Home Media Center News Releases

Washington, D.C.—The Internal Revenue Service’s (IRS) decision to return into the hands of agency employees the work of managing and storing taxpayer files was applauded today by the president of the National Treasury Employees Union (NTEU) who has called for this move since the IRS contracted out the work two years ago.

“This marks the first time since this administration launched its aggressive contracting out program that I have seen a major contract ‘in-sourced,’” said NTEU President Colleen M. Kelley. “Turning over the sensitive work of filing and maintaining tax returns and their related documents and correspondence was a bad idea from the start.”

The IRS said it is not renewing its multi-million dollar contract with IAP Worldwide, Inc., and that effective Oct 1 it would resume direct management over taxpayer files at seven regional tax return submission processing centers—Andover, Mass., Atlanta, Austin, Covington, Ky.; Fresno, Calif.; Kansas City, and Ogden, Utah. The agency is in discussions with NTEU over hiring employees for the positions. Some 700 jobs are expected to be filled at these locations.

The bid process covering this troubled contract began in 2003. Despite IRS employees winning the original public-private competition, the work was handed to IAP following the company’s protest of that decision. NTEU warned from the beginning that the five-year, $103 million contract was a mistake.

In fact, IAP failed to meet two deadlines to begin on the schedule it promised, leaving the IRS to scramble to staff the function after months of moving its employees out of that work. Once IAP finally took over, things got even worse, as NTEU members reported lengthy delays in retrieving the information they needed to do their jobs.

Nonetheless, that didn’t stop the Office of Management and Budget (OMB) from including phantom savings from the IAP contract in its annual effort to justify the value to taxpayers of contractors. In one such report, OMB claimed savings of $35 million from the IAP contract—even before the company started to perform the work as it promised.

In the wake of the IRS decision, President Kelley noted that federal agencies have legislative authority to take back in-house work previously contracted out, and she called on agencies to be more assertive in using their contractor oversight responsibilities to reach that conclusion.

“Federal agencies should take a long look at the private-sector companies doing the work of the federal government and bring that work back in-house,” Kelley said. “When federal employees are given the tools and resources to do their jobs, there is no one who can do the work of the federal government better than federal employees.”

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