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Washington, D.C.—Yesterday the Internal Revenue Service (IRS) announced to its workers that, in the wake of the failure of an outside contractor to live up to its obligations under a contract, IRS employees will be responsible for performing work that was awarded to the private firm.

“Once again employees are picking up the pieces of a failed contracting effort at the IRS,” said Colleen M. Kelley, national president of the National Treasury Employees Union (NTEU). “This is not the first time IRS workers have had to clean up behind a contractor and, sadly, I suspect it will not be the last.”

The announcement by the IRS informed employees that full implementation of a 5-year, $103 million contract between the agency and IAP Worldwide Services to file and maintain tax returns and related documents would be delayed for the second time.

The contract—in which IAP Worldwide was to take over the files work at seven IRS sites across the country—was originally awarded in May of 2006. The contractor was to assume work at each site on Dec. 1, 2006, but just days before the start date IRS announced that IAP would begin work at only two sites and would take over files work at the remaining sites six months later—June of 2007.

The latest timetable now has IAP assuming its obligations to the IRS and America’s taxpayers in August of this year at only one of the remaining sites. The other sites will be staffed by IAP on a rolling basis through October.

“If this new schedule holds true, it will be a full 16 months for IAP to assume this work,” President Kelley said. “I have to wonder why this is taking so long. Was the contractor simply not prepared to take over, despite being awarded the contract, or is the agency unable to manage its contracts to ensure a smooth implementation?”

Whatever the reason, Kelley added, it is the IRS employees who are stepping up to ensure that the work gets done.

This latest announcement of the failure of IAP follows a troubled competition for the work. In 2003 the IRS began the process of putting out for bid the work of federal employees responsible for the files work. These private taxpayer files, containing financial information and Social Security numbers for million of taxpayers, were kept for up to one year at one of the IRS campus sites across the country before being transferred to a central federal facility.

In 2005, the work was awarded to the employees only to have a protest filed by a losing private sector company. That protest resulted in the IRS reexamining the bids and ultimately awarding the work to IAP Worldwide.

“This delay in performance likely results in extra costs to the IRS not factored into IAP's bid,” President Kelley said, “calling into question whether the cost of the IAP bid really is less than that proposed by the federal employees currently performing the work.”

To date, the IRS has said nothing about what, if any, penalties it might apply to IAP for its continuing failure to perform appropriately. IAP is the same contractor that has been in the news lately for issues ranging from Katrina hurricane relief to the Walter Reed scandal.

“Of course, none of this would have been an issue,” President Kelley said, “if the IRS had kept the files work in the hands of its own employees who were capably performing the job.”

NTEU is the largest independent federal union, representing some 150,000 employees in 31 agencies and departments, including 94,000 in the IRS.