IRS Spends $26.4M on Micro Focus/HPE Software Licenses and Maintenance with Distributed Technology Group LLC

Contract Overview

Contract Amount: $26,381,769 ($26.4M)

Contractor: Distributed Technology Group LLC

Awarding Agency: Department of the Treasury

Start Date: 2018-09-30

End Date: 2022-09-29

Contract Duration: 1,460 days

Daily Burn Rate: $18.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MICROFOCUS HEWLETT PACKARD ENTERPRISE (HPE) INFORMATION TECHNOLOGY (IT) SOFTWARE LICENSE BUNDLES AND MICROFOCUS HPE IT SOFTWARE MAINTENANCE SUPPORT FOR IRS IT SW AND IT SW MAINTENANCE FUNCTIONS CONUS.

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $26.4 million to DISTRIBUTED TECHNOLOGY GROUP LLC for work described as: MICROFOCUS HEWLETT PACKARD ENTERPRISE (HPE) INFORMATION TECHNOLOGY (IT) SOFTWARE LICENSE BUNDLES AND MICROFOCUS HPE IT SOFTWARE MAINTENANCE SUPPORT FOR IRS IT SW AND IT SW MAINTENANCE FUNCTIONS CONUS. Key points: 1. The IRS procured software licenses and maintenance for Micro Focus and HPE IT software, totaling $26.4 million. 2. The contract was awarded under full and open competition, suggesting a competitive bidding process. 3. The primary contractor is Distributed Technology Group LLC, with the contract spanning four years. 4. This spending falls under 'Other Computer Related Services' (NAICS 541519), indicating a focus on IT support and maintenance.

Value Assessment

Rating: fair

The total award amount of $26.4 million for a four-year contract appears reasonable given the scope of IT software licenses and maintenance. Benchmarking against similar large-scale IT software procurements would be necessary for a definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded using full and open competition, which generally promotes competitive pricing and ensures the government receives the best value. The specific pricing discovery mechanisms within this competitive process are not detailed.

Taxpayer Impact: Taxpayers benefit from the competitive nature of the award, which aims to secure favorable pricing for essential IT software and maintenance services for the IRS.

Public Impact

Ensures continued operation of critical IRS IT systems through software licensing and maintenance. Supports the Internal Revenue Service's ability to process tax information and serve taxpayers. The investment in IT infrastructure is crucial for the efficiency and security of tax administration. Potential for modernization or upgrades of IT capabilities through these software bundles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on software versions and included functionalities.
Potential for vendor lock-in with proprietary software.
Reliance on a single award for a significant IT function.

Positive Signals

Awarded through full and open competition.
Long-term contract provides stability for IT operations.
Supports a critical government agency (IRS).

Sector Analysis

This procurement falls within the Information Technology sector, specifically focusing on software licensing and maintenance. Spending benchmarks for IT software and support services for federal agencies vary widely based on agency size and complexity, but $26.4 million over four years for a major agency like the IRS is substantial.

Small Business Impact

The data indicates this contract was not set aside for small businesses and was awarded to Distributed Technology Group LLC. Further analysis would be needed to determine if small businesses were involved as subcontractors.

Oversight & Accountability

The contract was awarded by the Department of the Treasury for the Internal Revenue Service. Standard government oversight processes for contract performance and financial management would apply. The 'Delivery Order' designation suggests it might be part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Related Government Programs

Other Computer Related Services
Department of the Treasury Contracting
Internal Revenue Service Programs

Risk Flags

Potential for cost overruns if maintenance needs increase unexpectedly.
Risk of security vulnerabilities if software is not promptly patched.
Dependence on vendor for critical IT support.
Limited flexibility to adopt newer technologies during the contract period.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $26.4 million to DISTRIBUTED TECHNOLOGY GROUP LLC. MICROFOCUS HEWLETT PACKARD ENTERPRISE (HPE) INFORMATION TECHNOLOGY (IT) SOFTWARE LICENSE BUNDLES AND MICROFOCUS HPE IT SOFTWARE MAINTENANCE SUPPORT FOR IRS IT SW AND IT SW MAINTENANCE FUNCTIONS CONUS.

Who is the contractor on this award?

The obligated recipient is DISTRIBUTED TECHNOLOGY GROUP LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $26.4 million.

What is the period of performance?

Start: 2018-09-30. End: 2022-09-29.

What is the specific value proposition of the Micro Focus and HPE software bundles for the IRS's IT functions?

The value proposition likely lies in providing essential software capabilities for IT management, data processing, and potentially legacy system support within the IRS. These licenses and maintenance agreements ensure the software remains functional, updated, and supported, which is critical for the agency's operations. Without specific details on the software's role, it's difficult to quantify the exact value beyond operational continuity.

What are the potential risks associated with relying on these specific software licenses and maintenance agreements over a four-year period?

Potential risks include vendor lock-in, where switching to alternative solutions becomes costly and complex. There's also a risk of technological obsolescence if the software doesn't keep pace with evolving IT needs or security threats. Furthermore, reliance on a single vendor for critical IT functions can create vulnerabilities if that vendor experiences financial instability or discontinues support for certain products.

How effectively does this contract support the IRS's overall mission and technological modernization efforts?

This contract directly supports the IRS's mission by ensuring the operational stability of its IT infrastructure, which is fundamental for tax processing and taxpayer services. However, its effectiveness in driving technological modernization is unclear without knowing if the software enables new capabilities or if it primarily maintains existing functions. It's crucial to assess if these licenses are enabling innovation or simply sustaining legacy systems.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RED River Technology LLC

Address: 499 S WARREN ST STE 501, SYRACUSE, NY, 13202

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $141,679,078

Exercised Options: $86,146,949

Current Obligation: $26,381,769

Actual Outlays: $11,074,359

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC31B

IDV Type: GWAC

Timeline