Treasury's IRS awards $52.7M IT task order to Science Applications International Corp. for computer systems design

Contract Overview

Contract Amount: $52,700,821 ($52.7M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of the Treasury

Start Date: 2023-10-01

End Date: 2026-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $48.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ESUS TASK ORDER #6 - MIPS

Place of Performance

Location: KEARNEYSVILLE, JEFFERSON County, WEST VIRGINIA, 25430

State: West Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $52.7 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: ESUS TASK ORDER #6 - MIPS Key points: 1. The contract's value appears reasonable given the scope of computer systems design services. 2. A sole-source award limits price discovery and potentially increases costs for taxpayers. 3. The duration of the task order suggests a need for sustained IT support. 4. Performance will be assessed against established IT service delivery benchmarks. 5. This contract falls within the IT services sector, a significant area of federal spending. 6. The firm-fixed-price structure shifts some risk to the contractor.

Value Assessment

Rating: fair

The $52.7 million award for computer systems design services over three years is a substantial investment. Without direct comparable task orders for identical services and scope, a precise value-for-money assessment is challenging. However, the firm-fixed-price contract type suggests that the contractor bears the risk of cost overruns, which can be a positive indicator. Benchmarking against similar IT service contracts awarded by the IRS or other Treasury bureaus would provide a clearer picture of whether this pricing is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This task order was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when urgency dictates a rapid award. The lack of competition means that the IRS did not benefit from a bidding process that could have driven down prices through market forces. This raises questions about whether the most cost-effective solution was secured.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not leverage competitive pressures to obtain the best possible pricing. This limits the opportunity for other capable firms to compete for government work.

Public Impact

The Internal Revenue Service (IRS) will benefit from enhanced computer systems design capabilities. This contract supports the modernization and efficiency of IRS IT infrastructure. The services delivered are crucial for maintaining and improving taxpayer services. The primary geographic impact is likely within the IRS's operational centers, potentially including West Virginia. The contract may have implications for IT professionals and support staff within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases cost to taxpayers.
Lack of transparency in the procurement process due to non-competitive award.
Potential for vendor lock-in if the contractor's systems become deeply integrated.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Contract duration suggests a stable, long-term need for these services.
Award to a known entity (SAIC) may indicate a reliance on established expertise.

Sector Analysis

The federal IT services market is vast and highly competitive, with agencies consistently seeking to modernize their systems. Computer systems design services, categorized under NAICS code 541512, are a critical component of this market. Spending in this area is driven by the need for cybersecurity, data management, cloud migration, and application development. Comparable contracts often range from millions to hundreds of millions of dollars, depending on the scope and duration. The IRS, as a major federal agency, represents a significant client within this sector.

Small Business Impact

This contract was not competed and there is no indication of a small business set-aside or subcontracting plan. As a sole-source award to a large business, it does not directly benefit small businesses through set-aside provisions. The absence of a subcontracting requirement means that opportunities for small businesses to participate in this specific contract are limited unless voluntarily included by the prime contractor.

Oversight & Accountability

Oversight for this task order will likely fall under the IRS's existing contract management and program oversight structures. The firm-fixed-price nature of the contract provides a degree of financial control. Transparency may be limited due to the sole-source award. The Inspector General for the Department of the Treasury would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

IRS IT Modernization Programs
Treasury Department IT Services
Federal Civilian Agency IT Contracts
Computer Systems Design and Related Services

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns not borne by contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $52.7 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. ESUS TASK ORDER #6 - MIPS

Who is the contractor on this award?

The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $52.7 million.

What is the period of performance?

Start: 2023-10-01. End: 2026-09-30.

What is Science Applications International Corporation's (SAIC) track record with the IRS and other federal agencies for similar computer systems design services?

Science Applications International Corporation (SAIC) has a significant history of performing IT services for various federal agencies, including the IRS and the Department of Defense. Their portfolio often includes complex systems integration, software development, and IT infrastructure support. For the IRS specifically, SAIC has previously been awarded contracts related to tax systems modernization and IT support. Their experience generally encompasses large-scale projects, suggesting they possess the technical expertise and capacity to handle substantial task orders like this one. A review of past performance evaluations and contract awards would provide a more granular understanding of their success rates and client satisfaction across different agencies and service types.

How does the $52.7 million cost compare to similar IRS or Treasury IT task orders for computer systems design over a three-year period?

Benchmarking the $52.7 million cost for this three-year task order against similar IRS or Treasury IT contracts for computer systems design is challenging without access to a comprehensive database of comparable awards. However, given the scale of the IRS and the complexity of its IT infrastructure, this figure appears to be within a plausible range for a sole-source award of this nature. Larger, more complex IT modernization efforts or enterprise-wide system overhauls can easily reach or exceed this amount. The firm-fixed-price structure is a positive factor, but the lack of competition means direct price comparisons are difficult. A detailed analysis would require identifying contracts with identical or highly similar scopes of work, service levels, and contract types within the same agency or related bureaus.

What are the primary risks associated with a sole-source award for critical IT services like computer systems design?

The primary risks associated with a sole-source award for critical IT services are multifaceted. Firstly, the lack of competition significantly reduces the government's leverage in negotiating price, potentially leading to higher costs for taxpayers. Secondly, it limits the opportunity for innovative solutions or more cost-effective approaches that might have been proposed by other vendors. Thirdly, it can create a dependency on a single contractor, leading to vendor lock-in and making future transitions more difficult and expensive. Finally, without the scrutiny of a competitive bidding process, there's a potential for less rigorous evaluation of the contractor's capabilities and proposed approach, increasing the risk of performance issues or unmet requirements.

How effective are firm-fixed-price contracts in ensuring value for money in IT service delivery, especially for long-term engagements?

Firm-fixed-price (FFP) contracts are generally considered effective in ensuring value for money for IT services when the scope of work is well-defined and unlikely to change significantly. In an FFP contract, the contractor assumes the risk of cost overruns, incentivizing them to manage resources efficiently and control expenses. This can lead to predictable costs for the government. However, for long-term engagements or projects with evolving requirements, FFP contracts can become problematic if scope creep is not managed carefully, potentially leading to disputes or the contractor seeking additional compensation. For well-defined, stable IT support or design tasks, FFP can be a strong mechanism for cost control and value realization.

What is the historical spending trend for computer systems design services (NAICS 541512) by the IRS over the past five fiscal years?

Analyzing the historical spending trend for computer systems design services (NAICS 541512) by the IRS over the past five fiscal years would reveal the agency's investment patterns in this critical area. While specific figures for this NAICS code alone are not readily available without detailed data mining, general trends indicate a consistent and often increasing federal investment in IT modernization and systems design. Agencies like the IRS face continuous pressure to upgrade legacy systems, enhance cybersecurity, and improve taxpayer services through technology. Therefore, it is reasonable to infer that spending on services like those provided under this task order has likely remained substantial, potentially fluctuating based on specific modernization initiatives and budget allocations.

Industry Classification

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

Product/Service Code: IT AND TELECOM - COMPUTE

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12010 SUNSET HILLS ROAD, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $115,659,831

Exercised Options: $52,700,821

Current Obligation: $52,700,821

Actual Outlays: $52,700,821

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $45,976,795

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 2032H523D00001

IDV Type: IDC

Timeline