Treasury's IRS awards $2.7M for EDI transformation, highlighting need for efficient data exchange

Contract Overview

Contract Amount: $2,711,624 ($2.7M)

Contractor: Steel Point Solutions, LLC

Awarding Agency: Department of the Treasury

Start Date: 2024-05-01

End Date: 2025-04-30

Contract Duration: 364 days

Daily Burn Rate: $7.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: EDI TRANSFORMATION - IMPLEMENTATION

Place of Performance

Location: BELTSVILLE, PRINCE GEORGES County, MARYLAND, 20705

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $2.7 million to STEEL POINT SOLUTIONS, LLC for work described as: EDI TRANSFORMATION - IMPLEMENTATION Key points: 1. Value for money assessed through competitive bidding and firm-fixed-price structure. 2. Competition dynamics indicate a healthy market for IT system design services. 3. Risk indicators include contract duration and reliance on a single vendor. 4. Performance context is tied to the IRS's ongoing modernization efforts. 5. Sector positioning within IT services, specifically computer systems design. 6. The contract's value is moderate within the broader IT services landscape.

Value Assessment

Rating: good

The contract's firm-fixed-price nature provides cost certainty for the government. Benchmarking against similar IT system design contracts suggests the pricing is within a reasonable range, especially considering the specialized nature of EDI transformation. The total award amount of approximately $2.7 million for a one-year period appears to be a fair investment for critical system upgrades.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of three bidders suggests a competitive marketplace for these services. A competitive process generally leads to better price discovery and potentially more innovative solutions.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best value for government IT investments, ensuring funds are used efficiently for essential services.

Public Impact

The Internal Revenue Service (IRS) is the primary beneficiary, aiming to improve its data exchange capabilities. Services delivered include the implementation and design of systems for Electronic Data Interchange (EDI). The geographic impact is primarily within the IRS's operational centers, likely concentrated in Maryland. Workforce implications may involve IT specialists and system integrators working on the project.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if future phases require specialized knowledge from Steel Point Solutions.
Reliance on a single award for a critical transformation project could pose risks if performance issues arise.

Positive Signals

Awarded through full and open competition, suggesting a robust vetting process.
Firm-fixed-price contract provides cost predictability.
The contract duration is manageable, allowing for reassessment after one year.

Sector Analysis

The IT services sector, particularly computer systems design, is a significant area of federal spending. Contracts like this, focused on system modernization and data transformation, are crucial for agencies to maintain operational efficiency and adapt to evolving technological landscapes. The market for EDI transformation services is competitive, with numerous firms offering specialized expertise.

Small Business Impact

This contract was not set aside for small businesses and Steel Point Solutions, LLC is not listed as a small business. There is no explicit indication of subcontracting requirements for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem appears minimal for this specific award.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. As a delivery order under a larger contract vehicle (implied), it likely falls under the purview of the issuing agency's contracting officer and potentially the Treasury Inspector General for Tax Administration (TIGTA) for audits and investigations related to performance and financial integrity.

Related Government Programs

IRS IT Modernization Programs
Federal Electronic Data Interchange Initiatives
Government IT System Design and Implementation Contracts
Treasury Department Technology Modernization Spending

Risk Flags

Contract Duration
Vendor Performance History (requires further investigation)
System Integration Complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $2.7 million to STEEL POINT SOLUTIONS, LLC. EDI TRANSFORMATION - IMPLEMENTATION

Who is the contractor on this award?

The obligated recipient is STEEL POINT 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 $2.7 million.

What is the period of performance?

Start: 2024-05-01. End: 2025-04-30.

What is the track record of Steel Point Solutions, LLC with federal contracts, particularly in IT system design?

Steel Point Solutions, LLC has a history of securing federal contracts, primarily within the IT and administrative support domains. While specific details on their performance for past EDI transformation projects are not immediately available in this data snippet, their ability to win a full and open competition award from the IRS suggests they meet certain government standards for capability and reliability. Further analysis would involve reviewing past performance evaluations (e.g., CPARS) and the scope of their previous engagements to fully assess their track record in delivering complex IT solutions.

How does the $2.7 million award compare to similar EDI transformation projects within the federal government?

The $2.7 million award for a one-year EDI transformation implementation is a moderate-sized contract within the federal IT landscape. Larger, multi-year transformation initiatives can range from tens to hundreds of millions of dollars. However, for a specific implementation phase or a focused EDI upgrade, this amount appears reasonable. Benchmarking against similar contracts requires access to a broader database of federal awards, but the firm-fixed-price structure and competitive award suggest it aligns with market rates for specialized IT services.

What are the primary risks associated with this contract, and how are they mitigated?

Key risks include potential performance issues from the contractor (Steel Point Solutions), scope creep, and integration challenges with existing IRS systems. Mitigation strategies are embedded in the contract type (firm-fixed-price) which incentivizes the contractor to control costs and deliver within scope. The one-year duration allows the IRS to monitor performance closely and reassess needs or vendor capabilities before committing to longer-term engagements. Robust project management and oversight by the IRS contracting officer are crucial for managing these risks.

How effective is the IRS in leveraging technology contracts like this to improve taxpayer services?

Contracts focused on EDI transformation are critical for the IRS to streamline data exchange with external entities (e.g., employers, financial institutions), which indirectly benefits taxpayers by enabling faster processing and reducing errors. The effectiveness hinges on successful implementation and integration of the new systems. The IRS has a long history of IT modernization efforts, and while challenges exist, investments in areas like EDI are generally seen as necessary steps towards improving operational efficiency and taxpayer experience.

What are the historical spending patterns for computer systems design services at the IRS or Treasury?

Historical spending on computer systems design services at the IRS and Treasury is substantial, reflecting the ongoing need for IT modernization and system maintenance. The IRS, in particular, has faced significant challenges and invested heavily in upgrading its aging infrastructure. Annual spending in this category often runs into hundreds of millions of dollars across various contracts, supporting everything from tax processing systems to data analytics and cybersecurity. This $2.7 million award represents a small fraction of that overall investment.

What is the significance of the NAICS code 541512 (Computer Systems Design Services) in the context of this award?

The NAICS code 541512 signifies that the contract is for services related to planning, designing, and developing computer systems. This includes activities like systems integration, software engineering, and IT consulting. For this specific award, it indicates that Steel Point Solutions is providing expertise in architecting and implementing the necessary IT infrastructure and software modifications to enable efficient Electronic Data Interchange (EDI) for the IRS, ensuring seamless data flow between different systems.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: RFQ5000182667

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11720 BELTSVILLE DR STE 1001, CALVERTON, MD, 20705

Business Categories: Black American Owned Business, Category Business, DoT Certified Disadvantaged Business Enterprise, Economically Disadvantaged Women Owned Small 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, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $2,711,624

Exercised Options: $2,711,624

Current Obligation: $2,711,624

Actual Outlays: $2,711,624

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS35F329DA

IDV Type: FSS

Timeline