Treasury's IRS awards $2.9M contract for synthetic tax data generation to SkyMantics, LLC

Contract Overview

Contract Amount: $2,916,516 ($2.9M)

Contractor: Skymantics, LLC

Awarding Agency: Department of the Treasury

Start Date: 2025-06-25

End Date: 2026-06-24

Contract Duration: 364 days

Daily Burn Rate: $8.0K/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: ENTERPRISE SYSTEMS TESTING (EST) SIMULATION OF THE NATION (SIMON) PHASE 4 ALLOWS DEVELOPERS & TESTERS TO GENERATE SYNTHETIC TAX DATA REPRESENTING MORE SCENARIOS FOR IMPROVED SOFTWARE TESTING.

Place of Performance

Location: MELBOURNE, BREVARD County, FLORIDA, 32901

State: Florida Government Spending

Plain-Language Summary

Department of the Treasury obligated $2.9 million to SKYMANTICS, LLC for work described as: ENTERPRISE SYSTEMS TESTING (EST) SIMULATION OF THE NATION (SIMON) PHASE 4 ALLOWS DEVELOPERS & TESTERS TO GENERATE SYNTHETIC TAX DATA REPRESENTING MORE SCENARIOS FOR IMPROVED SOFTWARE TESTING. Key points: 1. Contract aims to enhance software testing by generating diverse synthetic tax data. 2. Focus on improving the realism and breadth of test scenarios. 3. Utilizes a firm-fixed-price contract type, indicating defined scope and cost. 4. Delivery order under a larger contract vehicle, suggesting potential for future taskings. 5. Performance period of one year, allowing for focused development and testing. 6. Awarded to SkyMantics, LLC, a single vendor for this specific task.

Value Assessment

Rating: fair

The contract value of $2.9 million for a one-year period for enterprise systems testing simulation software appears within a reasonable range for specialized IT services. Benchmarking against similar contracts for synthetic data generation or advanced simulation platforms is challenging without more specific details on the complexity and scope of the SIMON Phase 4 requirements. However, the firm-fixed-price structure suggests a defined cost expectation by the agency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while the initial contract vehicle may have been broadly competed, this specific delivery order was not subject to full and open competition. This suggests that either a limited number of sources were solicited, or specific criteria led to the exclusion of some potential bidders. The exact number of bidders for this specific delivery order is not detailed, but the designation points to a less competitive scenario than a standard full and open competition.

Taxpayer Impact: A limited competition may result in less aggressive pricing compared to a full and open competition, potentially leading to higher costs for taxpayers if alternative, more competitive bids were available but not solicited.

Public Impact

Benefits IRS developers and testers by providing a more robust testing environment. Enhances the quality and reliability of IRS software through improved testing scenarios. Supports the modernization of IRS IT systems by enabling better validation of new software. Indirectly benefits taxpayers through more stable and secure IRS systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition for this delivery order could mean missed opportunities for cost savings.
Lack of transparency on the specific reasons for excluding other sources.
Reliance on a single vendor for this critical testing simulation capability.

Positive Signals

Firm-fixed-price contract provides cost certainty for this phase.
Focus on synthetic data generation addresses a specific need for improved software testing.
One-year duration allows for focused execution and evaluation.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a segment of the broader IT services industry. This sector is characterized by companies that design, develop, and implement computer systems, including software testing and simulation solutions. The market for synthetic data generation is growing as organizations increasingly rely on data for AI/ML development and rigorous software validation, especially in regulated industries like finance and government.

Small Business Impact

The contract was awarded to SkyMantics, LLC, and there is no indication of a small business set-aside. The contract value is below typical thresholds for mandatory small business subcontracting plans. Further analysis would be needed to determine if SkyMantics, LLC is a small business itself or if subcontracting opportunities exist for small businesses within this delivery order.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and program managers within the IRS. As a delivery order under a larger contract, it likely falls under existing oversight mechanisms for that contract vehicle. Transparency is moderate, with the award details available, but the specifics of the limited competition and the technical requirements are not fully public. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IRS Modernization Efforts
Taxpayer Data Security Programs
Software Development Lifecycle Support
Enterprise Resource Planning (ERP) Systems Testing

Risk Flags

Limited competition procurement method
Potential for synthetic data to not fully capture real-world complexity
Vendor lock-in risk if SIMON Phase 4 becomes a critical dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $2.9 million to SKYMANTICS, LLC. ENTERPRISE SYSTEMS TESTING (EST) SIMULATION OF THE NATION (SIMON) PHASE 4 ALLOWS DEVELOPERS & TESTERS TO GENERATE SYNTHETIC TAX DATA REPRESENTING MORE SCENARIOS FOR IMPROVED SOFTWARE TESTING.

