IRS Database Upgrade Delayed Again

WASHINGTON – The U.S. Internal Revenue Service has delayed a project to modernize its taxpayer database for the second time in less than two years.

The IRS last week announced it has delayed the first phase of its Customer Account Data Engine (CADE) project from August 2003 to March or April 2004. The agency had originally planned to move the first group of taxpayers, about 6 million Form 1040 EZ filers, to the new system in 2001, before the project was delayed until this August.

The problems with the transition center around the “juxtaposition of the old system to the new system,” said an IRS spokesman, who declined to elaborate.

IRS Commissioner Mark W. Everson said last week that the agency has launched an independent review of the project through the Software Engineering Institute of Carnegie Mellon University in Pittsburgh. The review will look at the performance of a team of contractors led by Computer Sciences Corp. (CSC) in El Segundo, Calif., and the agency’s management of the contract since it was signed more than four years ago.

The IRS has asked the institute to recommend changes to the project in 60 to 90 days.

The contractors being led by CSC include IBM, BearingPoint Inc., Northrop Grumman Information Technology, Unisys Corp. and Science Applications International Corp.

The IRS said the taxpayer database in question is based on DB2 technology from IBM. IBM declined to comment.

CSC issued a statement about the IRS review but said it wouldn’t comment further. The company said it’s confident CADE will be in place in time for the 2004 income tax season. CSC also said it welcomes the review by Carnegie Mellon. The contractor group is “eager to share its experiences and perspectives” with the university team, CSC said.

“This most recent setback is a serious matter,” Everson said in a statement. “The CADE project has had a number of delays over the past several years—too many delays.”

CADE is eventually intended to house tax information from more than 200 million U.S. taxpayers. It will replace a magnetic tape-based system that the IRS began using about 40 years ago.

The old system, called the Master File, takes a week for records updates, causing delays in providing accurate account data on taxpayers.

After the first delay, the IRS renegotiated the terms with the contractors working on the CADE project. The IRS spokesman said he wasn’t aware of any efforts to further renegotiate the contract.