Treasury's IRS awarded Deloitte $34M for IT integration and enhancement services

Contract Overview

Contract Amount: $33,975,595 ($34.0M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of the Treasury

Start Date: 2016-07-15

End Date: 2019-07-14

Contract Duration: 1,094 days

Daily Burn Rate: $31.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF PURCHASE OF BEN INTEGRATION AND ENHANCEMENT SUPPORT SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20228

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $34.0 million to DELOITTE CONSULTING LLP for work described as: IGF::OT::IGF PURCHASE OF BEN INTEGRATION AND ENHANCEMENT SUPPORT SERVICES Key points: 1. The contract focused on IT integration and enhancement, a critical area for tax administration. 2. Deloitte Consulting LLP, a large established firm, was the awardee. 3. The contract was awarded as a Delivery Order under a larger IDIQ, indicating a structured procurement process. 4. The duration of the contract was approximately three years. 5. The pricing structure was Firm Fixed Price, which shifts risk to the contractor. 6. The contract was awarded through full and open competition, suggesting a broad search for qualified vendors.

Value Assessment

Rating: good

The contract value of approximately $34 million over three years for IT integration and enhancement services appears reasonable given the scope and the contractor's expertise. Benchmarking against similar large-scale IT support contracts for federal agencies suggests that this level of investment is within expected ranges for complex system integration projects. The firm fixed-price nature of the award also indicates a commitment to defined costs, which is generally favorable for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning that all responsible sources were permitted to submit a bid. The fact that it was a Delivery Order under a larger IDIQ suggests that the initial competition for the IDIQ vehicle likely involved multiple bidders, and this specific order was then placed based on the established terms. The number of bidders for this specific delivery order is not explicitly stated but the 'full and open' designation implies a competitive process.

Taxpayer Impact: Full and open competition generally leads to better price discovery and potentially lower costs for taxpayers by ensuring a wide pool of qualified contractors are considered.

Public Impact

The primary beneficiary is the Internal Revenue Service (IRS), which receives enhanced IT capabilities. Services delivered include integration and enhancement of IT systems, crucial for tax processing and taxpayer services. The geographic impact is primarily within the District of Columbia, where the IRS headquarters is located. The contract supports IT professionals and potentially impacts the broader federal IT workforce through the services provided.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if integration services create deep dependencies.
Risk of scope creep if enhancement requirements are not tightly managed.
Dependence on a single large contractor for critical IT functions.

Positive Signals

Firm Fixed Price contract shifts cost overrun risk to the contractor.
Full and open competition suggests a robust selection process.
Award to a well-established IT services provider like Deloitte implies a degree of reliability.

Sector Analysis

The IT services sector for the federal government is a significant market. This contract falls within the broader category of IT consulting and systems integration, which is a multi-billion dollar segment of federal IT spending. Comparable contracts often involve large system overhauls, cloud migrations, or cybersecurity enhancements. The IRS, as a major federal agency, consistently invests in its IT infrastructure to manage complex tax laws and taxpayer data.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. As a large contract awarded to a major IT services firm, the primary focus is likely on the prime contractor's capabilities. However, large prime contractors often utilize small business subcontractors to fulfill specific needs or meet broader subcontracting targets, though this is not detailed here.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. As a Delivery Order under an IDIQ, oversight would likely involve the contracting officer's representative (COR) managing performance and adherence to terms. The Inspector General for the Treasury Department would have jurisdiction over potential fraud, waste, or abuse related to this contract. Transparency is generally maintained through contract databases like FPDS.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian IT Services Contracts
Large-Scale Systems Integration Contracts
IT Consulting Services

Risk Flags

Potential for vendor lock-in
Complexity of IT integration projects
Dependence on contractor expertise

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $34.0 million to DELOITTE CONSULTING LLP. IGF::OT::IGF PURCHASE OF BEN INTEGRATION AND ENHANCEMENT SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $34.0 million.

What is the period of performance?

Start: 2016-07-15. End: 2019-07-14.

What was the specific nature of the 'integration and enhancement' services provided under this contract?

The contract, "PURCHASE OF BEN INTEGRATION AND ENHANCEMENT SUPPORT SERVICES," likely involved integrating various IT systems or components ('BEN' could refer to a specific system or program) and enhancing their functionality. This could encompass tasks such as software development, system configuration, data migration, API development, performance optimization, and user interface improvements. The goal would be to improve the efficiency, security, or capabilities of the IRS's IT infrastructure, potentially supporting tax processing, taxpayer services, or internal operations. Without more specific documentation, the exact technical scope remains generalized.

How does the $34 million cost compare to similar IT integration contracts awarded by the IRS or other large federal agencies?

A $34 million contract over three years for IT integration and enhancement services is a substantial but not extraordinary amount for a large federal agency like the IRS. Similar contracts for major system overhauls, cloud migrations, or enterprise resource planning (ERP) implementations can range from tens to hundreds of millions of dollars. For instance, other agencies like the Department of Defense or Health and Human Services often award contracts in this range or higher for comparable IT modernization efforts. The value appears aligned with the complexity and scale typically associated with supporting a large, mission-critical agency's IT infrastructure.

What are the key risks associated with a contract of this nature, and how were they mitigated?

Key risks include scope creep, where requirements expand beyond the original agreement, leading to cost overruns or delays; vendor lock-in, where the agency becomes overly dependent on the contractor's proprietary solutions; and performance issues, where the delivered services do not meet expectations. Mitigation strategies often involve robust contract management, clear definition of requirements and deliverables, phased implementation with regular reviews, and strong oversight by the Contracting Officer's Representative (COR). The Firm Fixed Price (FFP) structure also mitigates cost overrun risk for the government by placing that burden on the contractor, provided the scope is well-defined.

What was Deloitte Consulting LLP's track record with the federal government, particularly the IRS, prior to this award?

Deloitte Consulting LLP is a major federal contractor with a long history of providing a wide range of services, including IT consulting, systems integration, and program management, to numerous government agencies. Prior to this specific $34 million award, Deloitte had likely secured numerous other contracts with the IRS and other Treasury bureaus, as well as with agencies across the federal government. Their extensive experience and established presence suggest a significant track record, implying familiarity with federal procurement processes, security requirements, and the complexities of government IT environments.

How has IRS spending on IT integration and enhancement services evolved over time, and does this contract represent a significant shift?

The IRS has consistently invested significant resources in IT modernization and enhancement due to the aging infrastructure and evolving technological landscape. Spending in this area has generally trended upwards over the past decade as the agency grapples with legacy systems and the need for improved digital services and data analytics. This $34 million contract, awarded as a delivery order, represents a specific component of that ongoing investment rather than a singular, dramatic shift. It is part of a larger, sustained effort to upgrade and maintain critical IT functions necessary for tax administration.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte LLP (UEI: 014127109)

Address: 1725 DUKE ST, ALEXANDRIA, VA, 22314

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $55,891,232

Exercised Options: $33,975,595

Current Obligation: $33,975,595

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $8,689,214

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00016

IDV Type: IDC

Timeline