Treasury's IRS awards $74.3M contract for mail processing services to ServiceSource Inc

Contract Overview

Contract Amount: $74,344,404 ($74.3M)

Contractor: Servicesource Inc

Awarding Agency: Department of the Treasury

Start Date: 2020-04-01

End Date: 2025-03-31

Contract Duration: 1,825 days

Daily Burn Rate: $40.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: THE PURPOSE OF THIS ABILITY-ONE CONTRACT IS TO PROVIDE ALL PERSONNEL, LABOR AND SUPERVISION, MATERIALS, EQUIPMENT AND SERVICES TO 59 OFF-SITE MAIL PROCESSING FACILITIES AND 8 HEADQUARTER OFFICES NATION-WIDE.

Place of Performance

Location: OAKTON, FAIRFAX County, VIRGINIA, 22124

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $74.3 million to SERVICESOURCE INC for work described as: THE PURPOSE OF THIS ABILITY-ONE CONTRACT IS TO PROVIDE ALL PERSONNEL, LABOR AND SUPERVISION, MATERIALS, EQUIPMENT AND SERVICES TO 59 OFF-SITE MAIL PROCESSING FACILITIES AND 8 HEADQUARTER OFFICES NATION-WIDE. Key points: 1. Contract provides essential mail processing support to 59 facilities and 8 offices nationwide. 2. ServiceSource Inc. is the sole awardee, raising questions about competition. 3. The contract duration of five years suggests a long-term need for these services. 4. Fixed-price contract type aims to control costs, but requires careful monitoring of performance. 5. The 'All Other Business Support Services' NAICS code indicates a broad scope of work. 6. Geographic reach across the nation highlights the scale of IRS mail operations.

Value Assessment

Rating: fair

The contract value of $74.3 million over five years averages to approximately $14.86 million annually. Benchmarking this against similar large-scale mail processing contracts is challenging due to the specific nature of government facilities and the broad scope of services. The fixed-price structure suggests an expectation of cost control, but the absence of detailed performance metrics or comparisons makes a definitive value-for-money assessment difficult without further data. The contract's value appears substantial, reflecting the significant operational needs of the IRS.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in specific circumstances like urgent needs or existing relationships. The lack of competition means that the government did not benefit from potential price reductions or service enhancements that could arise from a competitive bidding process. This raises concerns about whether the best possible price and terms were secured for the taxpayer.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also limits opportunities for other businesses to secure government contracts.

Public Impact

The Internal Revenue Service (IRS) benefits from streamlined and efficient mail processing operations. Taxpayers indirectly benefit from improved operational efficiency within the IRS, potentially leading to better service delivery. The contract supports mail processing infrastructure across 59 off-site facilities and 8 headquarter offices nationwide. The workforce implications are likely within ServiceSource Inc. and its subcontractors, providing employment in business support services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of detailed performance metrics makes it difficult to assess the true value for money.
Broad scope of 'All Other Business Support Services' could lead to scope creep if not managed tightly.
Long contract duration (5 years) requires ongoing vigilance to ensure continued cost-effectiveness and performance.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
ServiceSource Inc. is tasked with a critical function supporting nationwide IRS operations.
The contract covers a significant number of facilities, indicating a comprehensive service delivery model.

Sector Analysis

The Business Support Services sector encompasses a wide range of activities, including administrative, operational, and logistical support. This contract falls under the 'All Other Business Support Services' category (NAICS 561499), which is broad and can include services like mail processing, document management, and call centers. The federal government is a significant consumer of such services to maintain its vast operational footprint. Benchmarking is difficult due to the specific nature of government mail processing and the sole-source award.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses mandated by a set-aside. However, the prime contractor, ServiceSource Inc., may choose to subcontract portions of this work to small businesses as part of their own business strategy, which could provide opportunities within the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officers and program managers within the Department of the Treasury's Internal Revenue Service. As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency is dependent on the public availability of contract performance reports and any associated Inspector General audits, which are not detailed in the provided data. Accountability measures would be defined within the contract's terms and conditions.

