After spending two years and $19.5 million to develop its new website, the IRS has canceled the project six months before its scheduled completion date. From the Treasury Inspector General for Tax Administration, Initial Efforts to Develop a New Web-based Portal Environment Were Not Successful (2009-20-079) (May 19, 2009):

In Fiscal Year 2006, the IRS recognized the need to upgrade its existing portal environment and initiated the New Portal Implementation Project. A major concern that led to developing the new portal environment was that a significant amount of portal equipment was nearing or was at the end of its useful life expectancy. In addition, requirements from existing and planned projects that needed portal support could not be met due to technical limitations of existing equipment.

The IRS planned to complete the new portal environment by November 2008; however, in June 2008, the IRS Chief Information Officer cancelled the Project before it was completely developed. Reasons for the cancellation included the lack of a comprehensive enterprise strategy that considered industry best practices or advancements in portal technology, and budget challenges due to the significant expenditure requirements necessary to replace existing equipment. Subsequent to the Project being cancelled, the IRS hired a contractor to assist in developing an enterprise portal business strategy.

The IRS planned to launch two new projects, the My IRS Account project and a new release of the Modernized e-File project, in the new portal environment. However, because the New Portal Implementation Project was cancelled, the IRS had to expend $9.7 million for new equipment and upgrades to the existing portal capacity to operate projects dependent on the portals, including the My IRS Account and Modernized e-File projects. In addition to extraneous expenses, purchasing new equipment for portal capacity upgrades prior to development of an enterprise portal business strategy increases the risk that new equipment may not integrate with the new portal environment once it is developed.

The IRS uses the Modernization Vision and Strategy process to identify projects that need portal support. However, during our prior audit work and through recent discussions with IRS portal project personnel, we determined that the Modernization Vision and Strategy process has not yet matured to the extent that it includes all information technology projects. The IRS uses various methods to identify existing projects that require portal support, such as the Modernization Vision and Strategy Plan and Unified Work Requests; however, there is no formal process to continuously identify and evaluate future planned projects that may require portal support. As a result, the IRS currently does not have a uniform procedure to continuously identify all projects needing portal support. An interim procedure would assist portal office personnel in recognizing future needs and performing more precise portal capacity studies.

The Chief Technology Officer is re-evaluating the best approach for completing the information technology modernization program. Until final decisions on modernization emphasis are made, the enterprise portal business strategy may remain undecided.

(Hat Tip: WebCPA.)