#1004 - Sam Corcos - Inside DOGE, The IRS & How to Scam the US Government
In this episode of Modern Wisdom, Sam Corcos examines the current state of government IT systems, with a focus on the IRS and other federal agencies. He explains how outdated infrastructure, complex procurement processes, and challenges in talent management create significant operational inefficiencies, including the IRS's annual spending of half a billion dollars just to process paper documents.
Corcos details the obstacles to modernizing these systems, from civil service protections that make it difficult to address underperforming employees to salary caps that limit the ability to attract experienced IT professionals. He describes how government contractors often exploit procurement processes, and how fragmented data systems—with some departments using up to 60 different non-communicating systems—further complicate attempts at reform.
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1-Page Summary
Government IT System Challenges and Reform
Sam Corcos explores the intricate challenges faced by government IT systems, focusing on outdated infrastructure, procurement issues, and talent management difficulties.
Legacy IT Systems and Modernization
The complexity of government IT systems is evident in agencies like Health and Human Services (HHS) and the IRS. Corcos reveals that the IRS employs roughly 6,000 IT personnel and 6,500 contractors, creating confusion over responsibilities and hindering modernization efforts. The agency spends nearly half a billion dollars annually processing paper documents, highlighting the inefficiency of their outdated systems.
Procurement and Contract Issues
Government procurement faces significant challenges, as Corcos explains. He describes how one vendor initially agreed to a $2 million contract before dramatically increasing their demand to $100 million after a successful pilot. This exemplifies a broader issue where contractors often exploit the government's reluctance to negotiate prices, leading to substantial waste in unused services and inflated costs.
Talent Management Hurdles
According to Corcos, government salary caps and bureaucratic obstacles make it difficult to attract and retain skilled IT professionals. While early to mid-career positions offer competitive wages, senior roles like government CIO positions struggle to attract experienced professionals due to lower salaries. He points out that many current CIOs lack technical expertise, often reaching their positions through internal promotion rather than technical merit.
Bureaucracy and Power Dynamics
Corcos describes a deeply entrenched bureaucratic system resistant to change. He notes that civil service protections dating back to 1883 make it nearly impossible to remove underperforming employees, creating a "tenured professor" dynamic that discourages innovation and reform.
Scale and Complexity
The scale of government IT operations is immense, with Corcos noting that the IRS's Chief Information Officer's office alone employs about 8,500 people. He explains that even simple changes can take extensive time due to competitive bidding processes and interconnected systems. The fragmentation of government data systems further complicates matters, with the IRS compliance team alone using at least 60 different systems that don't communicate with each other.
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Counterarguments
- Legacy IT systems may be outdated, but they are often stable and secure due to their long-term use and the familiarity of staff with their operations.
- A large workforce in IT can be a strength, providing a broad base of knowledge and resources to address various issues, if managed effectively.
- Paper document processing, while inefficient, may still be necessary for certain legal or archival purposes, and can serve as a backup in case of digital system failures.
- High initial procurement costs can sometimes be justified by the long-term benefits and savings from the acquired technology or service.
- Government salary caps can help control public spending and ensure that public servants are not excessively compensated at the taxpayer's expense.
- Attracting experienced professionals to government IT roles may not always be about salary; mission-driven work and the opportunity to serve the public can be significant draws.
- CIOs without deep technical expertise may bring other valuable skills to the table, such as leadership, strategic planning, and an understanding of the broader governmental context.
- Civil service protections are designed to prevent political interference and ensure a nonpartisan, professional workforce, which can be crucial for the stability and integrity of government operations.
- The scale and complexity of government IT systems reflect the vast range of services provided to the public, necessitating a large and diverse workforce to manage them.
- Competitive bidding and interconnected systems are part of due diligence and security measures to ensure that government IT systems are reliable and cost-effective.
- Fragmentation in data systems can sometimes result from necessary compartmentalization for security purposes or to meet specific departmental needs.
