Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) troubled procurement of the Treasury Multi-User Acquisition Contract (TMAC), focusing on what IRS: (1) did to cause the protest; (2) could have done to avoid the successful protests; and (3) needs to do to prevent similar successful protests of future Tax System Modernization (TSM) procurements. GAO found that: (1) the TMAC procurement was successfully protested because IRS failed to justify paying $500 million for the technically superior awardee; (2) to avoid the successful protests, IRS should have done a better price/technical trade-off analysis to determine whether any offer was worth its cost in relation to the other offers; (3) IRS did not give any specific guidance to its source evaluation board on the methodologies and criteria to be used in analyzing bids where technical excellence was an important evaluation factor and IRS made award to other than the low bidder; and (4) IRS did not revise its analysis after it received advanced review comments from the Department of the Treasury questioning the validity of its price/technical trade-off analysis.

Tax Systems Modernization: IRS Could Have Avoided Successful Protests of Major Computer Procurement

In response to a request by the Chairman, Senate Committee on Governmental Affairs, The General Accounting Office reviewed IRS' Treasury Multi-User Acquisition Contract (TMAC) procurement to determine what IRS (1) did to cause the protests, (2) could have done to avoid the successful protests, and (3) needs to do to prevent similar successful protests of future TSM procurements. The GAO reviewed IRS, Treasury, and General Services Administration Board of Contract Appeals (GSBCA) documentation, including evaluation criteria, procedures and plans used to evaluate proposals, agency review procedures, review comments, minutes of meetings, and correspondence. The GAO also reviewed the protest file, known as the "Rule 4 file." In addition, GAO interviewed IRS and Treasury officials to obtain information on the evaluation and review process of the TMAC procurement. GAO performed its work at the Department of the Treasury, General Services Administration, and IRS headquarters in Washington, D.C., as well as IRS offices in Falls Church, Virginia.