General Dynamics IT awarded $15.3M for IT support, raising questions on competition and value

Contract Overview

Contract Amount: $15,290,516 ($15.3M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2006-05-30

End Date: 2013-08-07

Contract Duration: 2,626 days

Daily Burn Rate: $5.8K/day

Competition Type: NON-COMPETITIVE DELIVERY ORDER

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: TOTAL INFORMATION PROCESSING SUPPORT SER

Place of Performance

Location: LANHAM, PRINCE GEORGE'S County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $15.3 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: TOTAL INFORMATION PROCESSING SUPPORT SER Key points: 1. Contract awarded via non-competitive delivery order, limiting price discovery. 2. Significant duration of over 7 years suggests long-term IT needs. 3. Cost-plus-fixed-fee structure may incentivize cost escalation. 4. No small business set-aside, potentially limiting broader participation. 5. IT support services are critical for IRS operations. 6. Geographic concentration in Maryland for service delivery.

Value Assessment

Rating: questionable

The total award of $15.3 million over more than seven years for IT support services warrants scrutiny. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex IT services, can lead to higher costs if not managed tightly, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure may not represent the best value for taxpayers compared to fixed-price contracts that incentivize efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

This contract was awarded as a non-competitive delivery order, meaning it was not subject to a full and open competition. This approach is typically used when a specific need arises that can only be met by a particular contractor, or in situations where urgency or existing infrastructure dictates a sole source. The lack of competition means there were likely no other bidders, which can lead to higher prices and reduced innovation.

Taxpayer Impact: The non-competitive nature of this award means taxpayers did not benefit from the price reductions and efficiencies typically achieved through a competitive bidding process. This could result in a higher overall cost for the services provided.

Public Impact

Taxpayers benefit from the continued operation of IRS IT systems. Essential IT support services are delivered to the Internal Revenue Service. Services are primarily delivered within Maryland. The contract supports IT professionals employed by General Dynamics Information Technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Non-competitive award limits price discovery and potential savings.
Cost-plus-fixed-fee structure may lead to cost overruns.
Long contract duration (over 7 years) could lock in potentially suboptimal pricing.
Lack of small business participation may limit economic opportunity.

Positive Signals

Ensures continuity of critical IT support for a vital government agency.
Award to an established contractor with presumed experience in IT services.
Fixed fee component provides some cost predictability for the government.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader IT services industry. This sector encompasses a wide range of activities, including designing, developing, and implementing IT solutions. The market for these services is highly competitive, with numerous large and small firms vying for government contracts. Benchmarking spending in this area is challenging due to the variety of services and contract types, but IT support remains a significant expenditure across federal agencies.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no indication of subcontracting to small businesses. This means that the primary contract was awarded directly to a large business, General Dynamics Information Technology. While this ensures the services are provided by a capable entity, it represents a missed opportunity to leverage the small business ecosystem and potentially foster innovation and competition within that segment of the market.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury's contracting officers and the Internal Revenue Service's program managers. The Inspector General for Tax Administration (TIGTA) may also conduct audits or investigations into the contract's performance and financial management. Transparency is limited due to the non-competitive nature, but contract performance metrics and financial reporting would be subject to review.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian IT Services Contracts
Department of the Treasury IT Support Contracts
General Services Administration (GSA) IT Schedule Contracts

Risk Flags

Non-competitive award
Cost-plus-fixed-fee pricing
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $15.3 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. TOTAL INFORMATION PROCESSING SUPPORT SER

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 $15.3 million.

What is the period of performance?

Start: 2006-05-30. End: 2013-08-07.

What is the track record of General Dynamics Information Technology in delivering similar IT support services to federal agencies?

General Dynamics Information Technology (GDIT) has a substantial track record of providing IT support and systems integration services to various federal agencies, including defense, civilian, and intelligence communities. Their experience often spans large-scale enterprise IT operations, cybersecurity, cloud migration, and data center management. While specific performance metrics for this particular contract are not detailed here, GDIT's general profile suggests they possess the resources and expertise to handle complex IT requirements. However, the effectiveness and efficiency of their performance on this specific IRS contract would depend on detailed program management, oversight, and adherence to the contract's specific deliverables and service level agreements.

How does the cost structure of this contract compare to industry standards for similar IT support services?

The contract utilizes a Cost Plus Fixed Fee (CPFF) structure. CPFF contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. While common for IT services where scope can be uncertain or evolve, this structure inherently carries a risk of cost escalation if not rigorously managed. Industry benchmarks often show that fixed-price contracts can yield better value for taxpayers when requirements are well-defined, as they incentivize contractor efficiency. The CPFF structure here, especially without competitive pressure, makes direct cost comparison difficult without detailed cost breakdowns and performance data. However, it is generally considered less cost-advantageous for the government than competitive fixed-price arrangements.

What are the primary risks associated with a non-competitive award for IT support services?

The primary risks associated with a non-competitive award for IT support services include: 1. Inflated Pricing: Without competition, the contractor has less incentive to offer the lowest possible price, potentially leading to higher costs for the government. 2. Reduced Innovation: The absence of multiple bidders can stifle innovation, as there is no competitive pressure to develop more efficient or advanced solutions. 3. Potential for Scope Creep: The CPFF structure, combined with non-competition, can make it easier for the scope of work to expand without corresponding price adjustments, leading to cost overruns. 4. Lack of Accountability: While oversight exists, the lack of alternative providers can reduce the contractor's perceived need to maintain peak performance and responsiveness.

How effective has this contract been in ensuring the continuity and performance of IRS IT systems?

Assessing the effectiveness of this contract in ensuring the continuity and performance of IRS IT systems requires access to specific performance metrics, uptime reports, and user satisfaction data, which are not provided in the summary data. However, the contract's long duration (over 7 years) and its award to a major IT provider like General Dynamics Information Technology suggest an intent to ensure stable and continuous support. The IRS relies heavily on its IT infrastructure for tax processing, taxpayer services, and enforcement. The absence of major reported IT failures related to this support contract could be an indirect indicator of reasonable effectiveness, but a definitive judgment cannot be made without detailed performance evaluations.

What has been the historical spending trend for similar IT support services at the IRS or Treasury?

Historical spending trends for similar IT support services at the IRS and the broader Department of the Treasury are generally characterized by significant and sustained investment. Agencies like the IRS require robust, reliable, and secure IT systems to manage vast amounts of sensitive data and complex processing operations. Spending in this area often fluctuates based on modernization initiatives, system upgrades, and evolving technological landscapes. While specific year-over-year data for this particular contract isn't available, federal IT spending, in general, has been a substantial portion of agency budgets, often in the billions for large departments. Contracts for IT support are recurring needs, reflecting the ongoing operational demands of managing complex IT infrastructures.

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: NON-COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Computer Sciences Corporation (UEI: 009581091)

Address: 15000 CONFERENCE CENTER DRIVE, CHANTILLY, VA, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $17,000,592

Exercised Options: $17,000,592

Current Obligation: $15,290,516

Parent Contract

Parent Award PIID: TIRNO06D00025

IDV Type: IDC

Timeline