Treasury's IRS Spends $37.8M on Tax Engine Audit Software from Bloomberg Industry Group

Contract Overview

Contract Amount: $37,786,068 ($37.8M)

Contractor: Bloomberg Industry Group, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2020-10-01

End Date: 2026-03-31

Contract Duration: 2,007 days

Daily Burn Rate: $18.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: BLOOMBERG BUREAU OF NATIONAL AFFAIRS (BBNA) FISCAL YEAR 2021 LARGE CASE TAX ENGINE AUDIT - CORPORATE TAX ANALYSIS SOFTWARE

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $37.8 million to BLOOMBERG INDUSTRY GROUP, INC. for work described as: BLOOMBERG BUREAU OF NATIONAL AFFAIRS (BBNA) FISCAL YEAR 2021 LARGE CASE TAX ENGINE AUDIT - CORPORATE TAX ANALYSIS SOFTWARE Key points: 1. The contract for corporate tax analysis software represents a significant investment in tax administration technology. 2. Competition was limited, raising questions about potential price discovery and value for money. 3. The long duration (2020-2026) suggests a critical, ongoing need for this specialized software. 4. The sector is dominated by a few large players, indicating potential barriers to entry for smaller competitors.

Value Assessment

Rating: fair

The $37.8 million price tag over six years for specialized tax analysis software appears high, especially given the lack of competitive bidding. Benchmarking against similar, competitively procured software is difficult without more data, but the absence of competition suggests potential overpricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and may prevent the government from securing the best possible price through market competition.

Taxpayer Impact: The lack of competition could lead to higher costs for taxpayers if the software is not procured at the most competitive price.

Public Impact

Taxpayers may be indirectly funding a higher-than-necessary cost for tax administration software. The IRS relies on this software for corporate tax analysis, impacting the efficiency and accuracy of tax audits. Dependence on a single vendor for critical tax infrastructure raises concerns about long-term cost and potential vendor lock-in.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
High contract value
Long contract duration
Lack of transparency in pricing

Positive Signals

Essential function for tax administration
Long-term commitment suggests critical need

Sector Analysis

The IT services sector, particularly specialized software for government functions like tax analysis, often sees high contract values. Benchmarks are difficult without specific comparisons, but large, sole-source contracts warrant scrutiny due to potential cost inefficiencies.

Small Business Impact

The contract was awarded to Bloomberg Industry Group, Inc., a large corporation. There is no indication that small businesses were involved in this specific procurement, either as prime contractors or subcontractors.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight from the Department of the Treasury and the IRS to ensure the pricing remains fair and the services are essential. Regular performance reviews and justification for continued sole-source status are crucial.

Related Government Programs

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

Risk Flags

Sole-source award limits competition and price discovery.
High contract value over a long period requires justification.
Potential for vendor lock-in and future cost increases.
Lack of transparency regarding the necessity of sole-source procurement.
Need for robust oversight to ensure value for taxpayer money.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $37.8 million to BLOOMBERG INDUSTRY GROUP, INC.. BLOOMBERG BUREAU OF NATIONAL AFFAIRS (BBNA) FISCAL YEAR 2021 LARGE CASE TAX ENGINE AUDIT - CORPORATE TAX ANALYSIS SOFTWARE

Who is the contractor on this award?

The obligated recipient is BLOOMBERG INDUSTRY GROUP, 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 $37.8 million.

What is the period of performance?

Start: 2020-10-01. End: 2026-03-31.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair pricing without competition?

The justification for a sole-source award typically involves unique capabilities or proprietary technology that only one vendor can provide. The agency should have conducted a market survey to confirm no other sources exist and negotiated the price rigorously, potentially using cost analysis or benchmarking against similar, albeit not identical, services to ensure fair and reasonable pricing for the taxpayer.

How does the cost of this tax engine audit software compare to similar solutions procured competitively in the public or private sector?

Direct comparison is challenging due to the specialized nature and sole-source award. However, an analysis could involve looking at the cost per user, per transaction, or per audit supported, and comparing these metrics to competitively bid software for financial data analysis or regulatory compliance. The absence of competition suggests this price may be higher than what could be achieved through a competitive process.

What are the risks associated with the IRS's long-term reliance on a single vendor for critical tax analysis software, particularly regarding data security and future innovation?

Long-term reliance on a single vendor creates risks of vendor lock-in, potentially leading to escalating costs and reduced flexibility. Data security is paramount, and the IRS must ensure robust contractual safeguards and continuous monitoring of the vendor's security practices. Furthermore, dependence on one provider might stifle innovation if the vendor does not prioritize updates or adapt to evolving tax laws and technologies.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Bloomberg LP

Address: 1801, SOUTH BELL STREET, ARLINGTON, VA, 22202

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

Financial Breakdown

Contract Ceiling: $37,786,068

Exercised Options: $37,786,068

Current Obligation: $37,786,068

Actual Outlays: $37,579,125

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline