Treasury's $2.36M expert witness contract awarded to NERA without competition

Contract Overview

Contract Amount: $2,357,567 ($2.4M)

Contractor: National Economic Research Associates Inc

Awarding Agency: Department of the Treasury

Start Date: 2024-02-28

End Date: 2029-02-27

Contract Duration: 1,826 days

Daily Burn Rate: $1.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: Other

Official Description: EXPERT WITNESS SERVICES

Place of Performance

Location: NEW YORK, NEW YORK County, NEW YORK, 10036

State: New York Government Spending

Plain-Language Summary

Department of the Treasury obligated $2.4 million to NATIONAL ECONOMIC RESEARCH ASSOCIATES INC for work described as: EXPERT WITNESS SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The contract duration of 5 years suggests a long-term need for these specialized services. 3. The North American Industry Classification System (NAICS) code 541618 indicates a broad category of management consulting. 4. The contract is for expert witness services, a critical but often high-cost component of litigation. 5. The award value of $2.36 million over 5 years averages $471,513 annually. 6. The contractor, National Economic Research Associates Inc. (NERA), is a known entity in this field.

Value Assessment

Rating: questionable

Benchmarking the value of expert witness services is challenging due to the highly specialized nature of the work and the lack of publicly available pricing data for comparable sole-source contracts. However, the absence of competition raises concerns about whether the government secured the best possible price. The annual average of over $470,000 warrants scrutiny to ensure alignment with market rates for similar high-level expertise.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the IRS did not conduct a competitive bidding process. This typically occurs when a specific contractor is deemed uniquely qualified or when circumstances prevent a full and open competition. The lack of multiple bidders means there was no opportunity for price negotiation or comparison among different providers, potentially leading to a higher cost for the government.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive pressure to drive down costs. Without a competitive process, it's difficult to ascertain if the selected contractor's pricing is the most economical option available.

Public Impact

The Internal Revenue Service (IRS) will benefit from specialized expert witness services to support its legal and enforcement activities. These services are crucial for providing expert testimony and analysis in complex tax-related litigation. The contract's impact is primarily national, supporting federal legal proceedings. The workforce implications are likely limited to the specialized professionals at NERA and potentially IRS legal teams.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Long contract duration (5 years) may lock in potentially non-competitive pricing for an extended period.
Lack of transparency in the sole-source justification process.
High annual average cost raises questions about value for money without competitive benchmarking.

Positive Signals

NERA is a reputable firm with established expertise in economic consulting and expert testimony.
The contract addresses a critical need for specialized legal support within the IRS.
The contract is structured for a long-term engagement, suggesting a consistent and ongoing requirement.

Sector Analysis

The market for expert witness services, particularly in specialized fields like economics and tax law, is characterized by a limited number of highly qualified firms. These firms often command premium rates due to their deep expertise, proprietary methodologies, and the critical nature of their input in high-stakes litigation. The IRS's spending in this area aligns with broader federal trends where agencies require specialized external support for complex legal cases, often involving significant financial stakes.

Small Business Impact

This contract does not appear to involve any small business set-asides or subcontracting requirements. The nature of specialized expert witness services often favors large, established firms with extensive resources and a proven track record, making it less likely for small businesses to be primary contractors in such engagements.

Oversight & Accountability

Oversight of this contract would primarily fall under the IRS's contracting officers and legal departments. Transparency is limited due to the sole-source nature of the award. Accountability would be measured by the quality and effectiveness of the expert witness services provided, as well as adherence to contract terms. There is no specific mention of an Inspector General's direct jurisdiction over this particular award, though broader IRS oversight functions may apply.

Related Government Programs

Department of Justice Expert Witness Contracts
Federal Litigation Support Services
Economic Consulting Services for Government Agencies
Tax Law Expert Testimony

Risk Flags

Sole-source award
Lack of competition
Long contract duration
High annual average cost

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $2.4 million to NATIONAL ECONOMIC RESEARCH ASSOCIATES INC. EXPERT WITNESS SERVICES

Who is the contractor on this award?

The obligated recipient is NATIONAL ECONOMIC RESEARCH ASSOCIATES INC.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $2.4 million.

What is the period of performance?

Start: 2024-02-28. End: 2029-02-27.

What is the specific justification for awarding this contract on a sole-source basis to National Economic Research Associates Inc.?

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. The specific justification for this determination is not detailed in the provided data. Typically, sole-source awards are made when only one responsible source is available or capable of providing the required services, or when urgent and compelling circumstances preclude competition. For expert witness services, this might stem from a unique expertise required for a specific case, the contractor's prior involvement, or specialized knowledge that no other firm possesses. A full justification would normally be documented by the agency in accordance with federal procurement regulations (e.g., FAR Part 6).

How does the annual average cost of this contract compare to similar expert witness services procured by other federal agencies?

Direct comparison of annual average costs for specialized expert witness services is difficult without access to detailed pricing data from comparable sole-source or competitively awarded contracts. However, the annual average of approximately $471,513 for expert witness services suggests a significant investment. Federal agencies often engage specialized consultants for litigation support, and costs can vary widely based on the complexity of the case, the reputation and experience of the expert, and the duration of engagement. Without specific benchmarks for similar IRS cases or Treasury-wide needs, it's hard to definitively state if this represents a premium or a fair market value. Further analysis would require benchmarking against contracts for similar services, considering factors like the specific legal domain and the seniority of the experts involved.

What are the potential risks associated with awarding a long-term (5-year) contract for expert witness services on a sole-source basis?

The primary risk of a long-term, sole-source award for expert witness services is the potential for inflated costs due to the lack of competitive pressure. Over a five-year period, market rates could change, or alternative providers might emerge, but the government is locked into the current arrangement. There's also a risk of complacency from the contractor, potentially leading to a decline in service quality or responsiveness, as there's no immediate threat of losing the business to a competitor. Furthermore, if the scope of work evolves significantly, the sole-source nature might hinder the government's ability to adapt pricing or services efficiently compared to a competitive re-procurement.

What is the track record of National Economic Research Associates Inc. (NERA) in providing expert witness services to the federal government?

National Economic Research Associates Inc. (NERA) is a well-established economic consulting firm that frequently provides expert witness testimony and economic analysis for litigation and regulatory matters. While the provided data doesn't detail NERA's specific track record with the federal government on this particular contract, their general reputation suggests they are a significant player in this market. Agencies often engage NERA for their expertise in areas such as antitrust, finance, intellectual property, and damages assessment. A comprehensive review would involve examining past performance evaluations, any reported disputes or contract issues, and the scope of their previous federal engagements.

How does this contract align with the IRS's overall spending on legal and consulting services?

This contract for expert witness services represents a specific, albeit potentially significant, component of the IRS's broader spending on legal and consulting support. The IRS, like other large federal agencies, relies on external expertise for complex litigation, policy analysis, and specialized technical advice. The $2.36 million over five years is substantial for a single contract but must be viewed within the context of the IRS's total budget and its extensive legal caseload. Understanding its alignment requires comparing it to historical spending patterns for similar services, the number and complexity of cases requiring expert witnesses, and the agency's overall strategy for managing its legal and advisory needs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Other Management Consulting Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Parent Company: Marsh & Mclennan Companies Inc

Address: 1166 AVENUE OF THE AMERICAS, NEW YORK, NY, 10036

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,357,567

Exercised Options: $2,357,567

Current Obligation: $2,357,567

Actual Outlays: $1,870,258

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline