Treasury's $9.9M tax calculation software contract awarded to Thomson Reuters without competition

Contract Overview

Contract Amount: $9,899,000 ($9.9M)

Contractor: Thomson Reuters (TAX & Accounting), Inc.

Awarding Agency: Department of the Treasury

Start Date: 2025-12-31

End Date: 2026-06-30

Contract Duration: 181 days

Daily Burn Rate: $54.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: JOINT ENTERPRISE TAX CALCULATION SOLUTION (JETCS) COMMERCIAL OFF THE SHELF (COTS)TAX CALCULATOR

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $9.9 million to THOMSON REUTERS (TAX & ACCOUNTING), INC. for work described as: JOINT ENTERPRISE TAX CALCULATION SOLUTION (JETCS) COMMERCIAL OFF THE SHELF (COTS)TAX CALCULATOR Key points: 1. Contract awarded on a firm-fixed-price basis, indicating defined scope and cost. 2. Long-term contract duration of 181 days suggests a focused, short-term need. 3. The 'Other Computer Related Services' NAICS code points to a specialized IT service. 4. Sole-source award raises questions about potential cost efficiencies and market alternatives. 5. The contract's value is relatively modest within the broader federal IT spending landscape. 6. Awarded to a single vendor, Thomson Reuters, highlighting potential vendor lock-in.

Value Assessment

Rating: questionable

The contract's value of $9.9 million for 181 days of service is difficult to benchmark without more detailed scope information. Given the sole-source nature, it's challenging to assess if this represents a competitive price. However, the firm-fixed-price structure suggests cost certainty for the government. Without comparable sole-source awards for similar tax calculation software solutions, a definitive value-for-money assessment is limited.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the IRS did not conduct a competitive bidding process. This typically occurs when a specific product or service is only available from a single source, or in cases of urgent need. The lack of competition means there was no opportunity for multiple vendors to offer proposals, which can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may not benefit from the cost savings that could arise from a competitive bidding process. The absence of competition means the government may be paying a premium for this specific solution.

Public Impact

Federal tax processing and calculation accuracy for taxpayers. Supports the Internal Revenue Service's core mission of tax administration. Ensures compliance with evolving tax laws and regulations. Benefits federal employees and potentially other government agencies relying on accurate tax data.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs.
Sole-source award raises concerns about vendor lock-in.
Limited transparency into the justification for sole-source procurement.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Award to established vendor Thomson Reuters suggests reliability.
Focus on tax calculation is critical for IRS operations.

Sector Analysis

The federal IT services sector is vast, with significant spending on software development, maintenance, and specialized solutions. Contracts like this, for specific tax calculation software, fall under the 'Other Computer Related Services' category. While the dollar amount is substantial, it represents a small fraction of overall federal IT spending. Benchmarking requires comparison to similar sole-source procurements of specialized tax software or COTS solutions for critical government functions.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the specific product likely offered by a large, established vendor like Thomson Reuters, there are likely no subcontracting opportunities for small businesses directly related to this award. The impact on the small business ecosystem is minimal as it does not appear to be designed to foster small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Treasury's Inspector General, who is responsible for auditing and investigating federal programs and contracts. Transparency is limited due to the sole-source award, but contract details should be publicly available through federal procurement databases. Accountability rests with the IRS contracting officers and program managers to ensure the software meets requirements and the price is justified.

Related Government Programs

Federal Tax Software Procurement
IRS IT Modernization Efforts
Commercial Off-The-Shelf (COTS) Software Acquisition
Sole-Source IT Contracts
Financial Management Systems

Risk Flags

Sole-source award
Lack of competition
Potential for vendor lock-in
Limited public justification for sole-source

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $9.9 million to THOMSON REUTERS (TAX & ACCOUNTING), INC.. JOINT ENTERPRISE TAX CALCULATION SOLUTION (JETCS) COMMERCIAL OFF THE SHELF (COTS)TAX CALCULATOR

Who is the contractor on this award?

The obligated recipient is THOMSON REUTERS (TAX & ACCOUNTING), 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: 2025-12-31. End: 2026-06-30.

What is the specific justification for awarding this contract on a sole-source basis to Thomson Reuters?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For this contract, the IRS would need to document why Thomson Reuters' Joint Enterprise Tax Calculation Solution (JETCS) is the only viable option, potentially due to proprietary technology, unique integration requirements with existing IRS systems, or a lack of viable alternatives in the market that meet the specific technical and functional needs for tax calculations.

How does the $9.9 million contract value compare to historical spending on similar tax calculation software by the IRS or other federal agencies?

Without access to historical spending data specifically for tax calculation software, a direct comparison is difficult. However, $9.9 million for an 181-day contract (approximately 6 months) suggests a significant investment. If this is for a Commercial Off-The-Shelf (COTS) solution, the cost per day is substantial. To provide a meaningful comparison, one would need to analyze past contracts for similar COTS tax software, custom-developed tax solutions, or maintenance/licensing agreements for tax processing systems across federal agencies. The sole-source nature of this award also complicates direct price comparisons with competitively procured solutions.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract to ensure performance and value?

The provided data does not specify the KPIs or SLAs for this contract. However, for a critical system like tax calculation software, one would expect KPIs related to accuracy (e.g., error rates in calculations), availability (e.g., uptime percentages), processing speed, and compliance with tax law updates. SLAs would likely define response times for technical support, bug fixes, and the timely incorporation of new tax regulations. The firm-fixed-price nature suggests that the contractor is incentivized to meet these performance standards to avoid penalties or ensure future contract awards.

What is the track record of Thomson Reuters (Tax & Accounting), Inc. in delivering similar software solutions to the federal government?

Thomson Reuters is a well-established provider of tax and accounting software and information services. Their track record with the federal government, particularly the IRS, would likely involve providing solutions for tax compliance, research, and potentially calculation engines. A thorough assessment would involve reviewing past federal contract performance evaluations (e.g., through the Contractor Performance Assessment Reporting System - CPARS), any past issues or disputes, and the successful delivery of similar systems. Given their market presence, it's probable they have experience, but the specifics of this JETCS solution's delivery history are crucial.

What are the potential risks associated with relying on a sole-source provider for critical tax calculation software?

The primary risks of a sole-source contract for critical software include lack of price competition, leading to potentially higher costs for the government. There's also the risk of vendor lock-in, where the government becomes dependent on a single vendor, making it difficult and costly to switch providers in the future. This dependence can reduce leverage in negotiations. Furthermore, if the sole-source vendor experiences financial difficulties or decides to discontinue the product, the government could face significant disruption. Ensuring robust contract management and contingency planning is vital to mitigate these risks.

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

This contract for the Joint Enterprise Tax Calculation Solution (JETCS) likely aligns with the IRS's ongoing efforts to modernize its tax processing systems. By acquiring a Commercial Off-The-Shelf (COTS) solution, the IRS may be seeking to leverage commercial best practices and reduce the burden of custom software development and maintenance. The goal would be to ensure accurate, efficient, and compliant tax calculations, which are fundamental to the IRS's mission. Understanding the specific modernization goals, such as improving processing times, enhancing data security, or adapting to new tax legislation, would clarify the strategic importance of this particular software acquisition.

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: 6160 WARREN PKWY STE 700, FRISCO, TX, 75034

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

Financial Breakdown

Contract Ceiling: $9,899,000

Exercised Options: $9,899,000

Current Obligation: $9,899,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline