Treasury's IRS awards $9.9M IT contract to Maximus Federal Services for development, infrastructure, security, and modernization

Contract Overview

Contract Amount: $9,907,327 ($9.9M)

Contractor: Maximus Federal Services, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2025-11-17

End Date: 2026-05-16

Contract Duration: 180 days

Daily Burn Rate: $55.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DEVELOPMENT, INFRASTRUCTURE, SECURITY, AND MODERNIZATION

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85701

State: Arizona Government Spending

Plain-Language Summary

Department of the Treasury obligated $9.9 million to MAXIMUS FEDERAL SERVICES, INC. for work described as: DEVELOPMENT, INFRASTRUCTURE, SECURITY, AND MODERNIZATION Key points: 1. Contract focuses on critical IT functions including development, infrastructure, security, and modernization. 2. Maximus Federal Services, a large established contractor, holds this award. 3. The contract is a firm-fixed-price definitive contract, indicating predictable costs. 4. Awarded for a duration of 180 days, suggesting a focused scope of work. 5. The contract is not competitively procured, raising questions about potential cost savings. 6. The North American Industry Classification System (NAICS) code 541519 points to 'Other Computer Related Services'.

Value Assessment

Rating: questionable

Benchmarking the value of this $9.9 million contract is challenging without more detailed scope information. However, the absence of competition suggests that the government may not have secured the most favorable pricing. The firm-fixed-price structure provides cost certainty, but the overall value proposition is diminished if alternative, more cost-effective solutions were not explored. The contract's relatively short duration of 180 days might indicate a specific, time-bound project, but it also limits the opportunity for long-term value realization.

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 bypasses the standard competitive bidding process, which typically drives down prices and encourages innovation. Without a competitive solicitation, it is difficult to assess the breadth of available market solutions or the level of pricing pressure applied. The justification for a sole-source award would need to be robust to ensure taxpayer funds are used efficiently.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the benefits of competition, such as lower prices and better service options, are forgone. This limits the government's ability to ensure it is receiving the best possible value.

Public Impact

The Internal Revenue Service (IRS) is the primary beneficiary, receiving services crucial for its IT operations. The contract supports the development, infrastructure, security, and modernization of IRS systems. This work is essential for maintaining the operational integrity and security of taxpayer data. Employees within the IRS IT department will likely be involved in managing and overseeing this contract. The modernization aspect could lead to improved efficiency in tax administration processes.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing.
Sole-source awards can limit innovation by not exploring diverse market solutions.
The specific scope of 'development, infrastructure, security, and modernization' is broad and requires clear performance metrics to ensure value.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
The contractor, Maximus Federal Services, is an established entity with experience in government contracting.
The contract duration is defined, allowing for focused project management and evaluation.

Sector Analysis

This contract falls within the broader Information Technology (IT) services sector, specifically under 'Other Computer Related Services'. The IT services market is highly dynamic, with significant government spending allocated to modernization, cybersecurity, and cloud computing. Comparable contracts in this space often involve complex system integration, software development, and infrastructure management. Benchmarks for similar IT services contracts vary widely based on scope, duration, and complexity, but large-scale modernization and security efforts typically represent substantial investments.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. Maximus Federal Services, Inc. is a large business. The implications for small businesses are that they are unlikely to be direct recipients of this prime contract. However, depending on the subcontracting plan (if any), there might be opportunities for small businesses to participate indirectly. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem for this particular award is minimal.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Treasury and the Internal Revenue Service (IRS). As a definitive contract, it is subject to standard federal procurement regulations and oversight. The firm-fixed-price nature simplifies some aspects of financial oversight but requires rigorous performance monitoring. Transparency would be enhanced through contract award databases and potentially through agency reporting on IT modernization efforts. The IRS likely has internal audit functions and may be subject to oversight from the Treasury Inspector General.

Related Government Programs

IRS IT Modernization Initiatives
Federal Civilian IT Services
Government IT Infrastructure Support
Cybersecurity Services for Federal Agencies
Software Development Contracts

Risk Flags

Sole-source award lacks competitive pricing pressure.
Broad scope ('development, infrastructure, security, and modernization') requires careful performance monitoring.
Short contract duration may indicate a limited or phased approach, requiring follow-on actions.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $9.9 million to MAXIMUS FEDERAL SERVICES, INC.. DEVELOPMENT, INFRASTRUCTURE, SECURITY, AND MODERNIZATION

Who is the contractor on this award?

The obligated recipient is MAXIMUS FEDERAL SERVICES, 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 $9.9 million.

What is the period of performance?

Start: 2025-11-17. End: 2026-05-16.

What is the specific nature of the 'development, infrastructure, security, and modernization' work to be performed under this contract?

The provided data indicates the contract covers 'DEVELOPMENT, INFRASTRUCTURE, SECURITY, AND MODERNIZATION' for the IRS. However, the specific tasks, deliverables, and technical requirements are not detailed in the summary data. This broad description suggests a comprehensive IT support role, potentially encompassing software development lifecycle activities, network and server infrastructure management, cybersecurity enhancements, and upgrades to existing systems to improve performance, security, and user experience. A deeper dive into the contract's Statement of Work (SOW) or Performance Work Statement (PWS) would be necessary to understand the precise nature and scope of these activities, including the technologies involved, the expected outcomes, and the performance metrics.

How does the $9.9 million cost compare to similar IT modernization contracts awarded by the IRS or other federal agencies?

Direct comparison of the $9.9 million cost is difficult without knowing the specific scope and duration of work. However, IT modernization projects for large federal agencies like the IRS can range from tens of millions to billions of dollars over several years. This $9.9 million contract, with a 180-day duration, appears to be for a specific phase or a set of focused tasks rather than a complete agency-wide overhaul. To benchmark effectively, one would need to compare it against contracts for similar services (e.g., cybersecurity upgrades, specific system development) of comparable duration and complexity. The sole-source nature of this award also complicates direct value-for-money comparisons, as competitive bids might have yielded different pricing.

What are the potential risks associated with awarding this contract on a sole-source basis?

The primary risk of a sole-source award is the potential for inflated costs and reduced innovation. Without competition, the government may not be obtaining the best possible price or the most suitable solution available in the market. There's also a risk that the chosen contractor, Maximus Federal Services, may not be as incentivized to perform at peak efficiency compared to a situation where they are competing against other firms. Furthermore, the lack of a competitive process limits transparency and makes it harder to justify the expenditure to taxpayers. The government must have a strong justification for the sole-source award, such as a critical need or lack of available alternatives, to mitigate these risks.

What is Maximus Federal Services, Inc.'s track record with federal IT contracts, particularly with the IRS?

Maximus Federal Services, Inc. is a large government contractor with a significant presence across various federal agencies, including the Department of Health and Human Services, the Social Security Administration, and others. They have a history of providing IT services, health and human services program support, and administrative solutions. While specific details on their past performance with the IRS for IT modernization, development, and security are not provided in the summary data, their status as a large, established contractor suggests they possess the resources and experience typically required for such complex projects. A thorough review of their contract history, past performance evaluations, and any past issues or successes with the IRS would be necessary for a complete assessment.

How does this contract align with the IRS's broader IT modernization goals and historical spending patterns?

This contract, focusing on development, infrastructure, security, and modernization, directly aligns with the IRS's stated goals of updating its aging IT systems to improve efficiency, security, and taxpayer services. The IRS has historically faced challenges with its legacy systems and has ongoing initiatives to modernize them. Spending patterns in this area are typically substantial, reflecting the complexity and criticality of the IRS's mission. This $9.9 million award, while significant for its duration, likely represents a component of a larger, multi-year modernization strategy. Understanding the IRS's overall IT budget and its strategic IT roadmap would provide context for how this specific contract fits into the larger picture of their modernization efforts and historical spending trends.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1600 TYSONS BLVD STE 300, MCLEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $9,998,759

Exercised Options: $9,907,327

Current Obligation: $9,907,327

Actual Outlays: $4,995,993

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $3,192,453

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline