Public.Resource.org v. United States Internal Revenue Service

Filing 46

MOTION for Summary Judgment filed by United States Internal Revenue Service. Motion Hearing set for 1/7/2015 02:00 PM in Courtroom 2, 17th Floor, San Francisco before Hon. William H. Orrick. Responses due by 9/29/2014. Replies due by 10/29/2014. (Attachments: # 1 Proposed Order, # 2 Declaration of A. Leach, # 3 Declaration of D. Higley, # 4 Declaration of D. Ross, # 5 Declaration of J. Archibald, # 6 Declaration of L. Rosenmerkel, # 7 Declaration of M. Hooke, # 8 Declaration of U. Gillis, # 9 Exhibit 101, # 10 Exhibit 102, # 11 Exhibit 103, # 12 Exhibit 104, # 13 Exhibit 105, # 14 Exhibit 106, # 15 Exhibit 107)(Gelblum, Yonatan) (Filed on 8/13/2014)

IRS Sensitive but Unclassified Information

01 / 13 / 2014
Estimation Program Office, Dwayne M. Ross, Sr.

Require all Form 990 Series Tax and Information Returns
be Filed Electronically
Vision and Strategy Phase Estimate
Basis of Estimate Report, Version 1.1

Government
Exhibit
105
_____________

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

Contents
1  Introduction ........................................................................................................................................... 4 
1.1  Purpose .......................................................................................................................................... 4 
1.2  Relationship to Previous Estimates ................................................................................................ 4 
1.3  Summary Results ........................................................................................................................... 4 
2  Key Project Information ....................................................................................................................... 6 
2.1  Related Documents ........................................................................................................................ 6 
2.2  Estimate Contributors ..................................................................................................................... 7 
3  Estimation Methodology ...................................................................................................................... 7 
4  Project Scope and Business Capabilities .......................................................................................... 8 
4.1  Included Scope ............................................................................................................................... 8 
4.2  Excluded Scope.............................................................................................................................. 8 
5  Solution Characteristics ...................................................................................................................... 8 
6  Assumptions for Estimation................................................................................................................ 9 
6.1  Global Assumptions........................................................................................................................ 9 
6.2  Software Application Development .............................................................................................. 10 
6.3  Project Infrastructure .................................................................................................................... 12 
6.4  Business Operating Division (BOD) Support (non-IT Costs) ....................................................... 13 
6.5  Deployment Services.................................................................................................................... 13 
7  Issues and Risks ................................................................................................................................ 14 
8  Management Reviews ........................................................................................................................ 14 
9  Appendix A – Standard Ground Rules and Assumptions (GR&As) for Estimation .................... 15 
10  Appendix B – Software Size and Development Attributes ............................................................. 21 
11  Appendix E – Acronyms .................................................................................................................... 23 

2

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

List of Tables
Table 1-1. ELC Phases and Categories of Cost Included in the Estimate .................................................. 4
Table 1-2. Five Year Investment Summary Report ..................................................................................... 5
Table 1-3. Highest Cost Components .......................................................................................................... 5
Table 1-4. Projected Schedule ..................................................................................................................... 6
Table 1-5. Projected Staffing ....................................................................................................................... 6
Table 2-1. Estimate Contributors ................................................................................................................. 7
Table 5-1. Planned Infrastructure Investments ............................................................................................ 9
Table 6-1. Software Engineering Project Support ..................................................................................... 11
Table 6-2. Data Engineering Project Support ............................................................................................ 12
Table 6-3. AD Non-Developer Project Support Level of Effort .................................................................. 12
Table 12-1. Assumptions for % In-House Labor for DP Organizations ..................................................... 15
Table 12-2. IRS and Contractor IT Labor Rates by Functional Area ......................................................... 17
Table 12-3. Composite IRS and Contractor Labor Rates for Services and Enforcement ......................... 18
Table 12-4. Inflation Indices and Rates ..................................................................................................... 20
Table 13-1. Software EBS Component Sizes and Attributes..................................................................... 21
Table 13-2. Default Parameter Overrides .................................................................................................. 21

3

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

1 Introduction
1.1

Purpose

This estimate provides a structured accounting of all Information Technology (IT) resources and
associated costs required to complete the development and deployment of the FY2014 legislative
proposal that would require all Form 990 Series Tax and Information Returns be filed electronically. “”. A
general explanation of the Administration’s FY 2014 Revenue proposals is available in the “Green Book”
at: http://www.treasury.gov/resource-center/tax-policy/Documents/General-Explanations-FY2014.pdf
under the title “Make e-Filing Mandatory for Exempt Organizations”. The legislation would require all taxexempt organizations that must file Form 990 series returns to file them electronically. The proposal
would also require the IRS to make the electronically filed Form 990 series returns publicly available in a
machine readable format in a timely manner, as provided in regulations.
This estimate reflects the information that is available during the Vision & Strategy phase of the IRS
Enterprise Life Cycle (ELC) and includes costs for the lifecycle phases, cost categories, and cost types
noted in Table 1-1.
Table 1-1. ELC Phases and Categories of Cost Included in the Estimate

x
x
x
x
x
x
x

ELC Phases
Project Initiation
Domain Architecture
Preliminary Design
Detailed Design
System Development
System Deployment
Operation and Maintenance

x
x
x
x

Cost Categories
Application Software Development
Infrastructure Environments
Deployment Services
BOD Support (non-IT costs)
Program Management Office

x
x

Cost Types
IRS Labor
Capital Costs

This estimate was prepared to support the development of a FY2014 legislative proposal. The estimate
was requested by Bridget Forcier from the Chief Financial Officer (CFO), Corporate Budget, Budget
Formulation Office and was included as part of a group of new legislative proposals that were added by
Treasury Tax Policy in the FY 2014 President's Budget. Tax Exempt and Government Entities
Submission Processing (TEGE/SP) are the business sponsors for the proposal. This estimate includes IT
costs to design, build, deploy and operate the system and Business Operating Division (BOD) support
costs to support development activities.

1.2

Relationship to Previous Estimates

No previous estimate was developed for this proposal.

1.3

Summary Results

Tables below provide the following information:
1. Table 1-2 shows the cost by fiscal year for Make e-Filing Mandatory for Exempt Organizations for a
five-year investment period beginning with the base year of 2015. The 2015 costs for the projects are
supporting pre-MS2 activities.
2. Table 1-3 summarizes the largest cost components in the project estimate. The Estimate Breakdown
Structure (EBS) Identifier (ID) refers to the component number within the EBS Report that is included
in the Investment Summary Report (ISR) Extract described later in this section. The listed
components account for $10.68 out of the $14.3 total Non-Recurring (NR) cost of the project.
3.
4

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

4. Table 1-4 shows the project’s projected schedule. The estimate uses a project start date of
10/1/2015.
5. Table 1-5 summarizes project staffing. The labor costs include BOD (non-IT) support needed to
support the development of Make e-Filing Mandatory for Exempt Organizations.
Table 1-2. Five Year Investment Summary Report

Table 1-3. Highest Cost Components
EBS ID
1.1.1.2.1.1
1.1.1.2.1.4
1.1.4.1
1.3.1.3
1.1.2.3
1.2.1
1.1.6
1.1.2.1
Total:

Description

MeF new Form Enhancement - (1 new Forms)
Website for the machine readable data (ICCE)
SAT (25% of S/W Development) (A)
BOD SME Support - 1 / 3 / 5 FTE LOE (A)
Plan/Requirements - EA (A)
Network Augmentation
Security Activities - New System - Moderate Risk
Plan/Requirements - SE (A)

Cost ($)
$4.3M
$2.0M
$1.5M
$818K
$705K
$497K
$436K
$423K
$10.68M

5

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

Table 1-4. Projected Schedule
Lifecycle Phase
Project Initiation and Domain Architecture
Preliminary Design
Detailed Design
System Development
System Deployment

Start Date
10/1/14

Phase Duration (Months)
6
3
2
4
4

MS Exit Date
MS1/2
03/25/2015
MS3
07/06/2015
MS4a
09/05/2015
MS4b
01/12/2016
MS5
05/08/2016

Table 1-5. Projected Staffing

IRS FTE
Contractor
Total

FY2015
14.8
21.8
36.6

FY2016
7.4
12.8
20.2

Total
22.3
34.5
56.8

Detailed cost reports for this estimate are contained in an Investment Summary Report (ISR) extract Form
990 efile ISR Extract (2013-12-06) revised 1.3.
The ISR Extract provides a breakdown of the estimate's results into formats suitable for resource
planning. While a project cost estimate is used to inform budget formulation, it is critical to note that this
independent cost estimate report is neither an indication of Treasury’s future funding requests nor a
procurement commitment. Furthermore, for any particular fiscal year, actual budget formulation can
appropriately be either higher or lower than the project cost estimate. There are several factors that will
cause this difference to occur. While the estimate predicts future funding expenditures and
disbursements, budget formulation focuses on the funding commitment and obligation process to ensure
that sufficient funds are available during project execution.
Unless otherwise noted, reports are provided on five tabs of the extract:
1. ISR  Cost breakdown by fiscal year, for the project as a whole and for each Delivery Partner (DP)
2. DP Summary  Cost breakdown by DP.
3. DP by FY – Shows total cost Full Time Equivalent (FTE) staff by DP. The Above Unit Cost Rate
(UCR) costs shown in the report includes contractor labor and materials (purchased hardware,
purchased software, site preparation, training and travel).
4. Labor Charts  IRS and Contractor FTEs for up to 5 FYs, for the project as a whole and for each
DP
5. EBS Report - Product-oriented Estimate Breakdown Structure
6. DP Milestone  Cost breakdown by ELC phase and DP
7. JV  Journal Voucher

2 Key Project Information
2.1

Related Documents

The development cost to e-File the Form 990-T was derived from a previous estimate that was completed
in FY2007. The prior estimate is documented in the following document:

6

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

1. Form 990 Revision Cost Analysis 8 26 06 (2006-12-05)

2.2

Estimate Contributors

Participants who substantially contributed to this estimate appear in Table 2-1.
Table 2-1. Estimate Contributors
Organization
EPO
Solution Engineering
AD
TE/GE

Contact Names
Dwayne M. Ross, Sr.
Lini Wu, Jeffery Jones
Richard Rode, Andre Springer (MeF)
JaLynne Archilbald, Robert Noonan

3 Estimation Methodology
The estimator developed this estimate following the activities and steps defined in the IT
Estimation Procedure. The “Perform Estimation” activity within the procedure relied on two
commercial estimation tools: SEER for Software® and SEER for IT®. Estimation consisted of the
following major steps:
2. Refine Scope and Solution – Representatives from across TE/GE, W&I, SE, IPS, and AD discuss
necessary business and IT changes to refine the proposal’s scope and solution. Although the Green
Book would require all Form 990 series returns to be filed electronically, TE/GE refined the solution to
require only the new form 990-T to be e-Filed. Form 990-BL was excluded from the scope due to its
low volume and Form 990-W was excluded from estimate because it is a worksheet and is not
required to be filed.
3. Developed the EBS – The estimator tailored the IRS IT standard EBS for the proposal to make eFiling mandatory for exempt organizations. The EBS is a product-oriented outline that maps elements
of the estimate to the components of the design. All EBS elements are grouped into one of the
following categories: Application Development, Project Infrastructure, BOD Support, and Deployment
Services.
4. Estimated EBS Component Costs – The estimator used a combination of techniques to estimate
EBS components including parametric modeling, analogy, application of cost estimating relationships,
and utilization of pre-defined costs from service provider catalogs. Section 6, Assumptions for
Estimation, document baseline assumptions for EBS element from which the estimate was built.
5. Apply Factors and Rates – The estimator added other aspects of the project such as IRS/contractor
labor mix and labor rates to develop a complete cost and schedule estimate.
6. Generated reports – The estimator used the Investment Summary Report tool to create reports in a
variety of formats for the various users of the estimate.
This methodology relies on what is documented and what can be reasonably assumed at this time.
Estimated costs are expected to change as the project enters the life cycle and the more detailed
requirements and system specifications are developed.

7

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

4 Project Scope and Business Capabilities
4.1

Included Scope

The proposal would require all tax-exempt organizations that must file Form 990 series returns to file
them electronically. Forms 990, 990-EZ and 990-PF are currently being e-filed through MeF. Solution
would require the new form 990-T to be e-Filed. The proposal would also require the IRS to make the
electronically filed Form 990 series returns publicly available in a machine readable format in a timely
manner, as provided in regulations.
The proposal would generally be effective for taxable years beginning after the date of enhancement.
Transition relief would allow up to three additional years to begin electronic filing for smaller organizations
and organizations for which electronic filing would be an undue hardship without additional transition time.
In addition, the proposal would give the IRS discretion to delay the effective date for Form 990-T filers for
up to three taxable years. Capabilities that are included in scope of this estimate include:
1. Ability to e-file form 990-T. Forms 990, 990-EZ and 990-PF are currently being e-filed through MeF.
2. New process to filter the filed 990-T series form to redact individual Personally Identifiable information
(PII) and store it in a publicly accessible location.
3. Development of a new public user interface for accessing machine readable 990 series forms.

4.2

Excluded Scope

The following significant scope elements have been excluded from this estimate:
1. Ability to e-file Form 990-BL due to its low volume.
2. Ability to e-file Form 990-W because it is a worksheet and is not required to be filed.

5 Solution Characteristics
The solution will require new functionality and enhancements to the following systems:
1. Modernized e-File (MeF) will be enhanced to receive and process Form 990-T using standardized
business rules and requirements across form type. MeF provides for real time processing of
acknowledgements, streamlined error detection, capability to attach PDF files, and capability for IRS
employees to view MeF return data through the Employee User Portal (EUP) and also the Business
Objects Server.
2. Tax Return Database (TRDB) is the legal repository for electronically filed tax forms. TRDB will
require modification to receive the electronically filed Form 990-T from MeF.
3. Business Master File (BMF) Mainline Processing will be modified to support the pre-posting, posting,
analysis, and output of business account transactions using the information on the electronically filed
990-T form.
4. Integrated Customer Communications Environment Management Information System (ICCE MIS) will
be modified to extract Form 990 series forms from TRDB, transform the forms by filtering the filed 990
series forms to redact individual Personally Identifiable information (PII) and load the forms on the
web. ICCE will also provide a user interface for public users to access the filtered machine readable
990 series forms.

8

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

5. Purchased hardware, licenses, and storage needed for development, testing, production and disaster
recovery environments appear in Table 5-1. The infrastructure cost reflects the assumption that there
will be some network augmentation to handle the increased volume of e-Filed 990-T forms.
Table 5-1. Planned Infrastructure Investments
Environment
Network Augmentation
Portal
Production
Disaster Recovery

Purchased Materials
Telecom Build Out - Medium
IEP Integration – Small (Pending Accenture’s Refinement)
1 TB SAN Storage
1 TB SAN Storage

6 Assumptions for Estimation
Estimates are usually based on limited information and so need to be bound by the constraints that make
estimating possible. These constraints bind the estimate’s scope, effort, cost, schedule, staffing, and
quality, and are accounted for using assumptions. These assumptions document baseline conditions from
which the estimate was built.
In some cases, assumptions reference criteria that were used to select predefined elements contained in
cost catalogs. Cost catalogs contain predefined labor hours, labor mix, and material costs for different
scope size classifications (e.g., Small, Medium, Large and Extra Large) for IT services. EPO currently
maintains cost catalogs that were jointly developed by EPO and DPs who provide these services. The
catalogs are primarily used in the development of estimates during the Vision and Strategy phase to
provide placeholder costs for IT services and materials that will likely be needed. The criteria, categories
and associated labor hours or material costs were derived from the experience of the DPs.

6.1

Global Assumptions

1. Project Initiation Date – 10/1/2015. The project initiation date defines the base fiscal year for all
reported costs; i.e., if a project is initiated in FY 2015, all costs are reported in base year FY 2015
dollars, with the exception of the Investment Summary Report which shows inflation-adjusted costs.
2. Schedule – The following assumptions pertain to the overall project schedule:
a. The design and development phases were estimated using the SEER for Software parametric
model which was applied to estimate the effort to Extract, Transform and Load (ETL) Form 990
series data that is stored in TRDB and load the data into a publicly-accessible location. The
schedule for pre-MS2 (i.e., Project Initiation and Domain Architecture ELC phases) and
Deployment phases were estimated as a percentage of the Design and Development based on
the 30:50:20 guideline whereby the pre-MS2 schedule duration is set equal to 60% of the Design
and Development schedule duration and the System Deployment schedule duration is set equal
to 40% of the Design and Development schedule duration. The overall result is that pre-MS2 is
30%, Design and Development 50% and Deployment 20% of total schedule duration. This
guidance was developed by EPO based on a review of ELC Milestone Exit review dates for 19
completed projects and is documented in the EPO white paper, “Guidelines for Estimating Project
Schedule.
b. If the estimate is for a subsequent release of a Current Production Environment (CPE) system to
provide a new service that is consistent with other services that the system already supports, it is
assumed that the project will commence work beginning with preliminary design; pre-MS2
activities should be excluded from the estimate (Source: EPO White Paper “Guidelines for
Estimating Project Schedule”). Pre-MS2 activities were included this estimate.
3. Staffing Constraints – No staffing constraints.

9

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

4. Pre-MS2 Effort – Pre-MS2 IT effort is estimated as 23% of IT design and development effort based
on a review of actual effort IT effort on the IRDM R1 project. Costs are allocated to DPs as 30% to
Solution Engineering (SE), 20% to Requirements and Demand Management (RADM) and 50% to
Enterprise Architecture (EA).
5. Global assumptions – Productive hours per month, percentage of in-house labor for DP
organizations, probability of completion within budget and schedule, labor rates, inflation adjustment,
and Operation and Maintenance (O&M) phase duration appear in Appendix A.
6. AD/BOD/PMO Supplies – Costs for miscellaneous supplies are estimated at $160 per FTE per year
for AD, BOD, and PMO.

6.2

Software Application Development

1. Core Functionality – The estimator used a combination of techniques to estimate EBS components
for software development including parametric modeling and analogy,
a. MeF enhancements were estimated using a prior estimate for Form 990 Revision. The estimated
cost of $4.3M to e-File Form was based on the $4.4M in IBM Development Costs shown in Table
6-1. The prior estimate used a base year of 2007 so the cost was adjusted for inflation using a
2% inflation factor. Infrastructure support, government costs, and risk reserve costs are included
elsewhere in the estimate. IBM New Functions were assumed not to be needed. Contractor and
Project overhead are excluded from this estimate.

Table 6-1. Form 990 Revision Estimate Summary (Source: Form 990 Revision Cost Analysis 8 26 06 (2006-12-05))

b. ICCE costs were estimated through a combination of analogy and parametric modeling.
 The effort to extract 990 data, transform it to redact personal information, and store the
redacted 990 files in a publicly accessible repository was sized using the function point
methodology. The application was sized as 9 function points (3 External Inputs, 3 External
Outputs and 3 Internal Logical Files). The estimated size was entered into SEER for
Software. The model parameters are described in Section xx.
 The user interface to access 990 series forms was estimated to cost $2M based on input
from On-Line Services. The cost was compared with the estimated effort for Get Transcript
which had an estimated development cost of $259k.
BMF and TRDB enhancements were estimated using the CPE cost catalog.
2. CPE System Enhancements – The estimator selected predefined elements from the EPO CPE cost
catalogs as placeholders for development efforts.
10

IRS Sensitive but Unclassified Information

a.

Financial Management Services
Estimation Program Office

CPE system enhancement placeholders are defined as the following categories:


Small – Current user of the system requests an existing service that the external system
already provides to other users under a standard interface protocol.



Medium – New user of the system requests an existing service that the external system
already provided to other users under a standard interface protocol or and existing user of the
system requests a new type of service that is consistent with other services that the system
already supports but requires some effort to transform the data into the requested format.



Large – New user of the system requests a new type of service that is consistent with other
services that the system already supports but requires some effort to transform the data into
the requested format.



Extra Large – User requests a new type of service that requires some customization by the
external system and their need to test new or enhanced processing logic.

b. Using these definitions, CPE System Enhancements were estimated for the following systems:


BMF Modifications Enhancement = Medium/Large



TRDB Enhancement = Large

3. EST Effort – Guidance from the EST organization is to estimate the effort for Systems Acceptability
Testing (SAT) at 25% of the developed software. This test effort is beyond the typical testing effort in
the SEER for Software cost model and is listed as a separate element in the EBS. In addition,
Performance Testing effort is estimated at 10% of the developed software effort.
4. Software Engineering Project Support – The Software Engineering practice area within SE
supports the development of the application architecture technical solution, which is documented in
the Business Systems Architecture Report (BSAR) and Design Specification Report (DSR). The
estimator selected the Bronze category of effort from predefined categories of support as a
placeholder for engineering services that may be required for this project. The Bronze level of service
is primarily documentation review; the other levels involve direct participation of SE in the project. The
service levels were jointly developed by EPO and SE and determined from a review of support that
the organization has provided for several projects. For the Gold and Silver levels, the project size
criteria are as follows:


Medium applies in most cases, and typically represents a project adding significant new
functionality to an existing system.



Small applies to a project for a minor enhancement of an existing system.



Large applies to a project implementing a new system, or changes to a complex system
(multiple subsystems or many interfaces with external systems).
Table 6-2. Software Engineering Project Support

Type
None
Bronze
Silver - S / M / L
Gold - Small
Gold - Medium
Gold - Large

Effort (Least / Likely /
Most)
80-120 hours
Half of Gold level
0.1 / 0.5 / 1.0 FTE
1.0 / 1.5 / 2.5 FTE
2.5 / 3.0 / 4.0 FTE

Analogous Projects
CPE Enhancements
Solution Engineering planning
Solution Engineering planning
ACA BPD, SCRIPS, ACA IFSV
BDA
MeF R8, MeF R9, ACA IS&R, CADE2 TS1, RRP R1

5. Data Engineering Project Support – A data-centric application, involving the moving, transformation
and processing of large volumes of data will likely require a design approach that centers on the
design of the data model and the mechanisms for delivering data to and from the application. The
11

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

Enterprise Data Management Office (EDMO) will participate in multiple design sessions to ensure
that the data model meets IRS and industry standards while still providing a model that supported the
batch processing needs of the system. EDMO also manages the Extract, Transform and Load (ETL)
Informatica platform and tools. The estimator selected the Bronze category of effort from predefined
categories of support as a placeholder for data engineering services that may be required for this
project. The Bronze level of service is primarily documentation review; the other levels involve direct
participation of SE in the project. The service levels were jointly developed by EPO and SE and
determined from a review of current support that the organization has provided for several projects.
For the Gold and Silver levels, the project size criteria are as follows:


Medium applies in most cases, and typically represents a project adding significant new
functionality to an existing system.



Small applies to a project for a minor enhancement of an existing system.



Large applies to a project implementing a new system, or changes to a complex system
(multiple subsystems or many interfaces with external systems).
Table 6-3. Data Engineering Project Support
Type

None
Bronze
Silver - S / M / L
Gold - Small
Gold - Medium
Gold - Large

Effort
(Least / Likely / Most)
80-120 hours
Half of Gold level
0.2 / 1.0 / 2.0 FTE
2.0 / 3.5 / 5.0 FTE
5.0 / 6.5 / 8.0 FTE

Analogous Projects
CPE Enhancement or not a data centric application
Solution Engineering planning
Solution Engineering planning
ACA IFSV, MeF R8, MeF R9, ACA IS&R
RRP R1, ACA CDR, CADE2
BDA

6. DBA / SA Support – All estimates will include effort for Database Administrator / System
Administrator Support for hosting and maintaining development and test environments that range
from 1.1 / 2.1 / 3.3 (Least / Likely / Most) FTEs. The level of effort was determined based on ongoing
EPO analysis of actual costs from completed IRS IT projects.
7. AD Non-Developer Project Support – All project estimates include minimum program support
resources, unless otherwise specified, as shown in Table 6-4. Program Office costs exclude direct
software development management, which is included in the software development labor estimate.
Table 6-4. AD Non-Developer Project Support Level of Effort
Support Type
AD Project Manager
AD Domain Support
AD Travel

Level of Effort (LOE) per Schedule Month
1 FTE LOE (Default is .5 to 1 FTE LOE)
.5 to 1.5 FTEs LOE
1 one-person trip per 2 months @ $1,800 per trip

8. Software Operation and Maintenance – O&M begins at the completion of the system deployment
phase and was estimated to be 20% of the development effort annually unless known to be
otherwise. Purchased Software O&M was estimated to be 20% of licensing costs annually unless
known to be otherwise.

6.3

Project Infrastructure

1. Purchased Hardware – No new hardware was included in this estimate.

12

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

2. IRS Enterprise Portal (IEP) – The new Registered User Portal (RUP) (deployed August 2013) and
Public User Portal (PUP) (deployed July 2012) hosted on the IEP will be supported under a contract
that is being managed by the Portal Project Management Office (PPMO). Placeholder costs are
included in the estimate to host new applications on the IEP however catalogs that are currently used
are based on the old portal support costs. The catalogs used assume that the effort will depend on
the degree portal infrastructure customization that will be required for the application. Support levels
are assumed to be Few Modifications based on the following definitions:
a. Hosting Only – The project intends to use the Portal services "as is". This option assumes that
the project will only require minor configuration changes. This option also assumes that the new
application will rely on a set of standard JVM class libraries that implement the Java API
(Application Programming Interface). The catalog entries include only the Solution Engineering
labor hours to configure the environment.
b. Few Modifications/Increased Capacity – The project intends to use the Portal services with only
one or two minor modifications. Solution Engineering will advise when a project’s impact on an
existing environment will require increased capacity.
c.

Many Modifications – The project intends to use the Portal, but needs to make several changes
and/or introduce new technologies and/or needs a separate environment. The project needs a
separate environment if the Portal is expected to require additional capacity to support a large
number of new users that require authentication services.

3. Security Certification and Accreditation (C&A) Support and Planning – The estimator selected
the New/Moderate Risk category from predefined elements from the Security cost catalog. This
estimate assumes that each engaged service provider will perform the required security due
diligence, so no costs are included for Cybersecurity to perform those tasks.
4. Network Augmentation – The estimator selected the Medium category from predefined elements
from the Network cost catalog as placeholders for effort that may be required to configure the network
to support the increase in the volume and size of transactions over the IRS Wide Area Network
(WAN).
5. O&M Support for Hardware – Estimated at 20% of purchase cost annually for 5-year rust
replacement.

6.4

Business Operating Division (BOD) Support (non-IT Costs)

BOD-support costs incurred to support the IT development will include the following:
1. BOD Project Support – Labor assumptions are as follows:
a. One full-time BOD Project Manager for the duration of the project
b. A Business Systems Planning (BSP) Project Manager ¼ to ½ time
c.

Subject Matter Experts – 1 to 5 FTEs / all in-house

2. BOD Travel – 1 one-person trip per month @ $1,800 per trip
3. Development and Printing of Training Materials  effort to update training materials is estimated at
4 FTEs for 1.5 months; cost to print training materials is estimated between $25K and $100K.

6.5

Deployment Services

This estimate includes the following activities:
1. AD Labor – AD effort during the deployment phase is estimated as 50% of the peak staff for AD
development based on preliminary analysis of historical project costs.
2. UNS-D Labor
13

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

a. IDEA Lab Desktop Application Certification – 200-280 hours to certify and create installation
package
b. Get Services Help Desk Probe and Response Guide – 40 hours
3. Facilities and Site Prep – included $5K for each installed site.
4. Transition Management – The estimator selected the Medium, 12 months category from predefined
elements from the Transition Management cost catalog.

7 Issues and Risks
1. The cost of e-Filing new form types varies considerably. Estimate was based on prior estimate; not
actuals.

8 Management Reviews
A summary cost analysis of the new FY2014 legislative proposals was sent to the Associate Chief
Information Officer (ACIO) of Application Development (AD), Gretchen McCoy, the Assistant ACIO of AD,
Nancy Sieger, and the Director of Financial Management Services (FMS), Ursula Gillis on December 18,
2013, The deck contained a summary of the costs for implementing new legislative proposals that were
added by Treasury Tax Policy in the FY 2014 President's Budget, and included this proposal to require
Form 990 series forms to be e-filed. Because it is not known if the proposed legislation for any of the
proposals will be actually be passed into law (usually, legislation is not passed) the management did not
request a briefing on the results.

14

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

9 Appendix A – Standard Ground Rules and Assumptions (GR&As) for
Estimation
This section provides an overview of the standard GR&As that are applied on EPO estimates. Exceptions
to GR&As are allowed and not uncommon. GR&A exceptions are noted within the BOE Report as
exceptions to GR&As. Unless specifically noted as an exception, all GR&As included in the BOE are
applicable to the estimate. Estimates that make use of these conventions will be easier to understand
when they are reviewed for QA, or when they need to be modified.
1. Productive Hours per Month – Schedules are based on the availability of 152 effort hours of both
employee and contractor labor per person month for project work. This is equivalent to 1,824
productive hours per person per year and excludes vacation, sick, and administrative time. This is
used for both IRS and Contractor labor. Assumption is that Contractor labor rates are applied only to
hours actually charged for work on contract.
2. Percentage of In-House Labor for DP Organizations – DP organizations are organizations that are
responsible for delivering parts of the proposed solution for a project.
a. Every non-rollup element in the EBS report has a DP Identifier shown in Table 9-1. This property
is used to allocate costs by DP in estimate reporting. The distribution of hours between IRS and
contract labor varies by DP.
b. The assumptions for percentage of in-house labor by DP are provided in Table 9-1. Distributions
represent organizational defaults or, in the case of AD, projections obtained by the estimator for
this estimate since AD labor distribution varies widely between IRS and Contractor labor
depending on application.
Table 9-1. Assumptions for % In-House Labor for DP Organizations

AD
BOD
CS
EOps
ES
EST
PMO
SE
TMO
UNS-D
UNS-N

DP Organizations
Application Development
Business Operating Division (all: W&I, SB/SE, LB&I, TE/GE, etc.)
Cybersecurity
Enterprise Operations
Enterprise Services
Enterprise System Testing
Program Management Office
Solution Engineering
Transition Management Office
User and Network Services – Desktop
Enterprise Networks – Network

% In-House
50%
100%
10%
100%
30%
30%
100%
30%
5%
100%
80%

3. Probability of Completion – The Confidence Level (CL) that a project will deliver the completed
scope of work within estimated cost and schedule.
a. Software size, labor rates, and other program/cost attributes are entered into our cost models as
least, likely and most ranges that result in a range of projected cost for best- through worst-case
implementation scenarios. The 50% CL equates to a 50% likelihood that the project will deliver all
functionality on schedule and within budget, and the lowest recommended funding level if the
project is approved. A lower CL is accompanied by a lower cost projection, but also a higher risk
that the project will require more money and/or schedule than estimated.
b. Budget projections are specified as point estimates. The CL for a point estimate associates the
CL with a dollar value on the cost curve. For Vision and Strategy phase estimates, point
estimates are specified at an 80% confidence level.

15

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

4. Base Year Labor Rates – All labor costs are based on the fiscal year of the start date of the project.
The IRS rates vary by DP and are derived from the UCR Calculator that is maintained by the Office of
the Chief Financial Officer (CFO).
a. Hourly rates are calculated by dividing the annual FTE costs in the UCR calculator by 1,824
which is the assumed number of productive hours per year for an IRS or contractor employee.
Table 9-2 provides an overview of IT labor rates applied in estimates by functional area. The table
shows the assumed rates for support by the top-level Services and Enforcement organizations.
Many organizational units comprise the composite rates shown. If better rate information is known
for the actual organizational unit(s) supporting a project, the estimator may override the
composite rates with unit rates.
b. Contractor rates are derived from the Independent Government Cost Estimate (ICGE) rates that
are published by the Total Information Processing Support Services (TIPSS) Program
Management Office and updated annually. Table 9-2 and

16

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

Table 9-3 show the TIPSS labor categories that were mapped to each functional area and used
to provide a range of costs for hourly contractor support. For in-flight projects, actual contractor
rates should be used in lieu of the rates shown in the tables.
Table 9-2. IRS and Contractor IT Labor Rates by Functional Area
Functional
Area
AD (9R)

EOps (9S)
UNS-N (9T)
UNS-D (9X)

CS (90/9K)
ES
(9U/66/67)
Includes SE
S&P (9Z)
includes
TMO
BSM (6D)
includes
PMO

Range
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most

IRS Hourly Rates
2013

2014

2015

76.70

77.19

78.27

67.87

70.01

70.99

72.20

73.25

74.28

62.88

62.77

63.65

83.53

84.54

85.72

94.24

95.67

97.01

85.96

88.10

89.33

83.39

84.43

85.61

TIPSS IGCE Contractor Hourly Rates
Mapped Category
Applications Systems Analyst
Systems SW Engineer
Senior IT Specialist
IT Administrative Specialist
IT Administrative Specialist
Senior IT Admin Specialist
Network Engineer
Network Engineer
Telecom Engineer
Jr. IT Technician
IT Technician
Senior IT Technician
Jr. Security Specialist
Security Specialist
Senior Security Specialist
IT Specialist
Information Engineer
Systems Architect
Information Engineer
Information Engineer
Senior IT Specialist
Task/Project Manager
Business SME
Business SME

2013
104.49
116.78
132.04
68.65
68.65
82.77
106.87
106.87
126.43*
60.15
77.40
96.01
82.75
109.96
135.48
104.00
124.89
137.04
124.89
124.89
132.04
161.89
186.46
186.46

2014
107.42
120.05
135.74
70.57
70.57
85.09
109.86
109.86
129.57
61.83
79.57
98.70
85.07
113.04
139.27
106.91
128.39
140.88
128.39
128.39
135.74
166.42
191.68
191.68

2015
110.64
123.65
139.81
72.69
72.69
87.64
113.16
113.16
129.57
63.68
81.96
101.66
87.62
116.43
143.45
110.12
132.24
145.11
132.24
132.24
139.81
171.41
197.43
197.43

* Note – UNS-N and TMO rates marked with an asterisk were recommended by the Functional Area.

17

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

Table 9-3. Composite IRS and Contractor Labor Rates for Services and Enforcement

Functional Area
WAGE (1K/Activity
Type 5 (CSR))
WAGE (BOD
Composite)
LB&I (BOD
Composite)
CIDV (BOD
Composite)
SBSE (BOD
Composite)
TEGE (BOD
Composite)

Range
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most
Least
Likely
Most

IRS Hourly Rates
2013

2014

2015

48.30

46.05

TIPSS IGCE Contractor Hourly Rates

46.69
109.36

112.42

115.79

109.36

112.42

115.79

Information
Engineer

80.48

2015

124.89

128.39

132.24

79.50

80.04

2014

Bus. Process Eng
Specialist

78.40

2013

Bus. Process Eng
Specialist
75.44

Mapped Category

81.61

46.00

52.52

53.26

52.93

50.03

50.73

60.44

59.73

60.57

5. Adjustment for Inflation – With the exception of the Investment Summary Report, all reported costs
are shown in base year 2015 dollars. The Investment Summary Report in the ISR Extract shows the
inflation adjusted numbers alongside the base year numbers.

18

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

Table 9-4 shows the EPO developed inflation index, rates, and sources for the rates. This is a “raw”
index so inflation adjusted numbers are reflected in their own base year (without the multi-year
spend-out implied by a weighted index). EPO maintains complete documentation for its index in a
white paper entitled “Inflation Documentation (2012-01-11 v1.1)”.
6. O&M Phase Duration – O&M phase duration extends to a point five years after project initiation.
Unless noted, O&M phase estimates do not include software modifications for tax law changes,
legislative mandates, and moderate to large functional enhancements.

19

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

Table 9-4. Inflation Indices and Rates
Indices

Rates

FY

IRS FTEs

Capital

IRS FTEs

Capital

2006
2007
2008
2009
2010

0.860
0.888
0.918
0.944
0.959

0.852
0.879
0.907
0.933
0.944

3.30%
3.30%
2.90%
1.50%
1.90%

3.00%
3.10%
2.80%
1.20%
2.00%

2011

0.977

0.964

2.00%

2.10%

2012

0.996

0.984

0.37%

1.60%

2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031

1.000
1.004
1.015
1.030
1.044
1.059
1.074
1.089
1.104
1.119
1.135
1.151
1.167
1.183
1.200
1.217
1.234
1.251
1.268

1.000
1.016
1.032
1.049
1.066
1.083
1.100
1.118
1.135
1.154
1.172
1.191
1.210
1.229
1.249
1.269
1.289
1.310
1.331

0.39%
1.15%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%
1.40%

1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%
1.60%

2032

1.286

1.352

1.40%

Comments

1.60%

Rates from Dept. of Labor, Bureau of Labor
Statistics, Employment Cost Index (ECI), for Public
and Private workers

Rates from Treasury Guidance via CFO's Office
(12, 13 only); increase in IRS FTEs reflects frozen
pay with increased value of health benefits.

The FY14 IRS FTE Rate (1.15%) is a composite
rate. IRS FTE pay raises take effect in January, so
EPO assumed one quarter at the low rate of
increase, reflecting an increase in the value of
benefits but not pay (~0.4%), and three quarters
reflecting a 1.4% increase in total compensation.
The Capital rate (1.6%) was extrapolated from
Dept. of Treasury guidance for FY 2013, because
Treasury does not provide guidance past 2013 at
this time.
The CFO's office advised that IRS FTE increases
are expected to be 1.4% in 2014; EPO
extrapolated for future years in the absence of
additional guidance.

20

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

10 Appendix B – Software Size and Development Attributes
This section defines the software components for the core functionality in the estimate and characterizes
each component by the knowledge base attributes used by the SEER for Software model. The knowledge
base attributes identify the set of reference items that will be used by the SEER for Software model to
estimate the effort and schedule of the software components to be developed or enhanced. These
settings are summarized in Table 10-1.
Table 10-1. Software EBS Component Sizes and Attributes
Software EBS
Component

Effective
Size

Implemented
Language

Acquisition
Method

Platform

Application
Type

Development
Method

Effective
Productivity
(output)

Filter Form 990

X UFP ≈
1,278
SLOC

Third
Generation
Language
(3GL)

New
Development

Sever

Database

Waterfall

57

UFP – Unadjusted Function Points
The following notes apply to estimates developed using SEER for Software:
1. Development Standard – specified as IS Formal on all estimates.
2. Data Normalization for APR Software Size – Physical line counts obtained from the Application
Program Registry (APR) and used as a basis for the software size of core functions represent
physical lines of code. These sizes were normalized to logical lines for input to the SEER for Software
model by reducing the sizes by 30%. The normalization is used to equate the counts to an industry
standard code count by removing blank and comment lines.
3. SEER for Software Model Calibration – The combination of Knowledge Bases (Kbase) selections
and development language, will result in a default set of parameter settings that characterize the
development effort and establish an effective productivity for software development. For estimates
developed during the Vision and Strategy phase, EPO maintains model default settings with the
exception of the overrides shown in Table 10-2. For in-flight projects, parameters are tailored for each
environment. The impact of the IRS Override on effort and schedule are shown in the last column of
Table 10-2.
Table 10-2. Default Parameter Overrides
Parameter

Model Defaults

IRS Overrides

Least / Likely / Most

Least / Likely / Most
Server

PLATFORM
LINES
Programs included in Size
1
PRODUCT DEVELOPMENT REQUIREMENTS
Requirements Volatility
Nom
Nom
Hi
Test Level
Low
Nom
Hi
Rehost from Dev to Target
Nom
Nom
Nom+
SCHEDULE AND STAFFING
Min Time / Max Effort
Min Time
CONFIDENCE LEVEL
Effort Probability
50%
Schedule Probability
50%
REQUIREMENTS
Reqts Definition Formality
Vlo
LowLow
Reqts Effort after Baseline
No

% Change
Effort

Sched

16%
5%
18%

5%
2%
6%

Optimal Effort

-29%

19%

80%
80%

50%
50%

0%
0%

7%
4%

13%
0%

10k-20k per Program
Hi
HiHi-

Hi

Hi
HiHi-

Hi
Yes

Hi+
HiHi-

VHi

21

IRS Sensitive but Unclassified Information

Parameter
SYSTEM INTEGRATION
Progs Concurrently Int

Financial Management Services
Estimation Program Office

Model Defaults

IRS Overrides

1

3

% Change
3%

1%

22

IRS Sensitive but Unclassified Information

Financial Management Services
Estimation Program Office

11 Appendix E – Acronyms
Acronym
ACA
AD
APR
AQT
BOD
BOE
BSAR
BSM
BSP
C&A
CER
CIDV
CFO
CL
COTS
CPE
CPU
CS
DBA/SA
Dev
DITE
DP
DR
DSR
EA
EBS
EDMO
ELC
EOps
EPO
ES
EST
ETL
EUP
FIT
FP
FTE
FY
GB
GELs
GR&A
HD
IGCE
IFS
ISR
IEP
ISR
IT
JV
LB&I
LOE
MD
MIPS
MS
O&M

Definition
Affordable Care Act
Application Development
Application Program Registry
Application Qualification Testing
Business Operating Division
Basis of Estimate
Business Systems Architecture Report
Business Systems Modernization
Business Systems Planning
Certification and Accreditation
Cost Estimating Relationship
Criminal Investigation Division
Chief Financial Officer
Confidence Level
Commercial-Off-The-Shelf
Current Production Environment
Central Processing Unit
Cybersecurity
Database Administrator/Systems Administrator
Development
Development Integration and Testing Environment
Delivery Partner
Disaster Recovery
Design Specification Report
Enterprise Architecture
Estimate Breakdown Structure
Enterprise Data Management Office
Enterprise Life Cycle
Enterprise Operations
Estimation Program Office
Enterprise Services
Enterprise Systems Test
Extract, Transform and Load
Employee User Portal
Final Integration Test
Function Point
Full Time Equivalent
Fiscal Year
Gigabytes
Government Equipment Lists
Ground Rules and Assumptions
Heavy Duty
Independent Government Cost Estimate
Integrated Financial System
Investment Summary Report
IRS Enterprise Portal
Investment Summary Report
Information Technology
Journal Voucher
Large Business and International Division
Level of Effort
Medium Duty
Millions of Instructions Per Second
Milestone (i.e., MS3 is Milestone 3)
Operations and Maintenance

23

IRS Sensitive but Unclassified Information

Acronym
OMB
PMO
PPMO
PPT
PRD
PUP
RADM
RUP
SBSE
S&P
SAN
SAT
SE
SEER
SEER-IT
SEM
SLOC
SME
S&P
TAD
TB
TEGE
TIPSS
TMO
TS
UCR
UNS-D
UNS-N
VROM
WAGE
WAN

Financial Management Services
Estimation Program Office

Definition
Office of Management and Budget
Project Management Office
Portal Project Management Office
Parallel Production and Test
Product Requirements Documents
Public User Portal
Requirements and Demand Management
Registered User Portal
Small Business/Self Employed
Strategy and Planning (Functional Area)
Storage Area Network
System Acceptability Testing
Solution Engineering
Software Evaluation and Estimation of Resources
SEER-Information Technology
Strategic Enterprise Management
Source Lines of Code
Subject Matter Expert
Strategy & Planning
Technical Architecture Diagram
Terabyte
Tax Exempt Government Entity
Total Information Processing Support Services
Transition Management Office
Transition State
Unit Cost Rate
User and Network Services - Desktop
User and Network Services - Network
Very Rough Order of Magnitude
Wage and Investment
Wide Area Network

24