Treasury's IRS awards $30.4M for IT services to General Dynamics, raising questions on value and competition

Contract Overview

Contract Amount: $30,404,240 ($30.4M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2006-09-29

End Date: 2013-04-26

Contract Duration: 2,401 days

Daily Burn Rate: $12.7K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: INCREMENTAL FUNDING(RGS) - TIPSS III

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20002

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $30.4 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: INCREMENTAL FUNDING(RGS) - TIPSS III Key points: 1. Significant contract value ($30.4M) for IT services over a long duration (2006-2013). 2. General Dynamics Information Technology, Inc. secured the award, highlighting a key player in government IT. 3. The contract's 'Cost Plus Fixed Fee' structure warrants scrutiny regarding cost control and efficiency. 4. Lack of small business participation is noted, potentially limiting broader economic impact.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type can lead to higher costs if not managed tightly. Without specific performance metrics or benchmarks, assessing the value for $30.4M over seven years is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

Awarded as a competitive delivery order, suggesting multiple bids were considered. However, the specific competition details and the number of bidders are not provided, making it hard to gauge the intensity of competition and its impact on price discovery.

Taxpayer Impact: While competition was present, the CPFF structure and lack of small business involvement may have limited the full benefit to taxpayers.

Public Impact

Taxpayers funded $30.4 million for IT services over seven years. The contract supported the Internal Revenue Service's IT infrastructure. General Dynamics Information Technology, Inc. was the primary contractor. The contract did not involve small businesses, missing opportunities for economic inclusion.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee structure
Long contract duration
No small business participation

Positive Signals

Competitive award process

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical area for government operations. Spending benchmarks for similar IT services contracts can vary widely based on scope and complexity, but $30.4M over seven years suggests a substantial, ongoing need.

Small Business Impact

The contract explicitly states no small business participation (sb: false). This indicates a missed opportunity to leverage the innovation and economic benefits that small businesses can bring to government contracting.

Oversight & Accountability

The contract was awarded as a delivery order under a larger contract (TIPSS III). Oversight would likely be managed by the IRS and Treasury, focusing on performance and adherence to the CPFF terms.

Related Government Programs

Computer Systems Design Services
Department of the Treasury Contracting
Internal Revenue Service Programs

Risk Flags

Cost Plus Fixed Fee structure can incentivize higher costs.
Long contract duration (7 years) may indicate a lack of flexibility or potential for vendor lock-in.
No small business participation limits economic opportunities.
Lack of detailed performance metrics makes value assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $30.4 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. INCREMENTAL FUNDING(RGS) - TIPSS III

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $30.4 million.

What is the period of performance?

Start: 2006-09-29. End: 2013-04-26.

What specific IT systems or services were provided under this contract, and how did they contribute to the IRS's mission?

The contract was for Computer Systems Design Services (NAICS 541512). While the exact systems are not detailed, these services typically encompass design, development, integration, and support of IT systems. The contribution to the IRS mission would be in maintaining and enhancing the technological infrastructure necessary for tax administration, taxpayer services, and enforcement activities.

Given the CPFF structure and long duration, what mechanisms were in place to ensure cost efficiency and prevent overruns?

Cost Plus Fixed Fee contracts inherently carry a risk of cost overruns if not meticulously managed. Effective oversight would require detailed cost tracking, regular audits, and strict adherence to the fixed fee component. Without specific details on oversight reports or performance reviews, it's difficult to assess the effectiveness of these mechanisms in ensuring cost efficiency for this particular contract.

How did the competitive nature of this delivery order translate into cost savings or better service delivery for the IRS?

While designated as 'COMPETITIVE DELIVERY ORDER', the extent of competition (number of bidders, bid evaluation criteria) is not specified. True cost savings and improved service delivery from competition depend on the rigor of the bidding process and the government's ability to negotiate favorable terms. The CPFF structure might also temper the direct cost-saving impact of competition.

Industry Classification

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

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

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 3211 JERMANTOWN RD, FAIRFAX, VA, 22030

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

Financial Breakdown

Contract Ceiling: $36,299,693

Exercised Options: $36,299,693

Current Obligation: $30,404,240

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: TIRNO06D00012

IDV Type: IDC

Timeline