Actionables
- You can advocate for modernization by writing to your local representatives about the importance of updating government IT systems. Explain that as a taxpayer, you're concerned about the efficiency and security of government operations, and urge them to support legislation that addresses these issues. For example, if you've experienced delays or complications due to outdated government systems, share your story to illustrate the real-world impact.
- Volunteer to help non-profits and small community organizations digitize their records, using simple cloud-based tools. This hands-on experience will give you a personal understanding of the challenges and benefits of modernizing data systems. For instance, you could assist a local charity in moving their donor records from paper files to a secure online database, improving their efficiency and data accessibility.
- Educate yourself on the basics of competitive bidding and procurement to better understand how these processes work. Use free online resources or community college courses to learn about these topics, which will allow you to form informed opinions on government procurement practices. As you learn, you might identify ways that these processes could be streamlined or improved, and you could share these ideas with community groups or through social media to spark broader discussions.
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Government IT System Challenges and Reform
Sam Corcos delves into the complex issues faced by government IT systems, revealing the outdated infrastructure, overpriced contracts, and difficulties in attracting technical expertise.
Legacy IT Systems and the Difficulties of Modernization
IRS IT Systems Are Outdated, Siloed, and Hard to Modernize
At the Health and Human Services (HHS), a convoluted payroll system involves numerous full-time employees managing payroll through various legacy processes, including mainframes running COBOL scripts and manual data entry. This complexity illustrates the challenges of legacy systems across government agencies.
The IRS, struggling with similar legacy system issues, employs approximately 6,000 IT personnel and about 6,500 contractors, creating confusion over task responsibility, which hinders system modernization efforts. With the IRS processing an immense volume of paper, costing close to half a billion dollars annually, Corcos expresses concern regarding the outdated and inefficient operations. He notes that IRS leadership initially asserted all IT components were critical, although subsequent investigations unveiled feasible cuts, suggesting inefficiencies within the systems. Work is being undertaken to build a unified API to enable internal communication within IRS divisions.
Procurement and Contracting Challenges
Complex Procurement and Contractor Overcharging in Government
Government procurement complexities, including BPAs and IDIQs, lead to challenges in measuring cost savings, especially when contracts routinely auto-renew without reassessment. Corcos recounts a vendor that initially agreed to a $2 million contract increasing their demand to $100 million after a successful pilot, showcasing arbitrary pricing practices. Contractors often exploit the government's tendency not to negotiate prices.
In a financial review during an administrative leave period, Corcos discovered ongoing payments to vendors for unused services, amounting to millions annually. This waste is exacerbated by the fact that the government resorts to hiring contractors at high costs due to salary caps for direct hires.
Incentive Misalignment: Government vs. Contractors Leading to Waste
Corcos emphasizes the systemic challenge of incentive misalignment between government officials and contractors. Government officials, not spending their own money, may lack the urge to negotiate contract prices, whereas contractors leverage their entrenched positions for renegotiating contracts at inflated rates. Without a structure incentivizing efficient spending, the government faces recurring wastage.
Talent Management and Technical Expertise
Attracting and Retaining Top Technical Talent In Government Despite Salary Limits and Bureaucracy
Retaining and recruiting highly adept IT staff in the government is complicated by salary restrictions and bureaucratic hurdles. Corcos argues that offering competitive salaries for specialized roles is crucial to modernizing IT systems; however, the current salary cap hinders this. He argues for changes to the hiring process and fundamental reforms instead of contract reductions. ...
Here’s what you’ll find in our full summary
Government IT System Challenges and Reform
Additional Materials
Counterarguments
- Legacy systems, while outdated, may still be functional and secure due to their obscurity and the difficulty in hacking them.
- The complexity of government IT systems can sometimes be attributed to the vast array of services they provide, which may not be easily replicated by modern systems without significant investment and risk.
- High costs associated with paper processing might be offset by the reliability and auditability that paper records provide, which digital systems can sometimes struggle to match.
- Procurement complexities and contracting challenges can also be seen as due diligence processes that aim to prevent fraud and ensure compliance with various regulations, even if they may be inefficient.
