IRS tax receivable collection contract awarded to The CBE Group for over $170M, utilizing full and open competition

Contract Overview

Contract Amount: $170,990,618 ($171.0M)

Contractor: THE CBE Group, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2021-09-23

End Date: 2026-09-22

Contract Duration: 1,825 days

Daily Burn Rate: $93.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: THE PURPOSE OF THIS EFFORT IS TO ENLIST THE SERVICES OF PRIVATE COLLECTION AGENCIES (PCAS OR CONTRACTORS) TO COLLECT CERTAIN OUTSTANDING INACTIVE IRS TAX RECEIVABLES AS DESCRIBED IN THIS PERFORMANCE WORK STATEMENT AND THE POLICY.

Place of Performance

Location: CEDAR FALLS, BLACK HAWK County, IOWA, 50613

State: Iowa Government Spending

Plain-Language Summary

Department of the Treasury obligated $171.0 million to THE CBE GROUP, INC. for work described as: THE PURPOSE OF THIS EFFORT IS TO ENLIST THE SERVICES OF PRIVATE COLLECTION AGENCIES (PCAS OR CONTRACTORS) TO COLLECT CERTAIN OUTSTANDING INACTIVE IRS TAX RECEIVABLES AS DESCRIBED IN THIS PERFORMANCE WORK STATEMENT AND THE POLICY. Key points: 1. Value for money assessed through firm-fixed-price structure, incentivizing efficient collection. 2. Competition dynamics indicate a robust bidding process, potentially driving favorable pricing. 3. Risk indicators include reliance on external agencies for sensitive tax matters. 4. Performance context is set against the backdrop of IRS efforts to recover delinquent taxes. 5. Sector positioning places this contract within the financial services and government contracting space.

Value Assessment

Rating: good

The contract's firm-fixed-price structure suggests a clear understanding of expected costs for collection services. Benchmarking against similar contracts for tax receivable collection is challenging without specific performance data, but the total award value of over $170 million over five years indicates a significant investment in debt recovery. The pricing appears reasonable given the scope of recovering inactive tax receivables, which can be complex and resource-intensive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of six bidders suggests a healthy level of competition for this service. This broad competition is generally expected to lead to more competitive pricing and a wider selection of qualified contractors.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the most cost-effective services for the government, ensuring that taxpayer funds are used efficiently for debt collection.

Public Impact

Benefits taxpayers by facilitating the recovery of outstanding tax debts, potentially reducing the overall tax burden. Delivers essential services for the Internal Revenue Service in managing and collecting inactive tax receivables. Geographic impact is national, as the IRS operates across the United States. Workforce implications include employment opportunities within The CBE Group and potentially related support services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for aggressive collection tactics impacting taxpayer relations.
Data security and privacy risks associated with handling sensitive taxpayer information.
Dependence on contractor performance for achieving collection targets.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Full and open competition suggests a competitive market for these services.
Long-term contract duration allows for sustained collection efforts.

Sector Analysis

This contract falls within the government's broader efforts to manage and collect delinquent tax debts. The market for private collection agencies is competitive, with numerous firms offering services to government entities. The IRS's use of such contracts is a common strategy to supplement its internal collection capabilities, particularly for older or more difficult-to-collect debts. Comparable spending benchmarks are difficult to ascertain without more specific contract details, but the scale of this award suggests it is a significant program.

Small Business Impact

The contract was awarded to The CBE Group, Inc., and the data indicates that small business set-asides were not utilized (ss: false, sb: false). This suggests that the primary award was not specifically targeted towards small businesses. However, the prime contractor may engage small businesses for subcontracting opportunities, though this is not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on the extent of any subcontracting.

Oversight & Accountability

Oversight is likely managed by the IRS through contract performance reviews, adherence to the Performance Work Statement (PWS), and financial reporting requirements. Accountability measures are embedded in the firm-fixed-price structure and performance metrics. Transparency is facilitated by the contract award process being subject to federal procurement regulations, and the IRS may have internal audit functions or utilize the Treasury Inspector General for Tax Administration (TIGTA) for oversight.

Related Government Programs

IRS Tax Debt Collection Programs
Federal Debt Collection Services
Government Contracted Collection Agencies

Risk Flags

Potential for taxpayer dissatisfaction with collection methods.
Data privacy and security concerns.
Contractor performance variability.
Effectiveness of inactive debt recovery.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $171.0 million to THE CBE GROUP, INC.. THE PURPOSE OF THIS EFFORT IS TO ENLIST THE SERVICES OF PRIVATE COLLECTION AGENCIES (PCAS OR CONTRACTORS) TO COLLECT CERTAIN OUTSTANDING INACTIVE IRS TAX RECEIVABLES AS DESCRIBED IN THIS PERFORMANCE WORK STATEMENT AND THE POLICY.

Who is the contractor on this award?

The obligated recipient is THE CBE 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 $171.0 million.

What is the period of performance?

Start: 2021-09-23. End: 2026-09-22.

What is the historical performance of The CBE Group, Inc. in collecting federal tax receivables?

The provided data does not include historical performance metrics for The CBE Group, Inc. specifically related to this contract or previous federal tax receivable collection efforts. To assess their track record, one would need to review past performance evaluations, contract award histories, and any reported successes or failures in meeting collection targets for the IRS or other federal agencies. Information on their experience with similar inactive tax receivables, their collection methodologies, and their compliance with federal regulations would be crucial for a comprehensive understanding of their capabilities and reliability.

How does the per-unit cost of collection for this contract compare to industry benchmarks or similar government contracts?

The provided data does not include a specific per-unit cost metric for collection, making direct comparison difficult. The contract is a firm-fixed-price award valued at over $170 million for a five-year period, covering the collection of 'certain outstanding inactive IRS tax receivables.' Without knowing the total number of receivables targeted or the average debt amount per receivable, a precise per-unit cost cannot be calculated. Industry benchmarks for private debt collection agencies often vary widely based on the age and type of debt, the amount owed, and the collection strategy employed. A detailed analysis would require access to the contract's fee structure or performance data detailing the cost per dollar collected.

What are the primary risks associated with outsourcing tax receivable collection to private agencies?

Key risks associated with outsourcing tax receivable collection include potential damage to taxpayer relations due to aggressive collection tactics, data security and privacy breaches of sensitive taxpayer information, and the risk that the private agency may not achieve the expected collection rates, leading to a lower return on investment for the government. There's also a reputational risk for the IRS if the contractor engages in unethical or illegal practices. Ensuring robust oversight, clear performance standards, and strict adherence to privacy laws are critical to mitigating these risks.

How effective has the IRS been historically in collecting inactive tax receivables through private contractors compared to in-house efforts?

Historical effectiveness data comparing private contractor performance to in-house IRS collection efforts for inactive tax receivables is not provided in this dataset. Generally, the IRS utilizes private collection agencies for specific types of debt, often older or more challenging receivables, where private sector expertise or capacity may offer advantages. The success of these contracts can vary depending on the contract terms, the contractor's capabilities, and the specific characteristics of the debt portfolio. A comprehensive analysis would require reviewing IRS reports, Government Accountability Office (GAO) findings, and Treasury Inspector General for Tax Administration (TIGTA) audits on the effectiveness and cost-efficiency of such outsourcing initiatives over time.

What is the total federal spending on tax collection services, including both in-house and contracted efforts, over the past five years?

The provided data focuses solely on a single contract award to The CBE Group, Inc. for inactive tax receivable collection. It does not offer a comprehensive view of total federal spending on tax collection services. To determine this, one would need to aggregate spending data across the IRS and potentially other agencies involved in tax administration and debt recovery, encompassing both internal operational costs and all contracted collection services. This would require accessing broader federal procurement databases and agency budget reports, which are outside the scope of the current data.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Offices of Certified Public Accountants

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1309 TECHNOLOGY PKWY, CEDAR FALLS, IA, 50613

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

Financial Breakdown

Contract Ceiling: $170,990,618

Exercised Options: $170,990,618

Current Obligation: $170,990,618

Actual Outlays: $164,773,979

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS23F0230P

IDV Type: FSS

Timeline