The treasury department’s Internal Revenue Service division is spending billions on technology contractors but gets little in return, says a technology consultant hired by the Department of Government Efficiency (DOGE) office.
“It’s hard to really grasp the scale of this,” IRS consultant Sam Corcas told Fox News Laura Ingraham on May 20:
We process about the same amount of data as a mid-sized bank. A typical mid-size bank will have somewhere between 100 and 200 people in it, and they’ll have an operations and maintenance budget in the $20 million-a-year range. We have 8,000 people and our operations and maintenance budget is $3.5 billion a year. I don’t really know why yet, but I will tell you, 80 percent of the budget goes to contractors and licenses.
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It doesn’t take a lot — just somebody who cares — to solve these problems. You find [existing] contracts that are $10 million, $20 million, $30 million, $50 million and you just ask “Why are we doing this?” And [the answer is] “I don’t know.” Then you cancel it, and then nothing [bad] happens. It is just inertia.
Treasury Secretary Scott Bessent told Ingraham that the private-sector contractors are like pythons that wrap themselves around the agencies that provide their funding:
I’ve been here eight weeks [and] one of the biggest surprises for me is just seeing how these entrenched interests just keep constricting themselves around the power, around the money, around the systems, and nobody cares. I said to [Corcas] today, the IRS [technology upgrade] system was supposed to be delivered in 1996 and he said it was started in 1990 so that’s how far behind they are and nobody cares. And the other thing we’re seeing too is, as Sam said, some of the employees, many of the employees, are fantastic. It’s this consultant group … they’re like a boa constrictor, they’re like a Python … they constricted themselves around our government, and the costs are unbelievable that are being passed on to the taxpayer.
The agency’s problems spotlight the normal difficulty of getting government agencies to act efficiently for Americans, said Kevin Lynn, founder of USTechWorkers which champions U.S. technology professionals. Lynn continued:
It’s the worst of all possible worlds where [government officials] have no bottom line. There’s no way that [an official will say], “Wow, this [contract] project is an absolute fail.” They [contractors can] keep coming back and back [for more money] because of the barriers to entry to anyone else.
But the problem is worsened by contractors’ massive use of imported, subordinated, no-rights H-1B contract workers in the management and line jobs once held by outspoken American professionals, said Lynn, who is a former manager in the tech sector.
Congress allows U.S. and foreign contractors and subcontractors to import many foreign H-1Bs. The companies import the contract workers — mostly from India — to help extract greater profits from long-running government projects, he said.
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The H-1Bs are preferred because they can be paid less and will not blow the whistle on fraud and incompetence because their managers will immediately cancel their work permits and send them home to India or elsewhere, he said. Moreover, the H-1Bs allow the contractors to add surplus workers to each contract — dubbed “featherbedding,” — which maximizes their payments from the government, he said.
But, he said, “If the government would exclude H-1Bs, we’d have an opportunity to reintroduce merit and professionalism into the ranks of the IT sector that supports the government. Also, you’ll have patriotic Americans involved who would possibly be more interested in doing what’s best for the country — innovating, doing things on the fly to innovate and increase productivity.”
Bessent “is not seeing any of that — he’s just seeing more and more spending on contractors that are getting fat off of the government,” said Lynn.
Many thousands of H-1B workers are employed by federal agencies and contractors.
Many imported H-1B workers become legal immigrants, some are promoted to management jobs, and some bring their home country cultures with them. For example, FedScoop.com reported in September 2024:
Satbir Thukral, 62, of Germantown, Md., conducted two bribery schemes over four years in his capacity as a computer engineer supervising IT subcontracts for the IRS, according to the DOJ.
The first began in October 2018, when Thukral sought cash payments from the owner of an unnamed company working on a subcontract that he oversaw. The cash payments, which came out of the company’s earnings from the IRS subcontract, were made to Thukral between 2018 and 2020, exceeding $120,000 in total, the DOJ said.
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Separately, Thukral in July 2022 received roughly $2,800 in cash from a manager at a key contractor with the tax agency. The manager paid Thukral, according to the DOJ, because he had ensured that two underqualified individuals on the contract connected to the manager were able to maintain their employment. According to the DOJ, the manager was also under the impression at the time that Thukral would have influence over the award of a pending $200 million contract, having been chosen to serve on a three-person panel to assess bids’ technical feasibility.
“We should not have any H-1Bs working on federal, state, or local projects,” Lynn said, adding:
They are foreign nationals. We should only have American nationals working at these outfits. It doesn’t matter if they’re a contractor or an employee, it should only be Americans.
Corcas said the new leadership is cutting costs and reanimating the agency’s non-contractor, in-house, civil service technology experts:
The career staff has been super cooperative. I think we’ve so far cut about $1.5 billion from the modernization budget, mostly projects that we’re going to continue to put us down this death spiral of complexity in our code base. I think most people that I’ve interacted with are really excited [to see that] somebody actually cares now. They’ve been in a situation where their hands are tied and they can’t solve the things that they know need to be solved. My experience has obviously been very positive working with them.
“It’s all hands on deck because we’ve got this massive government debt,” Bessent said, adding: “We’re going to pay that down, but we’re also going to make government work better.”
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