IRS Hired Clerical Worker for $188,000 for 11 Months of Work; Report Finds Examples of Waste

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

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

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

The IRS was responsible for developing and implementing the program for providing more secure identification cards to some 150,000 employees at the Treasury Department. The projected cost of the Treasury program was put at $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, the 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 around $38,000 plus benefits. The contractor and the temporary worker it provided were not identified.

Of the $30 million the IRS has committed so far 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 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."

Among the costs the report says should have been avoided:

--The IRS spent $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 Treasury said the certificates purchased had a three-year lifespan.

--The IRS also spent $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."

--A Treasury program management office under IRS leadership spent $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 only able to account for 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 the work was carried out, the report said.

The IRS, in a letter to the inspector general's office, said it agreed with the recommendations and planned to take corrective actions.