Related Government Programs

IRS Mail Operations
Federal Mail Handling Services
Business Support Services Contracts
Department of the Treasury Procurement

Risk Flags

Sole-source award
Lack of competitive bidding
Broad service category (NAICS 561499)
Long contract duration (5 years)

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $74.3 million to SERVICESOURCE INC. THE PURPOSE OF THIS ABILITY-ONE CONTRACT IS TO PROVIDE ALL PERSONNEL, LABOR AND SUPERVISION, MATERIALS, EQUIPMENT AND SERVICES TO 59 OFF-SITE MAIL PROCESSING FACILITIES AND 8 HEADQUARTER OFFICES NATION-WIDE.

Who is the contractor on this award?

The obligated recipient is SERVICESOURCE 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 $74.3 million.

What is the period of performance?

Start: 2020-04-01. End: 2025-03-31.

What is the historical spending pattern for mail processing services by the IRS?

Historical spending data for IRS mail processing services is not provided in the current data extract. To assess this contract's value and necessity, a review of past expenditures on similar services would be crucial. This would involve examining previous contracts, their values, durations, and the scope of work performed. Understanding historical spending can reveal trends, identify potential cost savings, and highlight any significant increases or decreases in the demand for these services. Without this context, it's difficult to determine if the $74.3 million award represents an increase, decrease, or consistent level of investment in mail processing.

How does the per-unit cost of mail processing under this contract compare to industry benchmarks?

A precise per-unit cost comparison for mail processing under this contract is not feasible with the provided data. The contract value is a total award amount over five years, and specific metrics for 'per unit' (e.g., per piece of mail processed, per facility serviced) are not detailed. Furthermore, the nature of government mail processing, which may involve sensitive documents and specific security protocols, can differ significantly from commercial benchmarks. The absence of a competitive bidding process also limits the ability to infer a market-driven per-unit cost. A detailed analysis would require access to the contract's performance work statement and any associated cost breakdowns.

What is ServiceSource Inc.'s track record with similar government contracts?

Information regarding ServiceSource Inc.'s specific track record with similar government contracts is not detailed in the provided data. While ServiceSource Inc. is the awardee, the data does not include details on their past performance, previous contract values, or the types of services they have provided to the government. A comprehensive assessment of their suitability for this role would necessitate reviewing their performance history, client feedback, and any past issues or commendations on federal contracts. This information is typically available through federal procurement databases and performance assessment systems.

What are the key performance indicators (KPIs) for this contract, and how is performance measured?

The provided data does not specify the key performance indicators (KPIs) or the methods used to measure the performance of ServiceSource Inc. under this contract. Typically, government contracts include a Performance Work Statement (PWS) or Statement of Work (SOW) that outlines specific deliverables, service levels, and metrics for success. Without access to these documents, it is impossible to assess how the IRS will ensure that ServiceSource Inc. is meeting its obligations effectively and efficiently. Understanding these KPIs is crucial for evaluating the contract's success and ensuring value for taxpayer money.

What is the risk assessment associated with this sole-source contract for mail processing?

The primary risk associated with this sole-source contract is the potential for inflated costs due to the lack of competition. Without multiple bidders vying for the contract, there is less downward pressure on pricing, potentially leading to the government paying more than it would in a competitive scenario. Another risk is vendor lock-in, where the government becomes dependent on a single provider, making it difficult to switch even if performance or pricing becomes unsatisfactory. Ensuring robust oversight and clear performance standards are critical to mitigating these risks. The broad scope of services also presents a risk of scope creep if not managed diligently.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › All Other Business Support Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › ADMINISTRATIVE SUPPORT SERVICES

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: 10467 WHITE GRANITE DRIVE, OAKTON, VA, 22124

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

Financial Breakdown

Contract Ceiling: $77,728,850

Exercised Options: $76,627,300

Current Obligation: $74,344,404

Actual Outlays: $74,074,902

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline