Purpose: This IRM provides information for LB&I’s Outside Expert Program (OEP). The guidelines and procedures described in this IRM ensure proper procurement of outside expert services at the examination and Appeals levels.

Audience: These procedures apply to LB&I employees who are responsible for identifying a need for and requesting outside expert services.

Policy Owner: LB&I Policy under the Strategy, Policy, and Governance (SPG) office in the Assistant Deputy Commissioner Compliance Integration (ADCCI) organization.

Program Owner: The OEP is under LB&I’s Program and Business Solutions (PBS) area, in the Finance Group. The Director of PBS (Director) is responsible for executive oversight and the OEP Manager is responsible for the day-to-day operation of the program.

Primary Stakeholders: LB&I senior managers, frontline managers, examiners, and program analysts.

The Committee is typically composed of territory and program managers (or designated senior analysts). Committee membership includes the Director and at least one representative from:

Conflicts of interest are considered when a committee member’s name or signature is on the Funding Request Form. In this case, the vote of the committee member does not count, and the funding request is considered approved when a majority of voting Committee members attending the meeting cast an affirmative vote.

The Committee is responsible for allocating, monitoring, and controlling funding of LB&I outside expert requisitions at the examination and Appeals levels. The Committee has authority to review and recommend approval or disapproval of any request for outside expert services funding. If the funding is rejected, the exam team is allowed to present and explain the case at an ad-hoc emergency meeting or during a regular meeting. The OEP Manager or the OEP Analyst act as the Committee liaison.

The Committee meets according to the charter to review funding requests.

Documentation of the representative’s executive approval is required when a representative requests an ad-hoc Committee review.

The use of outside expert assistance is highly encouraged and is often critical on strategically managed issues and projects.

In addition to providing expert reports or consulting on case specific examination issues, outside experts may also be used to provide insight to and assist the IRS in understanding issues that apply to more than one case or practice area.

Case Managers: should discuss the potential need for an outside expert with team members and the team management with primary responsibility for the examination issue. The issue manager is typically the team manager assigned to the examination who has day-to-day substantive responsibility for the issue under examination.

Requests for outside expert services are encouraged regardless of any currently reported budget constraints.

Examination teams: should strive to submit requests early in the planning phase and be aware of procurement timelines. Usually, requisition packages need to be sent to the Office of the Chief Procurement Officer (Procurement) before the end of the fiscal year’s third quarter. The annual Procurement deadlines are subject to change.

Executives at the DFO and Director level should be made aware of funding requests and support the issue under development.

If applicable, specialist concurrences are necessary to facilitate strategic management of resources and to maximize the benefits from the OEP within budgetary constraints.

The economist team manager must obtain preliminary concurrence to request outside expert services from their direct territory manager for economist issues.

The engineer team manager must obtain preliminary concurrence to request outside expert services from their direct engineer territory manager for engineer issues.

The TPP team manager must obtain preliminary concurrence to request outside expert services from their direct TPP territory manager for IRC 482 or IRC 367 transfer pricing issues.

Requests for actuarial services must be approved by the Pass-Through Entities practice area prior to formal submission for funding to hire outside actuary experts.

The Financial Products team manager must obtain preliminary concurrence to request outside expert services from their direct territory manager.

In a situation when a specialist or a specialist’ team member does not agree with a funding request or an expert, the signature is still required on the funding request form, but the specialist can select the "No" option for concurrence.

Issue Manager: Request an OEP COR using SRS as soon as key stakeholders agree on the need for outside expert assistance. The OEP Manager will contact the requester within 3 business days.

The engineer team manager or economist team manager responsible for providing engineer or economist support on the issue should be the first POC when seeking COR assistance. The OEP Manager assists with COR assignments.

The OEP COR is responsible for all liaison with the outside expert. Examination team members must coordinate with the OEP COR before communicating with the outside expert. Adhering to this requirement ensures understanding of the formal requirements and limitations of the contract and minimize the risk of unauthorized procurements.

OEP CORs should be the first point-of-contact for guidance and assistance with all requirements and processes associated with the outside expert project. OEP CORs can provide process guidance, worksheets, forms, and templates for all required documentation associated with the requisition for outside expert services.

Time spent by the exam team members in connection to the procurement of and management of a case-specific outside expert contract is case-related direct examination time. Time requirements associated with the processing and management of an outside expert requisition will vary from case to case and should follow the requirements of IRM 4.46.6 , Workpapers and Reports Resources. OEP COR records must be maintained according to the FAR 1.604, https://www.acquisition.gov/far/part-1#FAR_1_604.

Once the contract is awarded, the OEP COR will work with the POC to verify the contractor’s invoice charges. The POC will approve the charges on the invoice and timely notify the OEP COR according to FAR 32.9 and Procurement Policy and Procedures (P&P) 46.5. After receiving approval from the POC, the OEP COR will promptly process contractor payments in the Service’s Procurement for Public Sector (PPS) and maintain documentation in their OEP COR administrative file.

Contractors are prohibited from receiving materials containing any Sensitive but Unclassified (SBU) information or Personally Identifiable Information (PII) until they have received at least the interim staff-like access approval and have taken the mandatory training. Additionally, only after the post-award conference can contractors start working. The OEP COR is monitoring the background investigation and training processes and must notify the exam team and contractor when all the processes are completed.

The team manager who has primary responsibility for providing specialist support on the examination of the subject issue should designate a POC if the OEP COR does not have primary responsibility for providing specialist examination support on the subject case or issue.

The POC:

The POC will be responsible for providing oversight to the examination team on all aspects of the OEP issue, including but not limited to assisting with the following:

The case and issue managers are responsible for ensuring OEP COR and POC involvement in all aspects of preparing the funding request package and the procurement requisition package.

Area counsel is available to assist in determining whether an outside expert is needed and can assist with identifying an appropriate expert and with related due diligence. Area counsel and technical specialist involvement are required when the estimated cost of an outside expert is $250,000 or more. The issue manager is responsible for obtaining written recommendations from area counsel and the technical specialist. Counsel’s recommendations should include the following:

Counsel should clearly indicate and explain their concurrence with the need to hire the outside expert at the examination level. A similar written recommendation from the technical specialist is also required.

Counsel assistance and involvement with identifying potential outside experts and preparing the statement of work is highly recommended. The issue manager should seek counsel concurrence with the selection of recommended expert(s) and statement of work.

At least one new potentially qualified outside expert should be contacted during the market survey process. Documentation of this contact is required. A written explanation is required if this cannot be accomplished.

Due diligence is required during market research to identify potential outside experts. Examination teams should request the assistance of area counsel when performing market research. At a minimum, prior to Procurement sending out formal solicitations for outside expert services, the examination team should perform the following actions:

The examination team should coordinate with the OEP COR for current guidance and forms associated with a request for outside expert services.

Requests for funding that require Committee review should be submitted to the OEP Analyst no later than fourteen (14) calendar days prior to a scheduled meeting of the Committee.

All requests and associated documentation for funding for outside expert services on LB&I examinations must be submitted by secure e-mail.

LB&I has specific forms that should be used to request OEP funds for initial funding requests and for additional funding requests. The funding request form is part of a funding package required to secure funding. The OEP COR assigned to the case will provide the exam team with the most recent form. The forms can also be found at OEP SharePoint: https://irsgov.sharepoint.com/sites/OutsideExpertProgramInformationalSharePoint?OR=Teams-HL=1705505471077.

Generally, funding request packages for submission to the Committee should include the following:

Contracts should be broken down into logical phases to better control the contracted services. The phases must be clearly identified in the contract’s statement of work. The contract-line item numbers (CLINs) in PPS are: labor (all phases), travel (all phases) and miscellaneous (all phases). All contracts must include a period of performance of 5 years. Most OEP contracts are labor hour service, non-severable.

Requests must include the estimated cost for all phases of anticipated outside expert services excluding trial preparation. OEP costs are the estimated total cost of assistance at the examination level including rebuttal and Appeals assistance.

The Committee must review funding requests when the total cost of all outside expert services (at both the examination and possible Appeals levels) equals or exceeds $250,000. The Committee delegated approval authority to the PBS Finance Director when the total cost is less than $250,000, except when operational budgets are constrained by a continuing resolution. The OEP Manager or OEP Analyst must discuss annually with the PBS Finance Director the requirements for the funding requests under $250,000.

The Director and Committee retain ultimate authority over any recommended approvals for funding.

Generally, requests for additional funding on existing contracts should include the following:

Requests for additional funding must be submitted to the Committee for review in these situations:

All funding request approvals must be documented in writing on the funding request forms.

For all requests, the case manager, issue manager, and issue territory manager are required to sign the funding request forms.

Additional approvers of the funding request may be required depending upon the total cost of the funding request. See Funding Request Forms for required signatures.

After the Committee approves a funding request, OEP Manager or OEP Analyst can sign the funding request on behalf of the Committee and return it to the OEP COR within three business days.

The OEP COR can start the acquisition request (i.e shopping cart) at any point in the process, but can only send it for proper approval after the funding request is approved.

The issue manager is responsible for ensuring the timely submission of complete, fully documented outside expert requisition packages to Procurement. Complete, fully documented requisition packages should be forwarded by the OEP COR to Procurement within thirty (30) calendar days after notification of the Committee’s approval.

The OEP COR coordinates with Procurement to provide guidance associated with the preparation and submission of a fully documented procurement requisition package.

Requisitions submitted to Procurement are discouraged during the fourth quarter of the fiscal year, due to Procurement’s limited resources and the processing times required to complete the award of a contract. Requisitions forwarded to Procurement in the fourth quarter are at risk for non-award. The OEP COR should coordinate with Procurement to facilitate the award of the contract prior to the end of the fiscal year. Procurement has the authority to award contracts.

The issue manager should engage all responsible team members including specialist team members and all associated team managers in the management and control of the contracted services to ensure that quality services are provided at a reasonable cost.

The issue manager is responsible for ensuring that the OEP COR conducts a post-award conference with the examination team and outside expert to explain and clarify the terms and limits of the contract and to explain roles and responsibilities and associated limits. The post-award conference must be held prior to authorizing any outside expert services under the contract. Teleconferences may be used to hold the post-award conference.

The issue manager must provide the OEP Analyst with a contract closing report when the examination closes. The OEP COR will provide detailed instructions and assistance.

The OEP Manager or OEP Analyst must notify the OEP COR and case manager within three business days if an outside expert funding request is denied by the Committee. The OEP Manager or OEP Analyst will work with the case manager, issue manager and OEP COR to review reason(s) for denial and help determine alternative solutions to address the audit issue going further. After considering and addressing the recommendations of the Committee, the issue stakeholders, including the case manager, issue manager, and OEP COR can resubmit the funding request for reconsideration during a subsequent meeting.