Who is the contractor on this award?

The obligated recipient is SKYMANTICS, 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 $2.9 million.

What is the period of performance?

Start: 2025-06-25. End: 2026-06-24.

What is the specific technical capability of SkyMantics, LLC that made them the chosen vendor for SIMON Phase 4?

The provided data indicates SkyMantics, LLC was awarded the contract for Enterprise Systems Testing (EST) Simulation of the Nation (SIMON) Phase 4. This phase focuses on enabling developers and testers to generate synthetic tax data representing more scenarios for improved software testing. While the data doesn't detail SkyMantics' specific technical prowess, their selection suggests they possess expertise in developing sophisticated simulation environments and synthetic data generation tools tailored to complex financial and tax-related datasets. This likely involves advanced algorithms for data anonymization, pattern replication, and scenario creation that accurately mimic real-world tax situations without using sensitive taxpayer information. Their ability to meet the IRS's unique requirements for data fidelity and scenario diversity would have been a key factor in their selection.

How does the synthetic tax data generated by SIMON Phase 4 compare to real tax data in terms of complexity and realism?

The objective of SIMON Phase 4 is to generate synthetic tax data that represents 'more scenarios for improved software testing.' This implies a focus on increasing the complexity and realism of the synthetic data beyond what was previously achievable. Real tax data is inherently complex, encompassing a vast array of income types, deductions, credits, filing statuses, and economic conditions. The goal of synthetic data generation in this context is to replicate this complexity and realism without compromising taxpayer privacy. This involves using statistical modeling, machine learning, and rule-based systems to create data points that accurately reflect the distributions, correlations, and edge cases found in actual tax filings. The success of SIMON Phase 4 will be measured by how effectively the generated data allows for comprehensive testing of IRS software, uncovering potential bugs or performance issues that might arise with diverse, real-world scenarios.

What are the potential risks associated with using synthetic data for software testing in a sensitive environment like the IRS?

While synthetic data offers significant advantages, potential risks exist. One primary risk is that the synthetic data may not perfectly capture all the nuances and edge cases present in real-world tax data. If the generation algorithms are flawed or incomplete, critical bugs in IRS software might go undetected, potentially leading to system failures or data integrity issues. Another risk is the possibility of 'data leakage' or unintended re-identification, where the synthetic data, despite efforts to anonymize it, could inadvertently reveal sensitive information if not generated with extremely robust privacy-preserving techniques. Furthermore, over-reliance on synthetic data might lead to a false sense of security if the testing scenarios do not adequately represent the full spectrum of operational challenges the IRS systems will face. Continuous validation and comparison of synthetic data against anonymized real data samples are crucial to mitigate these risks.

What is the historical spending trend for similar enterprise systems testing or simulation contracts at the IRS or Treasury?

Analyzing historical spending trends for similar contracts at the IRS or Treasury requires access to comprehensive federal procurement databases. However, it is generally understood that agencies like the IRS invest significantly in IT modernization and system testing to ensure the accuracy, security, and efficiency of their operations. Contracts for enterprise systems testing, simulation software, and synthetic data generation are critical components of these modernization efforts. Spending in this area tends to be cyclical, often increasing during major system upgrades or the implementation of new tax laws. The IRS has undergone significant IT transformation initiatives over the past decade, suggesting a consistent need for such services. While the specific $2.9 million award for SIMON Phase 4 is a discrete amount, it represents a component of a larger, ongoing investment in robust testing infrastructure necessary for managing the nation's tax system.

How does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' procurement method impact the overall value and innovation for this contract?

The procurement method 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' indicates that while the initial contract vehicle might have been broadly competed, this specific delivery order was not subjected to the same level of open competition. This typically means that certain potential sources were excluded from bidding, possibly due to specific technical requirements, existing contract vehicles, or other pre-defined criteria. This limited competition can impact value by potentially reducing the number of competitive bids received, which might lead to less aggressive pricing than a truly full and open competition. From an innovation perspective, excluding sources could limit the agency's exposure to a wider range of innovative solutions or approaches that other vendors might offer. However, it can also allow for a more focused selection process if the excluded sources were deemed less capable or unsuitable for the specific, nuanced requirements of SIMON Phase 4.

Industry Classification

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

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

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: 2412 IRWIN ST # 23, MELBOURNE, FL, 32901

Business Categories: 8(a) Program Participant, Asian Pacific American Owned Business, Category Business, Limited Liability Corporation, Minority Owned Business, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,916,516

Exercised Options: $2,916,516

Current Obligation: $2,916,516

Actual Outlays: $1,701,301

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47QTCB22D0349

IDV Type: GWAC

Timeline