Inspector General Says IRS Wasted $3.5 Million on ID-Card Program

By Jim Abrams
Associated Press
Friday, December 21, 2007

The Internal Revenue Service paid a contractor $188,000 to provide one person to do clerical work over 11 months.

The contract was one example of financial waste contained in a government report on the tax agency's involvement in a program ordered by President Bush in 2004 to develop more-secure identification cards for federal workers.

The Treasury Department's inspector general for tax administration also said the IRS needlessly spent almost $2 million on a computer security system that the tax agency doesn't plan to use.

The IRS was responsible for developing and implementing the program to provide identification cards to about 150,000 employees at the Treasury Department. The projected cost of the program was $421 million over 14 years.

To provide one person for a clerical support job updating contact lists, assigning and tracking equipment, and processing trip reports, a contractor was paid $128 an hour.

Auditors for the inspector general's office were told by IRS program managers that the work could have been done by an employee with a ranking of GS-7, eligible for a starting salary of about $38,000 a year plus benefits. The contractor and the temporary worker it provided were not identified.

Of the $30 million the IRS has committed for the project, about $3.5 million was spent on acquisitions that should have been avoided, the report said.

"The IRS accepted this responsibility for the Treasury Department," said the Treasury inspector general for tax administration, J. Russell George. "It must change its present course and proceed in an efficient, cost-effective and responsible manner."

Steve Ellis, vice president of Taxpayers for Common Sense, a private budget watchdog group, said it was "staggering" that more than 10 percent of initial spending for the project had been wasted.

"If any agency should be responsible for our taxpayer dollars, it should be the IRS," he said. "They are in the front lines of collecting revenue from our citizens, and you want them to be careful with every dime they spend."

The IRS, in a statement yesterday in response to the report, said it agreed with the inspector general's findings and had acted to ensure more rigorous contract management and oversight. It noted that last May it shifted from a stand-alone approach to using General Services Administration solutions in issuing the new identification cards.

Among the costs the report said should have been avoided:

¿ $1.9 million to buy 350,000 public key infrastructure certificates in 2005. PKI is an encryption system that verifies the validity of each party in an electronic transaction, and the certificates will be needed in the future so employees can use their ID cards to access computer systems. However, the IRS does not expect to use the cards at this time, and the Treasury said the certificates had a three-year lifespan.

¿ $838,000 in September for 18 PKI servers that were never used for the program. The report said some of the servers have been used on a very limited basis for other IRS projects, but it was clear "that the servers were purchased prematurely and the funds could have been used more effectively."

¿ $431,000 to establish an ID badge laboratory. That lab has been closed and deemed unnecessary now that Treasury is planning to share that work with the General Services Administration.

The inspector general's office also criticized the IRS for not maintaining documents to back up costs, saying it was able to account for only about 70 percent of the obligated spending.

Controls were too weak to hold contractors accountable for work performed, and the IRS paid contractors without verifying that the work was carried out, the report said.

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