IRS Turns to Automation Amid Shrinking Workforce

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The tax agency is preparing to launch a bot that would reduce a critical contracting compliance measure from multiple hours to two minutes.

They say death and taxes are the only two certainties in life, but years of budget cuts and workforce reductions have made it harder for the IRS to uphold the second half of the bargain.

After losing more than 16 percent of its funding and nearly a third of its employees since 2010, the agency today lacks the resources to properly enforce tax policy and carry out its mission. But today, officials are turning to technology to help make the most of the money and people it has left.

In the coming months, the agency plans to deploy a tool that would automate a significant portion of its vendor compliance process. The tech, which cost only $190,000 to build, could potentially free up tens of thousands of hours for employees to spend on more meaningful work, according to IRS Chief Procurement Officer Harrison Smith, who’s currently serving a three-month term as the Treasury Department’s acting senior procurement executive.

Each year, IRS contracting officers oversee some 12,000 transactions worth about $2.6 billion, including about 4,300 new awards. For each new award, officers need to conduct a contractor responsibility determination, a compliance procedure that checks vendors for past bankruptcies, business prohibitions and other red flags.

The process, which involves plugging the vendor’s DUNS number into multiple public databases and compiling a report, usually takes between two and four hours for each new contract, Smith told Nextgov. But under the new system, officers would email the DUNS number to a bot that automatically scans the databases and returns relevant information in a PDF document.

From start to finish, the entire process would take about two minutes, according to Smith.

Officers would still be required to sign off on every award, he said, but the hours they would’ve spent copying and pasting information could now be used to negotiate deals and build relationships with vendors.

The agency recently began piloting the tool with a small group of officers and plans to roll it out to all 308 contracting officers by the end of June. The bot is already capable of processing up to 20 DUNS numbers at one time, and eventually, IRS could add more databases to its checklist, according to Mitch Winans, a special assistant in the agency’s procurement office.

Smith said some officials initially balked at the idea of standing up a bot in an IT ecosystem rife with sensitive vendor and taxpayer data, which is why the first iteration of the bot only connects to public databases. But despite its relatively narrow scope, the bot is already changing the way IRS thinks about automation, he said. Leaders have started discussing ways to certify automation tools to handle sensitive information and exploring other potential applications in the contracting process.

Even “if [the bot] failed now, it’s been worth its weight in gold,” he said. “If you don't start small and build upon that, you're never going to have enough bandwidth to fix those complicated problems.”

While IRS has faced workforce and budget cuts across the board, its procurement office has been hit particularly hard, according to Smith. The office lost roughly 40 percent of its total contracting specialists in the past seven years while its docket of transactions and awards has continued to grow.

The office can only stretch its resources so far, Smith said, and the current trend can’t continue much longer without technologies like robotic process automation to take on some of the burden.

“Saying that we are simply going to do the same tasks in the same way with fewer people and expect the same level of quality, the same level of negotiation skills, the same level of savings—it's asinine,” he said. “Let me bang my head against the wall again and see if it doesn't hurt this time.”

The president’s management agenda specifically called on agencies to explore how robotic process automation could eliminate the rote, mundane tasks that often burden federal employees, and Smith sees the bot as a quintessential example of “shifting from low-value to high-value work.”

Last year, the IRS created a new process for buying technologies like RPA, moving away from traditional one-time buys toward the multi-phase agile development favored by research agencies. The new procurement system would allow the agency to quickly build and adapt RPA tools to fit different parts of its internal ecosystem and ultimately increase competition between vendors, Smith said.

“I think our goal as individuals and as civil servants ... is to do the absolute most we can do with the money and the support and the resources” we have, he said. “If we're not pursuing these types of things intentionally and carefully ... we're doing everybody a disservice.”

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