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Sam Corcos09 October 2025

Inside DOGE, The IRS & How to Scam the US Government - Sam Corcos - #1004

1Frameworks
16Insights

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Frameworks in this episode

Communication6 steps

Trading Up the Chain

Launder a half-truth through ever-bigger outlets until it becomes accepted fact

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Myth Buster· 1

Myth Buster

Old isn't bad: why the IRS's mainframes may be optimal

The IRS historically defined 'legacy' as anything 25+ years old and slated it for replacement. Corcos pushes back: many old systems are battle-tested and fine. Mainframes have been optimized for half a century for batch data processing — exactly what the IRS does a lot of — making them potentially the optimal tool, not the problem.

  • 'Legacy = 25+ years old' is a poor definition; they changed it
  • Some 25+ year-old systems are battle-tested and better than fine
  • Mainframes excel at batch data processing, an IRS core workload
  • Latency problems arise only where near-real-time data is needed

“Just because a system is old does not mean that it's bad.”

Sam Corcos
#mainframes#legacy-tech#irs

Hot Take· 2

Hot Take

The most common way to remove a bad employee: promote them

Because negative performance reviews are so painful and everyone tends to get a 4 or 5 regardless of performance, the most common way to get a poor performer off a team in government is to promote them onto another team — passing the problem up rather than solving it.

  • Almost everyone receives a 4 or 5 on performance reviews
  • Promotion is used as a tool to offload poor performers
  • The problem is passed up the chain, never resolved
  • A minority of managers do rigorous performance management

“The most common way to get a poor performer off your team is to promote them.”

Sam Corcos
#management#performance-reviews#government
Hot Take

The 8(a) fast-lane and the $24.9M contract tell

The Small Business Administration's 8(a)/small-disadvantaged-business program lets buyers skip competitive bidding and pick a vendor — but caps some contracts at $25 million. During contract review Corcos saw repeated $24.9M line items. These pass-through firms are meant to do 51% of the work but, in his experience, do essentially none, funneling money and skimming up to 50%.

  • 8(a) status lets you skip the competitive bidding process
  • Some contracts capped at $25M — hence a wall of $24.9M line items
  • Pass-throughs owe 51% of the work but do almost none
  • Estimated graft: his figure ~$30B/year; another investigator's ~$80B/year

“You see all these things like 24.9 million, 24.9 million, and you're like, okay, something's going on here.”

Sam Corcos
#procurement#fraud#waste-fraud-abuse

Explainer· 7

Explainer

The IRS modernization: $15B over budget and perpetually '5 years away'

Corcos was brought in to fix IRS IT modernization, which he calls one of the worst-managed IT projects in government — second only to the VA's health-record system. It started around the time he was born, is roughly $15 billion over budget, and has been 'five years away' since 1991.

  • One of the worst-managed IT projects in the US government
  • About $15 billion over budget
  • Has been 'five years away' since 1991 and still is
  • His mandate: 'land the plane' before the end of the administration

“It's still five years away. It was five years away in 1991.”

Sam Corcos
#irs#government-it#modernization
Explainer

Why government CIOs were non-technical: the librarian legacy

The Chief Information Officer role in government descends from a filing-cabinet 'librarian' function about where information is kept. Because the qualifications for the role were never updated for the computer era, most government CIOs before this administration were non-technical — making multi-billion-dollar technology decisions without understanding the technology.

  • CIO originated as a records/librarian role, not an engineering one
  • No technical standards or requirements were ever attached to the job
  • Non-technical leaders make multi-billion-dollar tech decisions
  • Compare: chief counsel must be a lawyer, but the CIO need not be technical

“These are multi-billion dollar technology decisions made by people who don't understand it.”

Sam Corcos
#leadership#cio#government-it
Explainer

Why you can't fire underperformers in government

Civil-service protections trace to 1883 reforms that ended the 'spoils system', where election winners fired the whole government and installed loyalists. Those protections give continuity but now cover ~2 million civil servants versus ~4,000 appointees. Firing requires multiple poor reviews in a row, and any negative review invites union action — so managers rarely give them.

