Working to change IRS acquisition culture from risk avoidance to innovation, speed and agility

Take a closer look at how IRS Procurement is working to manage risk while embracing innovation, transforming its culture and improving internal operations.

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By Shanna R. Webbers
CL-21-04, January 29, 2021

The Internal Revenue Service (IRS) is a major player in federal procurement. During fiscal year (FY) 2020, the IRS awarded $2.6 billion in contract obligations. And as the IRS begins to implement changes mandated by the Taxpayer First Act passed by Congress in 2019, not to mention handling federal information technology modernization efforts, the agency is tackling another challenge: procurement improvements.

The IRS — like all federal agencies — is under several mandates to incorporate new and emerging technologies to improve its day to day operations and its mission of administering the nation’s tax code.

Any improvement in procurement efficiencies will help the agency in terms of increased competition in bidding and driving down prices, while providing more innovative solutions for its internal customers who are carrying out the IRS’ mission.

The fourth quarter of the fiscal year can be grueling for procurement professionals.  For example, in FY 2019, a little more than 35% of our obligations came in the fourth quarter.  Last year, we obligated about 33% in the fourth quarter, which is down from a high of 42% in FY17 and is our lowest in five years.  Additionally, last FY we obligated about 15% in the month of September, down from almost 18% in FY 2019 and 25% in FY 2018. 

I’d like to give you a closer look into procurement activities earlier this year to transform our culture and improve our internal operations. 

Back on Aug. 1, 2020, in the middle of a pandemic that changed how we operated as an organization because all employees were working remotely, my procurement team was laser-focused on awarding contracts to maximize obligations and knock it out of the park for the fiscal year.  In addition to processing fourth quarter contracts, we also had to finalize the implementation plan to comply with Section 889 of the Fiscal 2019 National Defense Authorization Act. This act prohibits executive agencies from entering into, or extending or renewing, a contract with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, on or after August 13, 2020, unless an exception applies or a waiver is granted. Although I knew it would be a challenge to meet contracting requirements by September 30 and meet the August 13 deadline, I also knew my team was up for the challenge and we aggressively sought a solution.

We had to work quickly and address a myriad of questions: 

• How many contracts would require a modification? 
• How would we monitor completion so we could quickly answer data calls?
• How would we consistently manage vendor exception requests?
• What was the potential backlash if we hadn’t properly modified a contract and the vendor was using prohibited services or equipment? 

First things first - I needed to understand the scope of the situation.  We had approximately 2,700 active contracts.  Our process takes about two hours on average to complete a modification, input data into the Federal Procurement Data System-Next Generation (FPDS-NG) and upload the document in our contract file repository.  So, worst case scenario, it could take up to 5,400 hours – or 2.5 years – to modify 100 percent of our active contracts. 

To narrow down the scope, my team used the Product Service Code to identify 1,466 contracts that met Section 889 criteria.  Based on our current process it could still take up to 3,000 hours – or a full year – to get this finished.  There had to be a faster way.

Earlier in the year we had successfully used a Robotic Process Automation (better known as a “bot”) to correct data errors in the FPDS-NG, but we hadn’t used it for any other purpose.  We knew the bot could update the system in seconds, but we didn’t know if it could create contract modifications in bulk. There was a lot of angst and opposition about using the bot for this purpose. Some suggested the risk of using an unproven approach was too high, and I listened to various concerns and reasons why this might not work.  Each had merit and deserved consideration when assessing our options, but I was convinced the bot was our best path to success, so I continued to probe with more questions that would highlight the risks.

We didn’t have all the answers and there were a lot of disparate data points to consider.  I had learned early on in my career to trust my instincts.  At the end of the day, as Chief Procurement Officer, I was ultimately responsible for meeting the implementation timeline and managing risk.  I decided to move forward with the bot effort, even though there was uncertainty and disagreement within the team on which approach was best.  I was willing to accept the risks and give it a try, especially since I didn’t see any other way to modify thousands of contracts in such a short timeframe.  Plus, if the bot didn’t work as expected, we could pivot to Plan B – use our current process.  Either way, we would get it done, but the bot option would produce results in a much shorter timeframe.  

Once my decision to pursue the bot solution was made, we created a solid path forward within a week that could be implemented quickly and with minimal risk.  Our approach was simple:  

• Test and confirm the bot could accurately create modifications in bulk.
• Create a unique e-mail address for vendors to submit questions and exception requests.  
• Use a modification number ending in “889A” for quick identification.
• Select a dozen Contract Officers to sign the modifications.  
• Receive interim approval for the bot to upload modifications into the contract file repository.
• Utilize the bot to email 1,466 modifications to the appropriate vendor.

Even with this approach, I knew we still couldn’t meet the Aug. 13, 2020 deadline. So a letter was sent to every contractor in our database explaining our implementation approach that established a deadline for submitting an exception request.  These would be the priority since it had the highest risk, but no exceptions were received. 

While we didn’t meet the deadline, we did accomplish a task of this magnitude in record time.  And more importantly, we pushed outside of our comfort zone and we were still successful.  This reaffirmed my belief that the route you know is not always the best route. During this COVID-19 pandemic, we are operating in a constant state of uncertainty and when there is uncertainty, it’s important to think outside of the box to find new solutions.  Taking this approach might even reveal opportunities that were not apparent before.  As a leader, you must be able to manage risk, lead your team in embracing innovation, and take a chance when the opportunity presents itself.  Swing for the fences!

In this case, a new, innovative approach paid off.  The return on investment was impressive.  In addition to reducing the administrative burden on Contract Officers and eliminating data errors, the total time savings went from ~1 year (2,860 hours) to ~3 days (72 hours)! (The time for a Contract Officer to perform the manual process was 2 hours, on average, and the bot did it all in a little over three minutes on average.) Another benefit was that it didn’t require additional funding or other resources to implement this effort.  We used innovation to bring speed and agility to procurement operations.

As with so many initiatives at the IRS and especially in procurement, this was a team effort. Our Chief Information Officer and Information Technology partners worked with us every step of the way and provided outstanding support to enable our success. This is also a great example of how driving innovation and managing risk can make processes more efficient and get the job done. We are ONE TEAM! ONE IRS!

Shanna R. Webbers
Chief Procurement Officer