Treasury's $4.4M IT contract with Applied Fundamentals Consulting LLC for synthetic ID management raises questions on competition

Contract Overview

Contract Amount: $4,389,486 ($4.4M)

Contractor: Applied Fundamentals Consulting LLC

Awarding Agency: Department of the Treasury

Start Date: 2023-09-27

End Date: 2026-09-29

Contract Duration: 1,098 days

Daily Burn Rate: $4.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SYNTHETIC IDENTIFICATION MANAGEMENT

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20224

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $4.4 million to APPLIED FUNDAMENTALS CONSULTING LLC for work described as: SYNTHETIC IDENTIFICATION MANAGEMENT Key points: 1. The contract's value, while not exceptionally large, warrants scrutiny due to the lack of competitive bidding. 2. The IT services sector is highly competitive, making a sole-source award unusual and potentially indicative of missed savings. 3. Performance risk appears moderate given the fixed-price nature, but the absence of competition limits external validation of contractor capabilities. 4. This contract supports essential internal IT functions for the IRS, focusing on data security and integrity. 5. The provider, Applied Fundamentals Consulting LLC, is a new entity in federal contracting, increasing performance uncertainty. 6. The contract duration of nearly three years suggests a need for sustained services, further emphasizing the importance of competitive pricing.

Value Assessment

Rating: questionable

Benchmarking the value of this $4.4 million contract is challenging without competitive data. Applied Fundamentals Consulting LLC's pricing cannot be directly compared to similar contracts due to the sole-source nature of this award. The firm fixed-price structure provides some cost certainty, but the lack of competition prevents an assessment of whether the government secured the best possible value for these synthetic identification management services. Without competing the requirement, it's impossible to determine if the current price reflects market rates or if significant savings were forgone.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not publicly advertised or competed among multiple vendors. The IRS did not provide details on why full and open competition was not utilized, which is a significant departure from standard procurement practices. The absence of multiple bidders means there was no opportunity for price discovery through a competitive process, potentially leading to higher costs for taxpayers. This approach limits the government's ability to leverage market forces to obtain the most advantageous terms and pricing.

Taxpayer Impact: The sole-source award means taxpayers may have paid a premium for these services. Without competition, there's no assurance that the price reflects the best value achievable in the market.

Public Impact

The primary beneficiaries are the Internal Revenue Service (IRS) and the Department of the Treasury, who receive enhanced capabilities for managing synthetic identities. The services delivered are critical for maintaining the integrity of taxpayer data and preventing fraud. The geographic impact is primarily within the District of Columbia, where the IRS headquarters is located. There are no immediate workforce implications as this is a service contract, not a direct hiring initiative.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and missed opportunities for innovation.
The contractor is relatively new to federal contracting, introducing potential performance risks.
The sole-source justification needs further transparency to ensure it was appropriate.
Limited public information available on the specific technical requirements and performance metrics.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Contract supports critical IRS functions related to data integrity and fraud prevention.
Services are essential for modernizing IT infrastructure and security.

Sector Analysis

The IT services sector, particularly within data processing and hosting, is a dynamic and competitive market. This contract falls under the Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services NAICS code (518210). While the overall market is robust, specific niche services like synthetic identification management can sometimes be concentrated among fewer providers. However, the general expectation for IT services is competitive bidding to ensure value. The $4.4 million value is moderate for federal IT contracts, but the lack of competition is the primary concern.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to Applied Fundamentals Consulting LLC, a potentially newer entity, does not offer immediate insights into its small business status or its capacity to engage small businesses as subcontractors. Further analysis would be needed to determine if this contract missed an opportunity to support the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the IRS's contracting officers and program managers. The Department of the Treasury's Inspector General may also have jurisdiction to investigate potential fraud, waste, or abuse, particularly given the sole-source nature of the award. Transparency is limited by the lack of competitive bidding documentation, making it difficult to assess the full extent of oversight and accountability measures in place.

Related Government Programs

IRS IT Modernization Programs
Federal Cybersecurity Initiatives
Data Management Services
Identity and Access Management

Risk Flags

Sole-source award without clear justification
Contractor has limited federal contracting history
Potential for non-competitive pricing
Lack of transparency in procurement process

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $4.4 million to APPLIED FUNDAMENTALS CONSULTING LLC. SYNTHETIC IDENTIFICATION MANAGEMENT

Who is the contractor on this award?

The obligated recipient is APPLIED FUNDAMENTALS CONSULTING 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 $4.4 million.

What is the period of performance?

Start: 2023-09-27. End: 2026-09-29.

What is the track record of Applied Fundamentals Consulting LLC in federal contracting?

Based on the provided data, Applied Fundamentals Consulting LLC appears to be a relatively new entrant into federal contracting. The data does not indicate a significant history of awards or performance with the federal government. This lack of established track record introduces a degree of uncertainty regarding the contractor's ability to consistently meet performance expectations and deliver the required services effectively. Future performance will be crucial in establishing their credibility within the federal contracting landscape. Further investigation into their corporate structure, past performance on non-federal projects, and any available past performance information would be beneficial for a comprehensive assessment.

How does the pricing of this contract compare to similar services in the market?

Direct price comparison is not feasible due to the sole-source nature of this award. The absence of competitive bidding means there is no benchmark against which to evaluate Applied Fundamentals Consulting LLC's pricing. Typically, a competitive process allows the government to assess multiple proposals and select the best value, which includes price. Without this, it's impossible to determine if the $4.4 million awarded represents a fair market price or if potential savings were forgone. The firm fixed-price structure offers cost certainty but does not inherently guarantee value for money in the absence of competition.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract stem from the lack of competition. This includes the risk of paying a premium price compared to what might have been achieved through a competitive process. There is also a risk related to the contractor's performance, as there is less external validation of their capabilities compared to a scenario with multiple bidders. Furthermore, the lack of transparency inherent in sole-source awards can raise concerns about the justification for not competing the requirement. Finally, the potential for missed opportunities for innovation or more cost-effective solutions from other market participants is a significant risk.

How effective is the synthetic identification management service likely to be for the IRS?

The effectiveness of the synthetic identification management service will depend heavily on the specific capabilities of Applied Fundamentals Consulting LLC and the detailed requirements outlined in the contract Statement of Work (SOW). Synthetic identity fraud is a growing concern, and robust management systems are crucial for protecting taxpayer data and preventing financial losses. While the contract aims to enhance these capabilities, the lack of competitive vetting means the IRS has not had the benefit of evaluating multiple technical approaches or solutions. The firm fixed-price nature suggests a defined scope, but the ultimate effectiveness hinges on the contractor's execution and the IRS's oversight.

What are the historical spending patterns for synthetic identification management at the IRS?

The provided data does not include historical spending patterns for synthetic identification management at the IRS. This specific contract, valued at $4.4 million over approximately three years, represents a new or ongoing investment in this capability. Without historical data, it is difficult to assess whether this spending level is an increase, decrease, or consistent with previous investments in similar services. Understanding past expenditures would provide valuable context for evaluating the current contract's scale and necessity, and for identifying trends in the IRS's approach to managing synthetic identities.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT COMPETED' and is a 'SOLE SOURCE' type. However, the specific justification or rationale behind this sole-source determination is not included in the data. Federal procurement regulations typically require agencies to justify sole-source awards, often citing reasons such as unique capabilities, urgent needs, or lack of market availability. Without this justification, it is impossible to assess the validity of the sole-source decision and whether it was appropriate under the circumstances. This lack of transparency is a key area for further inquiry.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 5000167065

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 13655 DULLES TECHNOLOGY DR STE 160, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $4,389,486

Exercised Options: $4,389,486

Current Obligation: $4,389,486

Actual Outlays: $3,261,118

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline