Treasury's IRS awards $19.5M for IT program development and support through 2025

Contract Overview

Contract Amount: $19,466,827 ($19.5M)

Contractor: Kilda Group, LLC

Awarding Agency: Department of the Treasury

Start Date: 2020-09-07

End Date: 2025-03-06

Contract Duration: 1,641 days

Daily Burn Rate: $11.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THIS PROGRAM SUPPORT INCLUDES THE ONGOING DEVELOPMENT, SUPPORT, TEST, ENHANCEMENTS AND UPGRADES TO THE PORTFOLIO OF PROGRAMS INCLUDED IN THIS TASK ORDER IDENTIFIED IN SECTION C.3.1 THROUGH C.3.4. COVID-19

Place of Performance

Location: SEVERNA PARK, ANNE ARUNDEL County, MARYLAND, 21146

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $19.5 million to KILDA GROUP, LLC for work described as: THIS PROGRAM SUPPORT INCLUDES THE ONGOING DEVELOPMENT, SUPPORT, TEST, ENHANCEMENTS AND UPGRADES TO THE PORTFOLIO OF PROGRAMS INCLUDED IN THIS TASK ORDER IDENTIFIED IN SECTION C.3.1 THROUGH C.3.4. COVID-19 Key points: 1. Contract focuses on ongoing development, support, testing, enhancements, and upgrades for a portfolio of IRS programs. 2. The firm-fixed-price contract structure aims to control costs by establishing a set price for services. 3. Awarded under full and open competition, suggesting a competitive bidding process. 4. The duration of the contract extends over five years, indicating a long-term need for these IT services. 5. The contract is for 'Other Computer Related Services,' a broad category within IT. 6. The contractor, KILDA GROUP, LLC, is responsible for a range of IT lifecycle activities.

Value Assessment

Rating: good

The contract's value of approximately $19.5 million over five years for comprehensive IT program support appears reasonable, especially given the scope of development, support, and upgrades. Benchmarking against similar large-scale IT service contracts for federal agencies suggests this pricing is within expected ranges. The firm-fixed-price (FFP) structure provides cost certainty for the government, although it places the risk of cost overruns on the contractor. Without specific performance metrics or detailed cost breakdowns, a precise value-for-money assessment is challenging, but the competitive award process likely contributed to a fair price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but this procurement method generally fosters a competitive environment. A competitive process is expected to drive down prices and encourage innovation as contractors vie for the award. The IRS's decision to use full and open competition suggests they sought the best possible solution and price from the widest possible market.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically leads to more competitive pricing and a wider array of innovative solutions, ensuring government funds are used efficiently.

Public Impact

Taxpayers benefit from improved and reliable IRS IT systems, which are crucial for tax administration and processing. The contract ensures the continued development and enhancement of critical IRS programs, supporting tax compliance and revenue collection. Services delivered include software development, testing, maintenance, and upgrades, covering the full IT lifecycle. The primary geographic impact is within the United States, supporting federal government operations. Workforce implications include the potential for skilled IT professionals to be employed by the contractor to fulfill these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if 'enhancements and upgrades' are not clearly defined and managed.
Dependence on a single contractor for critical IT program support over a multi-year period.
Risk of vendor lock-in if knowledge transfer and documentation are not robust.
The broad nature of 'Other Computer Related Services' could lead to ambiguity in service delivery.
Ensuring the contractor maintains adequate cybersecurity measures for sensitive IRS data.

Positive Signals

Awarded through full and open competition, suggesting a competitive market and fair pricing.
Firm-fixed-price contract provides cost certainty for the government.
Long contract duration (over 5 years) indicates a stable, long-term partnership for critical IT functions.
Contract covers a comprehensive range of IT services, from development to ongoing support.
The IRS is actively investing in modernizing and maintaining its IT infrastructure.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on IT services and solutions. The market for government IT services is substantial, with agencies continually seeking to modernize legacy systems and implement new digital capabilities. Comparable spending benchmarks for IT development and support contracts with federal agencies often range from millions to hundreds of millions of dollars annually, depending on the scope and complexity. This contract's value aligns with mid-to-large scale IT service agreements.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, KILDA GROUP, LLC, is likely not a small business for the purpose of this award. There is no explicit information regarding subcontracting plans for small businesses. Without a small business set-aside or specific subcontracting goals, the direct impact on the small business IT ecosystem from this particular contract is likely minimal, though the prime contractor may engage small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the IRS. The firm-fixed-price nature of the contract provides a degree of financial oversight by fixing the cost. Performance monitoring against the requirements outlined in Section C of the contract is crucial. Transparency is facilitated by the contract being awarded under full and open competition, with its details likely available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian Agency IT Services
Tax System Modernization Efforts
Department of the Treasury IT Contracts
Software Development and Maintenance Services

Risk Flags

Potential for scope creep in enhancements/upgrades.
Long-term reliance on a single contractor.
Cybersecurity risks associated with IT systems.
Ambiguity in broad service category (NAICS 541519).

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $19.5 million to KILDA GROUP, LLC. THIS PROGRAM SUPPORT INCLUDES THE ONGOING DEVELOPMENT, SUPPORT, TEST, ENHANCEMENTS AND UPGRADES TO THE PORTFOLIO OF PROGRAMS INCLUDED IN THIS TASK ORDER IDENTIFIED IN SECTION C.3.1 THROUGH C.3.4. COVID-19

Who is the contractor on this award?

The obligated recipient is KILDA 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 $19.5 million.

What is the period of performance?

Start: 2020-09-07. End: 2025-03-06.

What is the track record of KILDA GROUP, LLC in performing similar federal IT contracts?

Information regarding KILDA GROUP, LLC's specific track record on federal contracts of this scale and complexity is not detailed in the provided data. A thorough assessment would require reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), contract history, and any reported issues or successes on previous government engagements. Understanding their experience with IRS systems or similar tax administration IT infrastructure would be particularly relevant. Without this data, it's difficult to definitively assess their capability to meet the demands of this significant IT development and support contract.

How does the per-year cost of this contract compare to similar IT support contracts for federal agencies?

The contract value is approximately $19.5 million over a period of 1641 days (roughly 4.5 years), equating to an average annual cost of about $4.3 million. This figure needs to be benchmarked against similar IT development, support, and enhancement contracts awarded to federal agencies of the IRS's size and complexity. Factors such as the specific services included (e.g., custom development vs. COTS integration, level of security required, number of systems supported) significantly influence costs. Generally, for comprehensive IT lifecycle support, an annual cost in the low millions is not uncommon for large federal entities, but a precise comparison requires detailed analysis of contract scope and market rates.

What are the primary risks associated with the 'enhancements and upgrades' component of this contract?

The primary risks associated with the 'enhancements and upgrades' component include scope creep, cost overruns, and schedule delays. 'Enhancements and upgrades' can be vaguely defined, potentially leading to the contractor performing work beyond the original intent or budget. If requirements are not meticulously managed and documented, the scope can expand significantly, increasing costs and extending timelines. Furthermore, integrating new features or upgrading existing systems can introduce unforeseen technical challenges or compatibility issues, requiring additional resources and time to resolve. Robust change management processes and clear definition of 'enhancements' are critical to mitigate these risks.

How effective is the firm-fixed-price (FFP) contract type in ensuring value for money for this IT services requirement?

The firm-fixed-price (FFP) contract type is generally effective in ensuring value for money when the scope of work is well-defined and unlikely to change significantly. For this contract, which includes ongoing development, support, testing, enhancements, and upgrades, the FFP structure provides cost certainty to the government, as the price is fixed regardless of the contractor's actual costs. This shifts the risk of cost overruns to the contractor. However, if the 'enhancements and upgrades' lead to substantial scope changes, managing the FFP contract can become complex, potentially requiring modifications or new contract actions. The effectiveness hinges on the clarity of the initial requirements and the government's ability to manage scope.

What are the implications of this contract being classified under 'Other Computer Related Services' (NAICS 541519)?

Classifying this contract under NAICS code 541519 ('Other Computer Related Services') indicates that the services provided do not fit neatly into more specific categories like software publishing, custom computer programming, or computer systems design. This broad classification suggests the contract likely encompasses a diverse range of IT activities, potentially including IT consulting, data processing, disaster recovery services, or IT support and troubleshooting that isn't tied to specific software development. While offering flexibility, this broadness can sometimes make it harder to benchmark specific services or assess specialized expertise compared to contracts under more narrowly defined NAICS codes.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

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: Kilda Group LLC

Address: 650 RITCHIE HWY STE 302, SEVERNA PARK, MD, 21146

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

Financial Breakdown

Contract Ceiling: $28,303,199

Exercised Options: $19,466,827

Current Obligation: $19,466,827

Actual Outlays: $19,466,827

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47QTCA18D00BR

IDV Type: FSS

Timeline