- Contractors may charge higher prices due to the additional risks and complexities involved in working with government entities, which often have more stringent requirements than private sector clients.
- Payments for unused services could be part of larger, long-term strategic contracts that offer benefits not immediately apparent, such as ensuring service availability or locking in lower prices for future use.
- Incentive misalignment might also reflect a cautious approach to spending public funds, where officials are more concerned with ensuring accountability and adherence to regulations than with negotiating every contract aggressively.
- Sa ...
Actionables
- You can advocate for clearer task assignments in your workplace by suggesting a visual task management system. For instance, use a shared online board where responsibilities are color-coded and assigned to specific team members, reducing confusion and improving accountability.
- Encourage your local community organizations to adopt a paperless policy by demonstrating the cost savings and efficiency of digital alternatives. Start by volunteering to help a small community group transition to digital record-keeping, showing them how to use cloud storage and online forms to reduce their reliance on paper.
- If you're involved in a hiring process, push for the inclu ...
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Bureaucracy, Politics, and Power Dynamics Within the Government
Sam Corcos and Chris Williamson delve into the complex world of government bureaucracy, discussing the innate resistance to change, issues of accountability, and the ongoing battle between political appointees and career civil servants.
Inertia and Resistance to Change
Entrenched Bureaucracy and Cultural Norms Hinder Meaningful Reforms
Corcos reflects on the historical shuffling within government, indicating reluctance to make structural changes. However, he notes that the current administration is considering unprecedented significant changes. The treasury improved markedly after Corcos made the tough decision to put certain individuals on leave, demonstrating that breaking away from the status quo can yield positive results. He observes that despite a known path forward, a willingness to implement change within the bureaucracy is often lacking.
A government agency head tasked with enacting significant changes found his leverage over staff limited by civil service protections dating back to 1883. The inability to fire underperformers due to "protections" and "tenured professor" dynamics disincentivizes change within government entities when faced with potential backlash, such as social pressure or union resistance.
Navigating Political Pressures and Competing Interests in Government
The conversation exposes the contrasting realities between being a government executive versus a CEO in the private sector, where executive orders can result in inaction or confusion versus instant compliance. Corcos describes the government system as ossified, suggesting that it is too rigid and resistant to change. Even talented individuals with high agency eventually learn that resistance to change is strong and deeply entrenched.
Corcos speaks to the bureaucratic complexities within the IRS, where multiple people are involved in simple tasks, leading to complications and delays. He reveals that sometimes steps have been added over time without being strictly necessary. The difficulty in removing government employees is demonstrated by the "reduction in force" method, which prioritizes tenure and veterans preference over performance.
Accountability and Oversight
Lack of Accountability For Government Waste, Inefficiency, and Poor Performance
Williamson discusses how resistance to change and the difficulty in implementing reforms highlight issues of accountability within government agencies. Corcos mentions how internal politics and pre-existing power dynamics can confront the removal of ineffective individuals, stressing the differences between how political appointees and career civil servants can affect change and reform.
The process of continually reminding people to implement policies implies a lack of accountability for government inefficiencies. Corcos experienced personal motivation conflicts when refusing expenditures, which would have been a win for the taxpayer, indicating issues in preventing government waste and ensuring accountability.
The IRS cited 100% of their cybersecurity spending as mission-critical, highlighting a lack of oversight and suggesting that contractor bloat is a problem. No investigation connected non-used software produced by a former government official, leading to questions about accountability for fraud and waste. Williamson cites a Pew study showing that only 16% of Americans trust the federal government, potentially due to these perceived shortcomings.
Corcos illuminates the issue further when discussing uncompleted tasks by colleagues, showing that there are often no consequences for failing to deliver on responsibilities. The political dynamics of government work mean that addressing existing issues might still result in blame for the person revealing them, indicating a further lack of accounta ...
