Watchdog: IRS skipped step meant to prevent ‘unnecessary spending’ on procurement hub
The IRS cut corners on the procurement and deployment of a platform to track contract spending that it now plans to sunset, per a watchdog report made public Friday.
According to the Treasury Inspector General for Tax Administration, the agency’s procurement hub was born out of a trio of executive orders signed in the early days of the second Trump administration that sought to make federal officials “defend the spend.”
The orders directed the IRS to report contract rationalization decisions to the Treasury Department, which would then be shared with the General Services Administration.
Up until that point, the IRS had been pulling spending decisions from multiple systems and documenting the data on spreadsheets. That process led to inconsistent reporting of contract details and procurement rationalizations to the Treasury Department, TIGTA said.
A senior IRS official told the watchdog that the agency came up with the procurement hub to improve the accuracy of its reporting as part of the “defend the spend” push.
What happened from there, in TIGTA’s view, was an “expedited procurement and deployment” process of the hub that skirted “key preventive controls” and didn’t take steps to avoid “potentially unnecessary spending.”
The first two contracts for the procurement hub were awarded by the IRS under an existing blanket purchase agreement, with the vendor offering $500,000 in introductory pricing for the first six months of the deal.
A senior IRS official told TIGTA that the deal was “cost effective” for the agency under those pilot pricing terms. But the price for the third contract, from the same vendor, jumped to $4.5 million for 12 months, and it didn’t include “clear milestones or deliverables for the vendor’s engineering services,” the report said.
“In addition, we found that the IRS did not complete sufficient market research before awarding the contract, despite a significant price increase,” TIGTA added.
In a response letter, IRS Chief Information Officer Kaschit Pandya and Chief Procurement Officer Alan Monico disagreed with the watchdog’s contention about market research, writing that the base agreement was “competitively awarded” and the “‘second’ contract identified by TIGTA was a within-scope modification to exercise an option for an additional three months.”
TIGTA and IRS officials also disagreed on whether proper security protocols were followed. The watchdog said the tax agency didn’t adequately assess, document or accept the risks involved with making a substantial change “to an existing environment.”
Pandya and Monico, however, wrote in their letter that the IRS “maintained appropriate controls” and granted limited access to the hub on a “need-to-know basis.”
The report also called the IRS out for allowing the vast majority of procurement hub users to bypass the agency’s access control system and failing to disable inactive accounts.
TIGTA issued its draft report to the IRS on Sept. 21. Two days later, the agency’s procurement office said it would shut down the hub and cut off user access. The IRS told the watchdog that it plans to transition the platform’s functionalities to an existing platform by the end of the year.
