Treasury's IRS awards $36.4M IT support contract to Deloitte, highlighting need for ongoing system development

Contract Overview

Contract Amount: $36,361,460 ($36.4M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of the Treasury

Start Date: 2019-09-15

End Date: 2025-03-14

Contract Duration: 2,007 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: OFAC IT OPERATIONS AND DEVELOPMENT SUPPORT.

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20220

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $36.4 million to DELOITTE CONSULTING LLP for work described as: OFAC IT OPERATIONS AND DEVELOPMENT SUPPORT. Key points: 1. Contract supports critical IT operations and development for the IRS. 2. Deloitte Consulting LLP, a major federal contractor, secured this award. 3. The contract duration extends over multiple fiscal years, indicating long-term needs. 4. The award was made under full and open competition. 5. The fixed-price contract type suggests a defined scope of work. 6. The contract is for Computer Systems Design Services, a key area for government modernization.

Value Assessment

Rating: good

The contract value of $36.4 million over its period of performance appears reasonable for comprehensive IT operations and development support. Benchmarking against similar large-scale IT service contracts for federal agencies suggests that this level of investment is typical for maintaining and enhancing complex systems. The firm fixed-price nature of the award provides cost certainty for the government, assuming the scope of work is well-defined and managed effectively. Without specific performance metrics or detailed cost breakdowns, a precise value-for-money assessment is challenging, but the competitive award process lends confidence.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The fact that it was competed suggests a healthy market for these types of IT services. While the number of bidders is not specified, a full and open competition generally leads to better price discovery and a wider range of technical solutions being considered. This process is designed to ensure the government receives the best value by leveraging market forces.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure IT support services at the most advantageous prices and terms, reducing the risk of overpayment and ensuring efficient use of public funds.

Public Impact

The IRS benefits from continuous IT operations and development, ensuring the smooth functioning of tax administration systems. Taxpayers indirectly benefit from reliable and secure systems that facilitate tax filing and processing. The contract supports IT professionals and developers, potentially creating or sustaining jobs in the technology sector. The geographic impact is primarily within the District of Columbia, where the IRS headquarters is located, but the IT services support nationwide operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if requirements are not clearly defined and managed.
Dependence on a single contractor for critical IT functions could pose a risk if performance falters.
Ensuring continuous alignment with evolving IRS technological needs requires proactive contract management.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
Firm fixed-price contract provides cost predictability.
Long contract duration indicates a stable, ongoing need for these essential services.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader Information Technology (IT) industry. The IT services market for the federal government is substantial, with agencies consistently investing in maintaining, modernizing, and securing their digital infrastructure. Comparable spending benchmarks for IT operations and development support contracts often run into tens or hundreds of millions of dollars, depending on the agency's size and complexity. This contract represents a significant, but not unusually large, investment for a major bureau like the IRS.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, Deloitte Consulting LLP, is a large business. While there is no explicit mention of small business subcontracting requirements in the provided data, large federal contracts often include provisions for small business participation. The absence of a small business set-aside suggests that the competition was open to all qualified offerors, and the focus was on securing the best overall solution rather than specifically promoting small business engagement through set-asides for this particular award.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the contracting officer's representative (COR) within the IRS. Performance monitoring, adherence to contract terms, and quality assurance are key oversight functions. Transparency is generally maintained through contract award databases and public reporting mechanisms. While specific Inspector General (IG) jurisdiction for this particular contract isn't detailed, the Treasury Inspector General for Tax Administration (TIGTA) has broad oversight authority over IRS programs and contracts, and could investigate any reported issues of fraud, waste, or abuse.

Related Government Programs

IRS IT Modernization Initiatives
Federal Civilian IT Services
Department of the Treasury IT Support Contracts
Computer Systems Design and Related Services

Risk Flags

Potential for vendor lock-in
Cybersecurity risks
Dependence on contractor performance
Scope management challenges

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $36.4 million to DELOITTE CONSULTING LLP. OFAC IT OPERATIONS AND DEVELOPMENT SUPPORT.

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $36.4 million.

What is the period of performance?

Start: 2019-09-15. End: 2025-03-14.

What is Deloitte Consulting LLP's track record with the IRS and other federal agencies for IT support contracts?

Deloitte Consulting LLP is a major federal contractor with a significant history of providing IT and consulting services across numerous government agencies, including the IRS. Their track record typically involves large-scale system implementations, modernization efforts, and ongoing operational support. For the IRS specifically, Deloitte has been involved in various projects related to tax systems, data management, and cybersecurity. While specific performance ratings for this particular contract are not provided, Deloitte's overall presence in the federal IT landscape suggests extensive experience. However, like any large contractor, they have faced scrutiny and reviews on past performance, underscoring the importance of diligent oversight by the contracting agency to ensure continued satisfactory performance and value.

How does the $36.4 million contract value compare to similar IT support contracts awarded by the IRS or other large federal agencies?

The $36.4 million contract value for IT operations and development support over its period of performance is substantial but falls within the typical range for large federal IT service contracts. For instance, major agencies like the Department of Defense, Health and Human Services, or the Social Security Administration frequently award IT support contracts valued in the tens to hundreds of millions of dollars, sometimes even billions for enterprise-wide solutions. The IRS, as a large bureau responsible for complex financial and taxpayer data systems, requires significant IT investment. This contract's value appears commensurate with the scope of supporting critical IT infrastructure and development needs for such an agency. Benchmarking against similar 'Computer Systems Design Services' (NAICS 541512) contracts awarded to large system integrators would likely show this award to be in a comparable tier.

What are the primary risks associated with this contract, and how are they being mitigated?

Primary risks associated with this contract include potential performance issues, cost overruns (though mitigated by the firm fixed-price structure), contractor lock-in, and cybersecurity vulnerabilities. Performance risks are mitigated through defined service level agreements (SLAs), regular performance reviews, and the contracting officer's representative (COR) monitoring. The firm fixed-price (FFP) contract type inherently limits cost overrun risks for the government, provided the scope is well-defined and managed. Contractor lock-in is a common concern with long-term IT support, managed through robust contract clauses, clear exit strategies, and potentially encouraging competition for future contract renewals. Cybersecurity risks are paramount; mitigation involves stringent security requirements within the contract, regular audits, and adherence to federal cybersecurity standards (e.g., NIST guidelines).

How effective is the IRS in managing its IT contracts to ensure program effectiveness and value for money?

The IRS has a complex history with IT contract management, marked by both successes and challenges. Historically, the agency has faced criticism for cost overruns and delays on major IT modernization projects. However, there have also been significant achievements in delivering essential IT services. The effectiveness of managing this specific contract hinges on robust program management, clear requirements definition, diligent oversight by CORs, and proactive risk management. The IRS employs various oversight mechanisms, including regular progress meetings, performance metrics tracking, and audits. The agency's ability to adapt to evolving technological landscapes and taxpayer needs while maintaining fiscal discipline is crucial for ensuring program effectiveness and value for money on contracts like this one.

What are the historical spending patterns for IT operations and development support at the IRS over the last 5-10 years?

Historical spending patterns for IT operations and development support at the IRS have generally shown a consistent and significant investment, reflecting the agency's reliance on complex technology infrastructure. Over the last 5-10 years, the IRS has allocated billions of dollars annually towards IT, encompassing modernization efforts, maintenance of existing systems, cybersecurity enhancements, and development of new capabilities. Spending fluctuates based on specific modernization initiatives, legislative mandates, and budget allocations. While the exact figures for 'operations and development support' as a distinct category can vary depending on how spending is classified, it represents a core component of the IRS's overall IT budget. Trends indicate a sustained need for these services, often driven by the imperative to replace legacy systems, improve taxpayer services, and enhance data security.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 2032H5-19-R-0004

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1919 N LYNN ST, ARLINGTON, VA, 22209

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $36,361,529

Exercised Options: $36,361,529

Current Obligation: $36,361,460

Actual Outlays: $16,665,253

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $6,947,308

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 47QTCK18D0029

IDV Type: GWAC

Timeline