  • Protections date to 1883 civil-service reforms ending the spoils system
  • ~2 million protected civil servants vs ~4,000 political appointees
  • Removal needs repeated poor reviews spaced far apart
  • Negative reviews trigger union pushback, so managers avoid them

“You can't fire the people who are not good. You just can't. It's not why.”

Sam Corcos
#civil-service#hr#government
Explainer

Fake auctions: how value-added resellers game competitive bidding

When an agency needs one specific software license, procurement rules still demand a competitive process. So buyers stage a 'fake auction' among three or four value-added resellers all selling the identical license, who compete on price and each skim a cut. They add nothing but provide cover for the process looking competitive.

  • Even single-product licenses must go through 'competition'
  • Buyers assemble multiple resellers of the identical license
  • Resellers skim a margin while doing no real work
  • GSA is reportedly trying to fix this widespread practice

“They all just take a cut off the top. They don't do anything, but they're there to provide cover for it looking like a competitive…”

Sam Corcos
#procurement#resellers#waste
Explainer

Salary caps force a $500K contract to pay one $250K engineer

Government pay caps around $226K make senior technical talent impossible to hire directly. The workaround: pay a large contractor ~$500K to funnel ~$250K to the person you actually wanted, with the contractor arbitraging the rest. The system spends more to get less, while refusing to pay in-house engineers market rates.

  • Effective pay cap around $226K; only ~800 roles can exceed it
  • To hire a $250K engineer, pay a contractor ~$500K to funnel it
  • Government will spend hundreds of millions on vendors but not raise engineer pay
  • The CIO overseeing ~$10B of spend is paid ~$160K with no outside income

“You pay them $500,000 to funnel $250,000 to the person that you actually wanted to hire. And they'll arbitrage off the top.”

Sam Corcos
#compensation#talent#contractors
Explainer

108 competing 'sources of truth' — why data integrity is priority #1

Good systems keep a single source of truth for each piece of data. The IRS has roughly 108 competing sources of truth and ~60 systems in one area that don't talk to each other. Staff must guess which record (e.g. a taxpayer's current address) is correct. Data integrity is Corcos's number-one priority.

  • Single source of truth is a foundational software principle
  • IRS has ~108 competing sources of truth (not data sources)
  • Some functions run ~60 systems that don't communicate
  • Staff use judgment to guess the correct record; data integrity is priority #1

“The IRS has about 108 competing sources of truth. This is like the most complex Rube Goldberg I've ever seen in my life.”

Sam Corcos
#data-integrity#irs#architecture
Explainer

Stop 'modernization': software is a puppy, not a house

Corcos argues 'modernization' as a concept is broken. Government spends billions once on a system then decrees 'never touch it again', so it builds a replacement, then another — how you end up with 108 systems. Software is a living system needing constant feeding like a puppy, not a house you build once and leave to trickle-maintain.

  • 'Modernize once and never touch it' produces stacked legacy systems
  • House = build up front, minimal upkeep; puppy = continuous care
  • Software is a living system requiring ongoing feedback and updates
  • The fix is an actual software development lifecycle, not big-bang rebuilds

“Software systems are effectively living systems that require constant maintenance... you can't just not feed the puppy for like a year.”

Sam Corcos
#software-lifecycle#mental-model#government-it

Story· 4

Story

Putting 50 IRS IT leaders on leave — and things got better in weeks

A month in, Corcos recommended placing roughly 50 people — effectively the entire IRS IT leadership team — on administrative leave during peak tax season, replacing them with technically capable people. After a week of panic, work stuck for years started shipping in weeks because technical decision-makers were finally in technical decision-making roles.

  • ~50 IRS IT leaders put on administrative leave during peak tax season
  • Not fired — removed from roles and replaced with technical staff
  • After ~1 week of panic, delivery improved dramatically
  • Projects stuck for years started shipping in weeks

“Things that were stuck for years started getting delivered in weeks, because we put technical decision makers in technical decision-making roles.”

Sam Corcos
#leadership#irs#reform
Story

The IRS receives 60 million faxes a year — and nobody knows why

The IRS still runs on fax, with about 50,000 active fax lines receiving roughly 60 million faxes annually, justified by a belief that faxing is more secure than email or the internet. Corcos has been unable to locate the policy that mandates it or the lever to change it — every office points to another.

  • ~60 million faxes received per year; ~50,000 active fax lines
  • Justified by a belief that fax is the 'gold standard' of security
  • Taxpayers routinely don't know how to send a fax
  • No one can identify which policy requires it or who owns the decision

“We receive 60 million faxes per year at the IRS. We have, I believe 50,000 active fax lines.”

Sam Corcos
#irs#bureaucracy#legacy-tech
Story

The vendor bait-and-switch: $2M pilot price becomes $100M

A vendor offered to build a system for about $2 million a year. Six months in, at renewal, they demanded $100 million a year, calling the original a 'pilot price' and later the increase a mere 'scope change'. Because they were already embedded in the systems, the government couldn't easily walk away — the core lock-in trap.

  • Quoted ~$2M/year, then demanded ~$100M/year at renewal — a 20x jump
  • Justified as 'pilot pricing' and a 'scope change', not a price rise
  • Lock-in: once a vendor is in your systems, you can't just stop
  • Works because historically no one in his seat says no

“If I had known that you were gonna raise your price arbitrarily by 20x for no reason whatsoever, I would not have agreed to this.”

Sam Corcos
#contracts#vendors#procurement
Story

Zero-paper stalled since April: $1M/day lost, contested for $100

Corcos launched a project in April to stop the IRS processing paper (a ~half-billion-dollar-a-year cost) using digitization vendors. Months later the contract still isn't awarded: any losing bidder can contest the award for about $100, freezing the process 30 days and forcing re-analysis. He estimates the delay costs over a million dollars a day.

  • IRS spends ~$500M/year on paper processing
  • Any vendor can contest an award for ~$100, pausing it 30 days
  • Repeated contests restart the analysis indefinitely
  • Delay costs >$1M/day; rules exist to prevent cronyism but overshoot

“This costs us more than a million dollars a day that we don't have this implemented and nobody cares because we just have to follow…”

Sam Corcos
#procurement#irs#paper-processing

Takeaway· 2

Takeaway

The core flaw: government has no feedback loop

Corcos's central structural insight is that government lacks the failure signal that disciplines the private sector. A bad company eventually dies; a bad agency just asks for more money and the debt grows. He ties this to FDR's opposition to public-sector unions — there is no counterbalancing force that pushes back when the public sector demands more.

  • Private firms have a death signal; agencies do not
  • A failing agency can always ask for — and get — more money
  • FDR opposed public-sector unions for lacking a counterbalance
  • This absence is why so many personnel and contract rules exist

“If the IRS were a private company, it would have gone bankrupt many, many years ago.”

Sam Corcos
#incentives#government#systems-thinking
Takeaway

The pitch for the job: 'I hope you have a lot of savings to burn'

The compensation structure actively selects against experienced mid-career talent. Overseeing ~$10B of spend, the Treasury CIO earns ~$160K with no outside income and mandatory financial disclosure. Corcos says the honest pitch to good candidates is that they'll burn down their savings — leaving only the very young or the near-retired able to serve.

  • Treasury CIO oversees ~$10B of spend for ~$160K/year
  • No consulting or outside income allowed; finances disclosed publicly
  • Honest pitch: expect to burn through your savings
  • Only the young (no expenses) or near-retired can realistically take it

“I hope you have a lot of money and savings, because as a result in taking this job, you'll probably burn down a lot of…”

Sam Corcos
#public-service#compensation#sacrifice