IRS Wins Competition for IT Work, but at a Price

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The Internal Revenue Service (IRS) has again won a public-private competition to keep work in-house, but at a price of 218 jobs.

For the second time in a week, the IRS beat back private-sector challenges and showed that federal employees can more efficiently do jobs that are considered commercial in nature. The contests are required by President Bush's five-part Management Agenda.

In the latest case, employees from the tax agency's Modernization and Information Technology Services branch competed against contractors for 278 technology positions at 10 offices across the country and prevailed, Government Executive magazine reported. To maintain an edge over competitors, though, in-house workers proposed cutting more than 200 jobs.

Out of a technology services staff of more than 275, 60 employees will remain to provide hardware and software services, such as management information reports, that support the processing of tax returns, officials told the Washington Post. The proposal is expected to be implemented by June 1, 2005.

The in-house team developed a "very creative" proposal, said Terry Lutes, associate chief information officer for the IRS's Information Technology Services branch. He told Government Executive that the team automated tasks and redesigned the work rather than simply slashing jobs. For example, the team proposed putting 87 percent of reports on the Web instead of producing paper copies. He added: "It was one of those moments I was proud to be a government employee."

Colleen Kelley, president of the National Treasury Employees Union, said the IRS made "an unnecessary and unfortunate choice." The agency could have used attrition and retraining to realign the workforce. NTEU represents 98,000 IRS employees.

Lutes said IRS officials are leaving "no stone unturned" to help employees who are expected to lose jobs. Options include early retirements, he said, and the IRS will work with the union to come up with a plan.

The announcement of the IT layoffs comes just days after the IRS said it planned to close distribution centers in Virginia and California and lay off workers at an Illinois warehouse. More than 270 workers will face layoffs.

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