter
IRS Commissioner Charles Rossotti is taking the same can-do approach to revamping the Internal Revenue Service that he practiced in his early days as one of the Pentagon's famed Whiz Kids.

The former chairman and co-founder of American Management Systems Inc. faces a daunting challenge: transforming the IRS into an efficient and modern agency.

Rossotti, 57, took the helm of the beleaguered agency last November. Its problems are legendary: antiquated computers, poor customer service and extensive year 2000 software repairs. In fact, a recent General Accounting Office report criticized the IRS for lacking a master plan for year 2000 work and for having too narrow an approach to contingency plans for failures.

Rossotti, whose third-floor office sports large photos of the lithography business his grandfather founded in the 1890s in New York City, uses words like "crisis," "enormous" and "risky" along with "opportunity" when he discusses the agency's condition.

He recently talked with Washington Technology staff writer Nick Wakeman about his plan to overhaul an agency whose service and systems are wildly out of date.

WT: The IRS gets much attention and a heap of criticism. So why work for the IRS?

ROSSOTTI: We have been under a microscope for two or three years, but that has created the conditions to address some fundamental, long-standing issues and to create a better organization. That is pretty exciting.

WT: What role will technology play in making the IRS a taxpayer friendly agency?

ROSSOTTI: Technology is one of the two principal barriers we must overcome to provide the service the public expects: the other is the organization's structure. Both of these have gotten out of date.

Some of the agency's past problems were because of trying to divine one system that does everything. Our proposal is to reorganize around four customer groups [individuals, small business, large corporations and tax-exempt organizations]. This will give us the ability to better define system requirements, because we'll have a clearer definition of who the customer is and who is responsible for serving that customer.

WT: The Prime Integration Services contract takes a long-term view of addressing agency IT needs. How do you balance those with near-term pressures, such as year 2000 software fixes?

ROSSOTTI: Balancing those needs is almost the most important management challenge we have here. Year 2000 is the most pressing near-term challenge, but there are others we need to respond to - like the service improvements the public wants.

We hope to get the Prime contract [potentially worth more than $8 billion over 15 years] awarded by the end of this calendar year. Then in 1999, we will be in the start-up phase of the technology modernization blueprint.

We won't be engaged in any heavy-duty application development during 1999. But if all goes well, after the turn of the century we'll have gotten the year 2000 problem behind us, and some of our organizational changes will be in place.

So beginning in year 2000 itself, we'll begin to pick up steam in terms of large-scale modernization.

WT: Successful company executives often have problems running government agencies. What frustrations have you faced, and how do you deal with them?

ROSSOTTI: You must recognize there are some special things about the public sector. You are more in the public eye, so you have to be prepared to justify and communicate your actions to the public. And you have to be aware that rules and regulations exist in a public sector agency.

If you become frustrated with them and think you are somehow going to get around them, you'll run into trouble.

On the other hand, if you work with people who understand how things work - the procurement people, the personnel people - there is reasonable flexibility to accomplish what you want. It just may take a little longer.

WT: A year from now, how will you know if the agency is on the right track?

ROSSOTTI: We will have finished the 1999 tax filing season, which will be a very important event for two reasons. We have to complete all the renovation work and replacement work in preparation for year 2000. And the other thing is we will have completed about 800 tax law changes that need to be put in place [for the filing season].

It will be an enormous and risky season, but if we can complete it with reasonable success, that will be a big milestone - a very big milestone. At that time, we will begin gearing up on the technology modernization blueprint and will have made some major steps on reorganization. So we will have a lot of things under way and completed a year from now.

WT: A lot of people have commented that you are the first non-tax attorney to head the IRS. How is this an advantage or disadvantage?

ROSSOTTI: Right now, what is needed at the IRS is primarily management and technology leadership. There are good tax lawyers here that give good advice on tax law. But what is needed ... is the experience of managing and understanding something about technology.

WT: You helped build American Management Systems into a successful company. What do you hope to bring from that experience to restructuring the IRS?

ROSSOTTI: In the end, an organization's success comes down to the commitment
of its people and the leadership to a common goal.

We have a lot of problems here at the IRS, but I haven't found one that a reasonably intelligent group of people can't solve. What is really required is to get people mobilized around a common goal and a common plan, and then you can deal with just about anything.

I think AMS has had that for a long time. I hope we can achieve that here.

WT: Some people think that you'll leave out of frustration in less than one year. What's your response?

ROSSOTTI: [Chuckling] I'm not frustrated. In fact, I'm very gratified with the support I've gotten. We are making a lot of progress, so I don't think that prediction is going to come true.

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