The IRS wasted $12 million on subscriptions for software that it couldn’t utilize, the Treasury Inspector General for Tax Administration (TIGTA) said in a report made public this week.

“The purchase was made without first determining project infrastructure needs, integration requirements, business requirements, security and portal bandwidth, and whether the subscriptions were technologically feasible on the IRS enterprise,” TIGTA said.

{mosads}The watchdog set out to determine whether the IRS has properly procured an enterprise email system. The IRS intends to purchase such a system to comply with an Office of Management and Budget directive.

The IRS authorized the purchase of $12 million of subscriptions for an enterprise email system from June 2014 to June 2016, but the software that was supposed to be used via the subscriptions wasn’t installed, TIGTA said.

Since IRS information technology executives considered the purchase an upgrade to existing software rather than a new project, they didn’t follow internal guidance. The agency may have violated the “bona fide needs” rule when it purchased subscriptions using funds appropriated to the IRS by Congress in fiscal years 2014 and 2015 but didn’t use the subscriptions in those years. Also, the IRS violated requirements under federal acquisition rules because it didn’t use a full and open competition to purchase the subscriptions, TIGTA said.

TIGTA recommended that the IRS ensures that it follows its internal manual and that it acquires any cloud solution products in the future through a competitive process as outlined in regulations. The watchdog also recommended that the IRS chief counsel’s office conduct a review to determine if the agency violated the bona fide needs rule and needs to take any additional action.

The IRS agreed with some of TIGTA’s recommendations but strongly disagreed that it wasted taxpayer funds.

The purchase “was done in good faith and in accordance with our guiding principle to maintain currency for our extensive use base and to take advantage of overall cost savings,” IRS Chief Information Officer S. Gina Garza told TIGTA.