Treasury's IRS awards $12.3M for SaaS data management, raising value-for-money questions

Contract Overview

Contract Amount: $12,338,769 ($12.3M)

Contractor: August Schell Enterprises, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2023-09-30

End Date: 2025-11-29

Contract Duration: 791 days

Daily Burn Rate: $15.6K/day

Competition Type: COMPETED UNDER SAP

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: AVEPOINT ONLINE SERVICES (AOS) SOFTWARE-AS-A-SERVICE (SAAS) DATA MANAGEMENT TOOL

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20852

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $12.3 million to AUGUST SCHELL ENTERPRISES, INC. for work described as: AVEPOINT ONLINE SERVICES (AOS) SOFTWARE-AS-A-SERVICE (SAAS) DATA MANAGEMENT TOOL Key points: 1. The contract's value appears high relative to the duration and scope, warranting a closer look at unit costs. 2. Competition was limited, with only four bidders, potentially impacting price discovery and taxpayer value. 3. The firm-fixed-price structure offers cost certainty but may not fully capture potential savings from efficient service delivery. 4. Performance is tied to a SaaS data management tool, crucial for IRS operations but with inherent cybersecurity risks. 5. The contract falls under 'Other Computer Related Services,' a broad category that requires specific performance metrics for effective oversight. 6. The award to August Schell Enterprises, Inc. requires examination of their track record in similar large-scale IT service contracts.

Value Assessment

Rating: questionable

The total award of $12.3M over approximately 26 months (791 days) suggests a significant investment. Benchmarking this against similar SaaS data management solutions for large government agencies is crucial. Without specific details on the features and user base supported, it's difficult to definitively assess value. However, the relatively high total cost for a 4-bidder competition warrants scrutiny to ensure the IRS is receiving competitive pricing for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was competed under SAP (Simplified Acquisition Procedures), which typically involves a less extensive solicitation process than full and open competition. With only four bidders, the level of competition was limited. While SAP aims for efficiency, it may not always yield the most competitive pricing compared to broader solicitations that attract a wider range of potential offerors.

Taxpayer Impact: Limited competition can lead to higher prices for taxpayers as the government may not benefit from the full spectrum of market-driven cost reductions.

Public Impact

The Internal Revenue Service (IRS) is the primary beneficiary, gaining access to a SaaS data management tool. This tool is expected to support critical IRS functions related to data organization and accessibility. The geographic impact is national, as the IRS operates across the United States. Workforce implications include potential efficiencies for IRS employees who utilize the data management system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in suboptimal pricing for taxpayers.
The broad 'Other Computer Related Services' NAICS code lacks specificity for performance evaluation.
Reliance on a single SaaS provider introduces potential vendor lock-in and cybersecurity risks.
The duration of the contract (nearly two years) requires ongoing monitoring to ensure continued value.

Positive Signals

The firm-fixed-price contract provides budget certainty for the IRS.
The use of a SaaS solution can offer scalability and potentially reduce infrastructure management overhead.
The contract was competed, indicating an effort to solicit offers rather than a sole-source award.

Sector Analysis

The IT services sector, particularly software-as-a-service (SaaS) solutions for data management, is a rapidly growing market. Government agencies increasingly rely on such tools to handle vast amounts of data efficiently and securely. Comparable spending benchmarks for similar SaaS data management tools within federal agencies can range significantly based on user count, data volume, and feature sets. This contract represents a moderate investment within the broader federal IT spending landscape.

Small Business Impact

The provided data indicates that small business participation (sb) was false, and there is no explicit mention of small business set-asides. This suggests that the contract was not specifically targeted towards small businesses. Consequently, the direct impact on the small business ecosystem is likely minimal, and there are no explicit subcontracting requirements for small businesses detailed in this award notice.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Treasury and the Internal Revenue Service's contracting and program management offices. The firm-fixed-price nature simplifies some aspects of financial oversight, but performance monitoring remains critical. Transparency is facilitated through contract award databases, but detailed performance reports and Inspector General reviews would provide deeper accountability assessment.

Related Government Programs

Federal IT Services Contracts
Software-as-a-Service (SaaS) Procurement
Data Management Solutions
IRS Technology Modernization Efforts
General Services Administration (GSA) IT Schedule Contracts

Risk Flags

Limited Competition
Potential for High Unit Costs
Cybersecurity Risk (SaaS)
Vendor Lock-in Potential

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $12.3 million to AUGUST SCHELL ENTERPRISES, INC.. AVEPOINT ONLINE SERVICES (AOS) SOFTWARE-AS-A-SERVICE (SAAS) DATA MANAGEMENT TOOL

Who is the contractor on this award?

The obligated recipient is AUGUST SCHELL ENTERPRISES, 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 $12.3 million.

What is the period of performance?

Start: 2023-09-30. End: 2025-11-29.

What is the specific SaaS data management tool being procured, and what are its key features and capabilities?

The specific SaaS data management tool is identified as 'AVEPOINT ONLINE SERVICES (AOS) SOFTWARE-AS-A-SERVICE (SAAS) DATA MANAGEMENT TOOL'. While the exact features are not detailed in the award notice, it is a data management solution. Typically, such tools offer functionalities like data storage, organization, retrieval, security, compliance management, and potentially analytics. For the IRS, this could involve managing taxpayer data, internal operational data, or compliance-related information. The 'AOS' designation suggests it is a cloud-based offering from AvePoint, a known provider of data management solutions, often focusing on Microsoft environments.

How does the $12.3 million award compare to similar SaaS data management contracts awarded by other federal agencies?

Comparing the $12.3 million award requires context on the scope, duration, and user base. For a contract spanning approximately 26 months (September 2023 to November 2025), this equates to roughly $475,000 per month. Similar SaaS data management solutions for large federal agencies can vary widely. For instance, contracts for enterprise-wide solutions supporting thousands of users with advanced features might exceed this amount significantly, while smaller, more specialized tools could cost less. Without knowing the number of users, data volume, and specific functionalities required by the IRS, a precise benchmark is challenging. However, given the limited competition (4 bidders), it is prudent to investigate if this price point is competitive within the market for the specified service level.

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

Key risks include cybersecurity vulnerabilities inherent in SaaS solutions, potential vendor lock-in, and ensuring the tool meets the IRS's evolving data management needs. Cybersecurity risks are managed through standard government security protocols, vendor security assessments, and potentially specific security requirements within the contract. Vendor lock-in can be mitigated by ensuring data portability clauses and planning for future transitions. To ensure the tool meets evolving needs, robust performance monitoring, regular reviews, and clear contract modification procedures are essential. The IRS's IT and contracting teams would be responsible for overseeing these aspects.

What is August Schell Enterprises, Inc.'s track record with similar government contracts, particularly in SaaS data management?

August Schell Enterprises, Inc. has a history of performing government contracts, often as a reseller or integrator of IT solutions. Information available through federal procurement databases (like SAM.gov or FPDS) would detail their past performance. It is important to review their experience with providing or managing SaaS data management tools, especially for large agencies like the IRS. Their success in delivering similar solutions on time, within budget, and meeting performance requirements would be key indicators of their capability for this specific contract. A review of past performance evaluations and any contract disputes would provide further insight.

How does this $12.3 million award fit into the IRS's broader IT modernization strategy and historical spending patterns?

This $12.3 million award for a SaaS data management tool likely aligns with the IRS's ongoing efforts to modernize its IT infrastructure and improve data handling capabilities. Modernization often involves migrating from legacy systems to cloud-based solutions like SaaS to enhance efficiency, security, and scalability. Historical spending patterns would reveal if the IRS has previously invested in similar data management tools or if this represents a new strategic direction. Understanding the context of their overall IT budget and modernization roadmap is crucial to assessing the significance and appropriateness of this particular investment.

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 › IT AND TELECOM - END USER

Competition & Pricing

Extent Competed: COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1700 ROCKVILLE PIKE STE 405, ROCKVILLE, MD, 20852

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

Financial Breakdown

Contract Ceiling: $12,338,769

Exercised Options: $12,338,769

Current Obligation: $12,338,769

Actual Outlays: $12,338,769

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Timeline