Treasury's $21.2M tax calculation system contract awarded to ATI Government Solutions amid limited competition

Contract Overview

Contract Amount: $21,208,521 ($21.2M)

Contractor: ATI Government Solutions LLC

Awarding Agency: Department of the Treasury

Start Date: 2024-09-30

End Date: 2025-10-23

Contract Duration: 388 days

Daily Burn Rate: $54.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: JETCS TAX CALCULATION AND MODERNIZATION SOLUTION (TCMS)

Place of Performance

Location: FREDERICK, FREDERICK County, MARYLAND, 21701

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $21.2 million to ATI GOVERNMENT SOLUTIONS LLC for work described as: JETCS TAX CALCULATION AND MODERNIZATION SOLUTION (TCMS) Key points: 1. Contract value appears reasonable given the scope of custom programming for tax systems. 2. Limited competition raises concerns about potential overpricing and reduced innovation. 3. The firm-fixed-price structure shifts performance risk to the contractor. 4. This contract supports critical IRS functions for tax calculation and modernization. 5. The IT services sector is characterized by high demand for specialized programming. 6. Contract duration of over a year suggests a significant project timeline.

Value Assessment

Rating: fair

Benchmarking the value of custom software development is challenging without detailed scope. However, the $21.2 million for a 1.3-year definitive contract for tax calculation and modernization services seems within a plausible range for complex IT projects. The firm-fixed-price contract type suggests the government has a clear understanding of the requirements, but the lack of competitive bids makes a direct value-for-money assessment difficult. Further analysis would require comparing the delivered functionalities and performance metrics against industry standards for similar IRS modernization efforts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' status, indicating a limited competitive environment. This suggests that only one or a very small number of contractors were deemed capable of performing the required custom computer programming services for the Tax Calculation and Modernization Solution (TCMS). While this can sometimes be justified by unique capabilities or urgent needs, it generally leads to less price discovery and potentially higher costs for the government compared to full and open competition.

Taxpayer Impact: Limited competition means taxpayers may not be receiving the best possible price for these critical IT services. The lack of robust bidding could result in the IRS paying a premium for the development and modernization of its tax systems.

Public Impact

Taxpayers will benefit from potentially more efficient and accurate tax calculation and processing systems. The IRS will receive custom software solutions to modernize its critical tax infrastructure. The contract supports the federal government's ongoing efforts to update and secure its IT systems. IT professionals and developers in the Maryland region may see employment opportunities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to higher costs for taxpayers.
Lack of transparency in the procurement process could mask inefficiencies.
Reliance on a single contractor for critical tax systems poses a potential risk if performance falters.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Contract supports modernization of essential IRS functions.
Contractor, ATI Government Solutions, likely possesses specialized expertise for this niche requirement.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically custom computer programming services. The market for IT services supporting government agencies, particularly tax administration, is substantial and highly specialized. The IRS requires sophisticated software to manage complex tax laws, ensure compliance, and modernize its aging infrastructure. This contract for the TCMS fits within the broader trend of federal agencies investing in digital transformation and upgrading legacy systems to improve efficiency and security.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the 'ss' (small business set-aside) field is false. There is no explicit mention of subcontracting goals for small businesses. This suggests that the primary contractor, ATI Government Solutions, is likely not a small business, and the contract was not specifically structured to promote small business involvement. Consequently, the direct impact on the small business ecosystem for this particular award appears minimal.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officer and program managers within the IRS, a bureau of the Department of the Treasury. The firm-fixed-price nature of the contract implies that performance standards and deliverables will be closely monitored to ensure compliance. Transparency may be limited due to the non-competitive award, but contract details and performance reports are typically available through federal procurement databases. The IRS also has an Office of Inspector General that provides independent oversight of its programs and operations.

Related Government Programs

IRS Taxpayer Data Management Systems
Federal Tax Processing Modernization Initiatives
Custom Software Development for Government Agencies
Financial Management Systems Modernization

Risk Flags

Limited competition procurement
Potential for cost overruns due to undefined scope
Reliance on a single vendor for critical infrastructure

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $21.2 million to ATI GOVERNMENT SOLUTIONS LLC. JETCS TAX CALCULATION AND MODERNIZATION SOLUTION (TCMS)

Who is the contractor on this award?

The obligated recipient is ATI GOVERNMENT SOLUTIONS 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 $21.2 million.

What is the period of performance?

Start: 2024-09-30. End: 2025-10-23.

What is the track record of ATI Government Solutions LLC in delivering similar IT solutions to federal agencies, particularly the IRS?

Assessing the track record of ATI Government Solutions LLC requires a review of their past performance on federal contracts. While specific details for this TCMS contract are not provided, a comprehensive analysis would involve examining their contract history, including contract values, durations, agencies served, and any reported performance issues or successes. Information from sources like the Federal Procurement Data System (FPDS) or the Contractor Performance Assessment Reporting System (CPARS) would be crucial. A positive track record with similar complex IT projects, especially those involving financial or tax-related systems, would increase confidence in their ability to successfully execute this $21.2 million contract. Conversely, a history of performance issues or missed deadlines on comparable projects would raise significant concerns.

How does the awarded price of $21.2 million compare to similar custom computer programming services contracts for tax systems?

Directly comparing the $21.2 million price tag for the TCMS contract to similar projects is challenging without detailed scope and complexity metrics. However, the average cost for custom computer programming services can vary widely based on factors like the number of users, integration requirements, data security needs, and the specific functionalities developed. For large-scale government IT modernization projects, especially those involving sensitive financial data and complex regulatory compliance like tax systems, costs can easily run into the millions. A benchmark analysis would involve identifying contracts with comparable objectives (e.g., tax system upgrades, financial calculation engines) and assessing their total contract value, duration, and the scope of work. Given the 'NOT AVAILABLE FOR COMPETITION' status, it's difficult to ascertain if this price represents optimal value without competitive bids.

What are the primary risks associated with awarding a critical IT system contract with limited competition?

The primary risks associated with awarding a critical IT system contract with limited competition include potential price inflation, reduced incentive for innovation, and a lack of robust performance oversight. When competition is restricted, the chosen contractor may face less pressure to offer the most competitive pricing, potentially leading to higher costs for the government and taxpayers. Furthermore, without the stimulus of multiple bidders vying for the contract, the contractor might have less motivation to explore innovative solutions or exceed performance expectations. This situation can also make it harder to benchmark performance against industry best practices. Finally, a sole or limited source award can create vendor lock-in, making it difficult and costly to switch providers if performance issues arise later in the contract lifecycle.

How effective are firm-fixed-price contracts in managing cost and performance risks for custom software development like the TCMS?

Firm-fixed-price (FFP) contracts are generally considered effective in managing cost risks for custom software development when the scope of work is well-defined and unlikely to change significantly. Under an FFP contract, the contractor assumes the primary responsibility for cost overruns, providing the government with cost certainty. This structure incentivizes the contractor to manage their expenses efficiently. However, for custom software development, where requirements can evolve, an FFP contract might lead to scope creep issues if not managed meticulously, potentially resulting in change orders that increase the overall cost. Performance risk is also partially mitigated as the contractor is obligated to deliver the specified product or service at the agreed-upon price. The success of an FFP contract hinges on the clarity and completeness of the initial requirements and the government's ability to manage scope changes effectively.

What is the historical spending pattern of the IRS on custom computer programming services and tax system modernization?

The IRS has historically allocated significant funding towards custom computer programming services and tax system modernization efforts. These investments are driven by the need to maintain compliance with evolving tax laws, enhance taxpayer services, improve data security, and replace aging legacy systems. Over the past decade, federal agencies, including the IRS, have increasingly focused on IT modernization. Spending patterns often reflect major system overhauls, upgrades to taxpayer portals, enhancements to data processing capabilities, and cybersecurity improvements. Analyzing historical IRS IT spending data would reveal trends in contract types, average contract values for programming services, and the specific areas of modernization receiving the most investment. This context is crucial for evaluating the current $21.2 million TCMS contract within the agency's broader financial and strategic IT landscape.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 47 E SOUTH ST, UNIT 002, FREDERICK, MD, 21701

Business Categories: 8(a) Program Participant, American Indian Owned Business, Category Business, Government, Native American Tribal Government, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $27,098,205

Exercised Options: $21,208,521

Current Obligation: $21,208,521

Actual Outlays: $21,208,521

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline