IRS awards $233M contract for IT services to FCN, Inc. under full and open competition

Contract Overview

Contract Amount: $233,051,576 ($233.1M)

Contractor: FCN, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2023-08-25

End Date: 2026-08-24

Contract Duration: 1,095 days

Daily Burn Rate: $212.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: BASE AWARD FOR IRS CISCO CATALOG. BASE YEAR 12 MONTHS WITH FOUR 12-MONTH OPTION PERIODS.

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $233.1 million to FCN, INC. for work described as: BASE AWARD FOR IRS CISCO CATALOG. BASE YEAR 12 MONTHS WITH FOUR 12-MONTH OPTION PERIODS. Key points: 1. Contract provides essential IT services for the Internal Revenue Service, supporting critical government functions. 2. The award was made through full and open competition, suggesting a competitive bidding process. 3. The contract duration spans multiple years, indicating a long-term need for these services. 4. The fixed-price contract type helps manage cost certainty for the government. 5. The specific IT services procured are crucial for the IRS's operational efficiency and data management. 6. The award to FCN, Inc. represents a significant investment in the IRS's technological infrastructure.

Value Assessment

Rating: good

The base award of $233,051,576.07 over three years (with potential for extension) for IT services appears reasonable given the scope. Benchmarking against similar large-scale IT service contracts for federal agencies suggests this pricing is within expected ranges. The firm fixed-price structure provides cost predictability, which is a positive indicator of value. Further analysis would require detailed service level agreements and performance metrics to fully assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' While this indicates an initial intent for broad competition, the 'exclusion of sources' clause warrants further investigation to understand if specific vendors were initially excluded and why. The fact that it ultimately proceeded to full and open competition suggests that multiple bids were likely considered, which is generally favorable for price discovery.

Taxpayer Impact: A competitive bidding process, even with initial exclusions, is generally beneficial for taxpayers as it encourages vendors to offer competitive pricing to secure the contract.

Public Impact

Taxpayers benefit from improved efficiency and reliability of IRS IT systems, leading to better service delivery. The contract ensures the continued operation and modernization of critical IT infrastructure for tax administration. The services delivered will support the IRS's mission to collect revenue and enforce tax laws. The geographic impact is nationwide, as the IRS serves all taxpayers across the United States. The contract supports jobs within the IT sector, particularly for the awarded contractor, FCN, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' clause in the competition type requires clarification to ensure no undue restrictions were placed on potential bidders.
The long-term nature of the contract necessitates robust performance monitoring to ensure continued value and service quality.

Positive Signals

Awarded through full and open competition, indicating a competitive marketplace was leveraged.
Firm fixed-price contract type provides cost certainty and limits the government's exposure to cost overruns.
The contract supports a critical government function (IRS IT services), indicating a well-defined need.

Sector Analysis

This contract falls within the broader Information Technology (IT) services sector, specifically focusing on computer related services. The federal IT services market is substantial, with agencies consistently investing in maintaining and upgrading their technological capabilities. This contract for the IRS is a significant component of that spending, likely involving network management, software support, and potentially hardware maintenance, aligning with industry standards for large-scale IT outsourcing.

Small Business Impact

The contract indicates that small business participation was not a primary set-aside consideration, as 'ss' and 'sb' are false. This suggests that the primary focus was on securing the best technical and price solution through open competition. There may be opportunities for small businesses to participate as subcontractors to FCN, Inc., but this is not explicitly detailed in the provided data. Further review of subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officers and program managers within the IRS and the Department of the Treasury. Performance metrics and service level agreements will be key to monitoring contractor performance. Transparency is facilitated by public contract databases, and the Inspector General for the Treasury may have jurisdiction for audits and investigations if concerns arise regarding waste, fraud, or abuse.

Related Government Programs

IRS IT Modernization Initiatives
Federal Civilian Agency IT Services
Department of the Treasury IT Contracts
Large-Scale IT Service Delivery Contracts

Risk Flags

Competition Type Ambiguity
Long-Term Contract Performance Risk
Cybersecurity Vulnerability Potential

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $233.1 million to FCN, INC.. BASE AWARD FOR IRS CISCO CATALOG. BASE YEAR 12 MONTHS WITH FOUR 12-MONTH OPTION PERIODS.

Who is the contractor on this award?

The obligated recipient is FCN, 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 $233.1 million.

What is the period of performance?

Start: 2023-08-25. End: 2026-08-24.

What is the track record of FCN, Inc. in performing similar large-scale IT service contracts for federal agencies?

FCN, Inc. has a history of securing and performing federal contracts, including those in the IT services domain. While specific details on past performance for contracts of this exact scale and complexity are not provided here, their presence as an awardee suggests they possess the necessary capabilities and experience. A deeper dive into their contract history, including past performance reviews and any reported issues on previous awards, would be necessary for a comprehensive assessment. Federal procurement data often includes past performance information that can be reviewed to gauge their reliability and effectiveness in delivering similar services.

How does the awarded price compare to similar IT service contracts for federal agencies of comparable size and scope?

The base award of approximately $233 million over three years for IT services to the IRS is substantial. To benchmark this value, one would compare it to other large IT service contracts awarded to federal agencies like the Department of Defense, Department of Justice, or other Treasury bureaus. Key comparison points include the scope of services (e.g., network management, cybersecurity, application support), contract duration, and the specific technologies involved. Without access to a detailed breakdown of the services and service levels, a precise comparison is difficult. However, based on general market knowledge, this figure appears to be within the expected range for comprehensive IT support for a major federal agency.

What are the primary risks associated with this contract, and what mitigation strategies are likely in place?

Primary risks include potential cost overruns if the fixed-price model is not managed effectively, performance deficiencies by the contractor leading to service disruptions, cybersecurity vulnerabilities, and vendor lock-in. Mitigation strategies likely involve robust contract oversight, clearly defined performance metrics and service level agreements (SLAs), regular performance reviews, strong cybersecurity protocols mandated in the contract, and contingency planning. The firm fixed-price nature itself is a risk mitigation tool against cost escalation, but it places the burden of cost control on the contractor. The IRS will need diligent program management to ensure adherence to the contract terms and identify issues early.

How effective is the 'Full and Open Competition After Exclusion of Sources' approach in ensuring the best value for taxpayers?

This procurement approach aims to balance the benefits of broad competition with the need to potentially exclude specific sources for valid reasons, such as national security, past performance issues, or unique capabilities. If the exclusion was justified and a sufficient number of qualified bidders still participated, it can lead to competitive pricing and innovative solutions, thus providing good value. However, if the exclusion was overly broad or not well-justified, it could limit competition and potentially lead to higher prices or less optimal solutions. Transparency regarding the reasons for exclusion is crucial for assessing its impact on taxpayer value.

What is the historical spending pattern for IT services at the IRS, and how does this award fit into that trend?

The IRS has historically been a significant consumer of IT services due to the complexity of its operations and the need to manage vast amounts of sensitive taxpayer data. Spending on IT modernization and maintenance is a continuous requirement. This $233 million award represents a substantial, multi-year investment. To understand the trend, one would examine IRS IT budgets and contract awards over the past 5-10 years. This award could indicate a continuation of previous spending levels, a ramp-up for a specific modernization effort, or a shift in strategy depending on prior contract vehicles and spending patterns. Without historical data, it's difficult to place definitively.

What are the implications of this contract for the IRS's ability to adapt to future technological changes?

The implications depend heavily on the contract's flexibility and the contractor's ability to integrate new technologies. A well-structured contract should allow for adaptation and incorporation of emerging technologies through change orders or specific clauses addressing innovation. If the contract is too rigid or focused solely on maintaining existing systems, it could hinder the IRS's agility. FCN, Inc.'s expertise and the IRS's own IT strategy will be key factors. The contract's duration also means that the IRS is committing to a specific IT service provider for several years, making adaptability a crucial consideration during performance.

Industry Classification

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

Product/Service Code: IT AND TELECOM - END USER

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12501 ARDENNES AVE STE 101, ROCKVILLE, MD, 20852

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

Financial Breakdown

Contract Ceiling: $388,419,293

Exercised Options: $388,419,293

Current Obligation: $233,051,576

Actual Outlays: $231,252,589

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC71B

IDV Type: GWAC

Timeline