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Bureaucracy, Politics, and Power Dynamics Within the Government
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Clarifications
- The "reduction in force" method is a process used by government agencies to reduce their workforce due to budget cuts, reorganization, or other reasons. It involves identifying positions that are no longer necessary and eliminating them, often based on factors like performance, tenure, and veterans preference. This method aims to streamline operations and cut costs but can be complex and may involve legal considerations to ensure fairness and compliance with regulations. Employees affected by a reduction in force may have certain rights, such as priority placement for other positions or benefits to ease the transition.
- Political appointees are individuals selected by elected officials or higher-ranking government officials to serve in specific roles within government agencies. They typically align with the current administration's policies and can be replaced when a new administration takes over. Civil servants, on the other hand, are non-political, career employees who work for the government regardless of the administration in power, providing continuity and expertise in running government operations. The distinction between political appointees and civil servants can impact decision-making, policy implementation, and the overall functioning of government agencies. Political appointees may bring in new priorities with each administration, while civil servants provide institutional knowledge and stability.
- Tenure in the context of government employees provides job security and protection from arbitrary dismissal. It is a safeguard intended to ensure that employees can perform their duties without fear of losing their jobs due to political changes or pressures. Tenure can make it challenging to remove underperforming employees, as the process often involves specific procedures and justifications. This protection is designed to promote stability and continuity within government agencies.
- The clash between government and tech world methodologies reflects the contrast between traditional bureaucratic processes in government and the fast-paced, innovative approaches commonly seen in the tech industry. Government systems often prioritize caution, compliance, and established procedures, while the tech world emphasizes agility, experimentation, and rapid iteration. This clash can lead to challenges when implementing technological solutions or driving organizational change within government agencies. The resistance from established government structures to adopt the disruptive and risk-taking nature of tech methodologies can hinder efficiency and innovation in public sector operations.
- In government institutions, there can be resistance towards new, innovative approaches brought by young engineers due to the entrenched traditional systems and processes in place. This resistance can stem from a preference for established methods over potentially disruptive changes proposed by those who are newer to the system. The clash often arises from differing perspectives on how to approach challenges, with established systems favoring stability and caution over rapid innovation. This dynamic can create challenges for integrating fresh ideas and technologies into bureaucratic structures.
- The complexities within the IRS that lead to complications and delays stem from bureaucratic processes involving multiple layers of approval for even simple tasks, which can slow down decision-maki ...
Counterarguments
- Civil service protections are designed to prevent political interference and ensure a nonpartisan, professional workforce.
- Resistance to change in government can sometimes safeguard against hasty and poorly considered policies that could have negative long-term effects.
- The complexity within agencies like the IRS may be a result of necessary checks and balances that ensure compliance with laws and regulations.
- The "reduction in force" method may prioritize tenure and veterans to protect those who have dedicated significant time to public service or have served in the military.
- The ossified nature of government systems can also be seen as stability, providing continuity and reliability in public services.
- The lack of trust in the federal government might not solely be due to inefficiencies or waste but also due to broader political polarization and public sentiment.
- The promotion of poor performers to remove them from their roles could be a reflection of systemic issues in performance management rather than a deliberate avoidance of dealing with underperformance.
- The low probability of one person causing significant changes in a large organization like the IRS may reflect the democratic nature of government, which is designed to resist the influe ...
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Scale and Complexity of Government Technology and Processes
Sam Corcos sheds light on the staggering scale and complications inherent in government technology systems, drawing attention to issues with data quality and integration.
The Sheer Scale and Complexity of Government Operations
Complexity of Simple Changes due to Interconnected Government Systems
Corcos highlights the enormous complexity of government IT systems. He explains that straightforward tasks, such as signing up for a $10 online service, could take a year or more due to a convoluted competitive bidding process. Engineers who propose solutions often lose control over the process, ending up with a vendor that only vaguely meets specifications.
Corcos describes the Internal Revenue Service's (IRS) Chief Information Officer's office as massive, with about 8,500 people, indicative of the large scale and complexity of government technology operations. He talks about the complexity that IT faces in government operations, where even the slightest change in the tax code can have widespread effects on a very diverse population, from people requiring special accommodations due to disabilities, to communities like the Amish who eschew computer use.
Modernization efforts at the IRS have often led to the creation of new systems rather than updating existing ones, complicating the process of making changes. Furthermore, Corcos touches on the rigidity of government systems regarding employee management, noting that reducing the workforce involuntarily prioritizes tenure over performance, implicating the interconnected web of rules and processes that hinder even simple organizational changes.
Data Quality and Integration
Fragmented Government Data Hinders Integrity and Comprehensive View
Data quality within government systems is so deficient that actual savings from contract cancellations are nearly impossible to determine, according to Corcos. He addresses the IRS's heavy reliance on obsolete methods such as faxing for taxpayer documents and the historically siloed nature of government information that impedes a comprehensive and cohesive view of systems and processes.
Corcos discusses his challenges in integrating existing systems at the IRS, where information is often segmented without connectivity, affecting the overall integrity and accessibility of data. The fragmented systems used by the IRS's compliance team, with at least 60 different systems that do not communicate with each other, exemplify this issue. These fragmented systems lead to the creation of a unified API to enable coherent communication between different departments.
Challenges Of Integrating IT Systems and Data for Efficient Government Services
In practice, fragmented data systems hav ...
Here’s what you’ll find in our full summary
Scale and Complexity of Government Technology and Processes
Additional Materials
Clarifications
- In government procurement, a competitive bidding process is a method used to select a vendor for a project or service. Government agencies typically issue a request for proposals (RFP) outlining their requirements, and interested vendors submit their bids. The bids are evaluated based on criteria such as cost, quality, and compliance with specifications. The goal is to ensure transparency, fairness, and value for money in the selection of vendors for government contracts.
- The IRS's Chief Information Officer's office faces challenges due to the massive scale and complexity of government technology operations. They encounter difficulties in modernizing systems, often resorting to creating new systems instead of updating existing ones. The office also grapples with fragmented data systems and a lack of connectivity between different IT systems, hindering data integrity and accessibility. Additionally, the rigidity of government systems regarding employee management can impede organizational changes and hinder operational efficiency.
- The fragmented systems within the IRS refer to the existence of multiple separate IT systems that do not communicate or share data effectively. This lack of connectivity leads to information being isolated in different systems, hindering the overall efficiency and accessibility of data. As a result, integrating these disparate systems becomes a challenge, impacting the IRS's ability to have a unified view of information and processes. This fragmentation can impede operational effectiveness and decision-making within the organization.
- The "do not pay" policy is a government initiative aimed at preventing improper payments. It faces challenges in implementation, leading to inefficiencies in stopping payments to ineligible recipients. Despite being in place since around 2013, the policy has struggled to be effectively enforced, highlighting issues with integrating systems for efficient government services.
- The Authority to Operate (ATO) process in government IT systems is a formal authorization granted by a designated authority. It signifies that a system has met specific security requirements and is approved to operate with ...
Counterarguments
- The complexity of government IT systems can be seen as a reflection of the vast array of services and protections that the government provides, which necessitates a certain level of complexity.
- Delays in government processes, while frustrating, can also be a byproduct of necessary checks and balances that ensure public funds are spent appropriately.
- The size of the IRS's Chief Information Officer's office may be justified by the sheer volume of work and the critical nature of handling the nation's tax infrastructure.
- Creating new systems rather than updating old ones could sometimes be more cost-effective in the long run if the existing technology is too outdated or incompatible with modern requirements.
- Prioritizing tenure over performance in employee management could be seen as a way to protect workers from arbitrary dismissal and to value experience.
- The use of outdated methods like faxing can be a way to accommodate stakeholders who are not yet ready or able to transition to digital methods.
- Fragmented data systems may be the result of legacy systems that have evolved over time, and integration efforts could be underway but not immediately apparent.
- The "do not pay" policy and other similar initiatives might face implementation challenges due to legitimate privacy conc ...
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