Inside DOGE, The IRS & How to Scam the US Government - Sam Corcos

Sam Corcos, Chief Information Officer of the Treasury Department, reveals systemic inefficiencies and deeply entrenched bureaucratic challenges in modernizing government IT, particularly at the IRS, stemming from outdated policies, non-technical leadership, and misaligned contractor incentives.

• Government IT modernization is severely hindered by outdated policies and a lack of technical expertise in leadership roles.

• Systemic issues like civil service protections and flawed procurement processes lead to massive waste and contractor exploitation.

• Effective change requires courageous leadership to replace non-technical personnel, scrutinize spending, and fundamentally reform organizational culture and processes.

Sam Corcos, the Chief Information Officer of the Treasury Department, discusses his efforts to modernize the IRS's outdated IT systems, which operate inefficiently with multi-billion dollar technology decisions often made by non-technical leaders. He highlights the structural issues like tenure-based promotions, an inability to fire underperforming civil servants, and procurement processes that lead to wasteful spending on contractors. Despite the inertia, Corcos and his team have initiated significant changes, including replacing non-technical IRS IT leadership and identifying substantial savings by scrutinizing contracts, demonstrating that real impact is possible with courageous leadership.

Role at Treasury & IRS

• 00:01:12 Sam Corcos accepted the role of Chief Information Officer of the Treasury Department six months prior to the interview, a position he initially thought he would take later in life. His primary focus is the IRS, specifically addressing its long-standing and extremely inefficient IT modernization program, which is $15 billion over budget and has been 'five years away' since 1991. The role of CIO in government, historically resembling a librarian overseeing filing cabinets, traditionally lacked technical requirements, contributing to the current issues.

IRS Leadership Challenges

• 00:05:00 A major problem identified at the IRS was the lack of technical background among its IT leadership, with many leaders not understanding how computers work, leading to multi-billion dollar technology decisions made by unqualified personnel. Corcos recommended putting about 50 people from the IRS IT leadership team on administrative leave during peak tax season, a courageous and unprecedented move, to replace them with technically competent individuals. Many of those removed acknowledged their lack of technical expertise and understood the necessity of the change, even if it was uncomfortable.

Government Bureaucracy & Inertia

• 00:15:03 Government operations are plagued by significant inertia and bureaucracy, exemplified by the IRS still relying heavily on faxes for document submission, processing 60 million faxes annually across 50,000 active lines. The belief that faxing is the most secure method for information exchange, though outdated, persists and changing this policy is difficult due to unclear ownership and an entrenched system that resists change. This bureaucratic entanglement makes simple, cost-saving improvements incredibly challenging to implement.

Civil Service Protections

• 00:18:46 The federal civil service system, designed to prevent political patronage and ensure continuity of government functions, makes it extremely difficult to fire underperforming employees. Promotions are largely tenure-based, and performance reviews rarely reflect actual performance, making it common to 'promote' poor performers to other teams rather than initiating a lengthy and union-contested termination process. This system contributes to a workforce with a significant proportion of employees who lack the necessary skills for their roles, particularly in technical departments.

Inefficient Procurement Process

• 00:31:01 The government's procurement systems are 'totally and utterly broken,' leading to disastrous outcomes, especially with external vendors. Budgets for IT at the IRS are not tight, but funds are often misallocated, with hundreds of millions spent on vendors who exploit the government's lack of negotiation and technical oversight. Engineers have no input on vendor selection, leading to contracts for irrelevant or unused software, while the process for procuring necessary simple software can take years and cost millions in overhead due to competitive bidding regulations and frequent contestations.

Contractor Bloat & Waste

• 00:42:01 The absence of technically proficient leaders historically led to rampant contractor bloat and waste, as illustrated by hundreds of millions spent on cybersecurity contractors for services that were either unnecessary or not even used for years. Leaders in non-technical roles approved contracts without proper scrutiny, as there was no personal incentive to cut costs or challenge vendors. This systemic issue highlights a fundamental incentive misalignment problem, where contractors often arbitrarily inflate prices, knowing government entities rarely negotiate or question the value received.

Data Quality & System Fragmentation

• 01:38:38 The IRS suffers from severe data quality issues and extreme system fragmentation, possessing around 108 'competing sources of truth' for the same data, leading to operational chaos. Essential information, such as a taxpayer's current address, requires checking numerous disparate systems, leading to errors and delays. This fragmentation stems from IT's historical failure to deliver, prompting sub-components to create their own 'shadow IT' systems, further exacerbating the problem and preventing seamless communication or efficient service delivery.

Impact of Leadership on IT

• 03:10:10 Effective leadership is the most crucial factor in resolving government IT dysfunction. Well-run entities within the Treasury Department, such as FinCEN and the Bureau of the Fiscal Service, demonstrate that stable, technical leadership focused on performance management leads to competent teams and efficient operations. The IRS's long history of poor technical leadership resulted in a hiring process that bypassed technical interviews, leading to a large non-technical workforce within engineering. Changing this culture requires strong, technically capable leaders committed to reorienting the organization towards modern software development practices and accountability.