Treasury's IRS awards $15.5M for HPE storage server upgrade, impacting West Virginia's IT infrastructure

Contract Overview

Contract Amount: $15,465,888 ($15.5M)

Contractor: Alvarez LLC

Awarding Agency: Department of the Treasury

Start Date: 2025-09-25

End Date: 2026-03-24

Contract Duration: 180 days

Daily Burn Rate: $85.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THIS FIRM FIXED-PRICE CONTRACT INVOLVES THE PROCUREMENT AND INSTALLATION OF A HEWLETT-PACKARD ENTERPRISE (HPE) STORAGE SERVER. THE PURPOSE IS TO UPGRADE THE EXISTING AGED STORAGE INFRASTRUCTURE FOR THE RESEARCH, APPLIED ANALYTICS, AND STATISTICS BUSI

Place of Performance

Location: KEARNEYSVILLE, JEFFERSON County, WEST VIRGINIA, 25430

State: West Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $15.5 million to ALVAREZ LLC for work described as: THIS FIRM FIXED-PRICE CONTRACT INVOLVES THE PROCUREMENT AND INSTALLATION OF A HEWLETT-PACKARD ENTERPRISE (HPE) STORAGE SERVER. THE PURPOSE IS TO UPGRADE THE EXISTING AGED STORAGE INFRASTRUCTURE FOR THE RESEARCH, APPLIED ANALYTICS, AND STATISTICS BUSI Key points: 1. Value for money appears reasonable given the firm fixed-price nature and the scope of upgrading critical IT infrastructure. 2. Competition dynamics indicate a full and open competition, suggesting a robust process for price discovery. 3. Risk indicators are moderate, with a defined performance period and a fixed-price contract mitigating cost overrun risks. 4. Performance context involves a necessary infrastructure upgrade to support research, analytics, and statistics functions. 5. Sector positioning places this contract within the broader IT services sector, specifically focusing on data storage solutions.

Value Assessment

Rating: good

The contract value of $15.5 million for a Hewlett-Packard Enterprise (HPE) storage server procurement and installation appears to be within a reasonable range for enterprise-level IT infrastructure upgrades. Benchmarking against similar large-scale storage solutions procured by federal agencies suggests that this price point is competitive, especially considering the firm fixed-price nature of the contract, which transfers risk to the contractor. The scope includes not just hardware but also installation, implying a comprehensive solution.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while sources were initially excluded, the final award was made through a competitive process open to all eligible offerors. The presence of 8 bidders suggests a healthy level of competition, which is generally conducive to achieving favorable pricing and innovative solutions. The exclusion of sources prior to the final competition warrants further investigation to understand the rationale and ensure it did not unduly limit market participation.

Taxpayer Impact: The full and open competition, despite initial source exclusions, is beneficial for taxpayers as it likely drove down costs through competitive bidding. A higher number of bidders generally leads to better price discovery and a greater likelihood of securing the best value for government funds.

Public Impact

The primary beneficiaries are the Department of the Treasury's Internal Revenue Service (IRS), which will receive upgraded storage infrastructure. The services delivered include the procurement and installation of a Hewlett-Packard Enterprise (HPE) storage server. The geographic impact is primarily focused on West Virginia, where the contract's performance is noted. Workforce implications may include IT specialists involved in the installation, configuration, and maintenance of the new storage system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with specific HPE hardware, requiring careful future planning for interoperability and upgrades.
The initial exclusion of sources, even if followed by open competition, raises questions about the fairness and completeness of the pre-award process.
Reliance on a single vendor for a critical infrastructure component could pose long-term supply chain risks.

Positive Signals

Firm fixed-price contract structure provides cost certainty and mitigates budget overruns for the government.
The upgrade addresses aging infrastructure, which is crucial for maintaining operational efficiency and data integrity.
A competitive bidding process with 8 bidders suggests a robust market engagement and potential for good value.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on data storage solutions. The market for enterprise storage is large and competitive, with major players like HPE offering a range of products. Federal agencies are significant consumers of such solutions to manage vast amounts of data. Comparable spending benchmarks for similar enterprise storage upgrades by agencies like the Department of Defense or other large civilian departments would provide further context on the value proposition.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary award went to a larger entity, and the direct impact on the small business ecosystem may be limited unless the prime contractor actively engages small businesses for subcontracting opportunities. Further analysis would be needed to determine if any small business participation is planned.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officer and program managers within the IRS. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified goods and services by the deadline. Transparency is facilitated by the public nature of federal contract awards, though detailed performance metrics may not be publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Federal Data Center Consolidation Initiative
IT Infrastructure Modernization Programs
Enterprise Storage Solutions Procurement
IRS IT Modernization Efforts

Risk Flags

Potential for vendor lock-in
Initial exclusion of sources requires justification
Dependence on specific hardware vendor

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $15.5 million to ALVAREZ LLC. THIS FIRM FIXED-PRICE CONTRACT INVOLVES THE PROCUREMENT AND INSTALLATION OF A HEWLETT-PACKARD ENTERPRISE (HPE) STORAGE SERVER. THE PURPOSE IS TO UPGRADE THE EXISTING AGED STORAGE INFRASTRUCTURE FOR THE RESEARCH, APPLIED ANALYTICS, AND STATISTICS BUSI

Who is the contractor on this award?

The obligated recipient is ALVAREZ 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 $15.5 million.

What is the period of performance?

Start: 2025-09-25. End: 2026-03-24.

What is the track record of ALVAREZ LLC in performing similar IT infrastructure upgrade contracts for federal agencies?

Information regarding ALVAREZ LLC's specific track record with similar federal IT infrastructure upgrade contracts is not detailed in the provided data. A comprehensive assessment would require reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), contract history, and any reported issues or successes on previous government engagements. Understanding their experience with HPE products and large-scale storage deployments would be crucial. Without this data, it's difficult to definitively assess their capability and reliability for this specific $15.5 million contract, though the competitive nature of the award suggests they met minimum requirements.

How does the $15.5 million cost compare to similar enterprise storage server procurements by other federal agencies?

Benchmarking the $15.5 million cost requires comparing it to similar enterprise storage server procurements by other federal agencies, considering factors like scale, specific hardware models (e.g., HPE enterprise-grade), included services (installation, support), contract duration, and the overall IT environment. Agencies like the Department of Defense, GSA, or other large civilian departments often procure similar solutions. A preliminary assessment suggests the price is within a typical range for enterprise solutions, especially given the firm fixed-price nature which includes risk transfer. However, a detailed comparison with publicly available contract data (e.g., from FPDS or agency procurement forecasts) for comparable systems would be necessary for a precise value-for-money evaluation.

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

The primary risks associated with this contract include potential vendor lock-in with HPE technology, which could limit future flexibility and increase long-term costs. There's also a risk of performance issues if the installed system doesn't meet the IRS's operational demands or if installation is delayed. Mitigation strategies include the firm fixed-price contract structure, which shifts cost overrun risks to the contractor. The defined performance period (180 days) and specific deliverables provide clear expectations. Furthermore, the competitive bidding process with 8 bidders suggests a selection of a capable vendor. Post-installation performance monitoring and acceptance testing will be critical to ensure the system meets requirements.

What is the expected impact of this storage upgrade on the IRS's research, applied analytics, and statistics business functions?

The upgrade is expected to significantly enhance the IRS's capabilities in research, applied analytics, and statistics by providing a more robust, reliable, and potentially faster storage infrastructure. Aging storage systems can lead to performance bottlenecks, data access delays, and increased risk of failure, all of which impede complex data analysis. A modern HPE storage server should offer improved data throughput, greater storage capacity, enhanced data protection features, and better integration with analytical tools. This will enable IRS analysts to process larger datasets more efficiently, conduct more sophisticated analyses, and ultimately support better decision-making and service delivery.

What is the historical spending pattern for similar IT infrastructure upgrades at the IRS or Treasury?

Analyzing historical spending patterns for similar IT infrastructure upgrades at the IRS or Treasury would provide valuable context for this $15.5 million contract. This would involve examining past procurements for storage solutions, servers, and related IT services over several fiscal years. Key metrics to track would include the average cost per contract, the number of bidders, the types of technologies procured, and the duration of contracts. Understanding whether spending has been consistent, increasing, or decreasing, and whether previous upgrades have met expectations, can help assess the current procurement's value and necessity. Without specific historical data, it's challenging to place this single contract within a broader trend.

What is the significance of the 'Full and Open Competition After Exclusion of Sources' award type?

The 'Full and Open Competition After Exclusion of Sources' award type is a specific procurement method where, initially, certain potential sources might have been excluded from consideration (perhaps due to specific requirements, past performance issues, or other documented reasons). However, the process was ultimately opened to all responsible sources capable of meeting the requirements. This suggests a deliberate decision to ensure broad competition after an initial screening or limitation. While it aims to balance efficiency with fairness, the 'exclusion of sources' aspect warrants scrutiny to ensure it was justified and did not unnecessarily restrict competition, potentially impacting price discovery or innovation. The fact that 8 bidders ultimately participated indicates a reasonably competitive outcome.

Industry Classification

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

Product/Service Code: IT AND TELECOM - COMPUTE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 2043FY-25-Q-00047

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 161 FORT EVANS RD NE STE 335, LEESBURG, VA, 20176

Business Categories: Category Business, HUBZone Firm, Limited Liability Corporation, Partnership or Limited Liability Partnership, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $15,465,888

Exercised Options: $15,465,888

Current Obligation: $15,465,888

Actual Outlays: $15,465,888

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SD19B

IDV Type: GWAC

Timeline