Treasury's IRS awarded Verizon $192.8M for toll-free contact center services over 11 years

Contract Overview

Contract Amount: $192,795,350 ($192.8M)

Contractor: Verizon Business Network Services LLC

Awarding Agency: Department of the Treasury

Start Date: 2012-01-13

End Date: 2023-05-31

Contract Duration: 4,156 days

Daily Burn Rate: $46.4K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: IT

Official Description: TOLL FREE CONTACT CENTER (TFCC)-VERIZON-EXERCISE OPTION PERIOD 1 YR 3

Place of Performance

Location: ATLANTA, FULTON County, GEORGIA, 30308

State: Georgia Government Spending

Plain-Language Summary

Department of the Treasury obligated $192.8 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: TOLL FREE CONTACT CENTER (TFCC)-VERIZON-EXERCISE OPTION PERIOD 1 YR 3 Key points: 1. The contract's value represents a significant investment in essential taxpayer communication infrastructure. 2. Sole-source award raises questions about potential cost efficiencies and market competition. 3. Long contract duration suggests a need for ongoing, stable support for critical services. 4. Performance context is crucial to understand if the fixed-price with economic adjustment met objectives. 5. The IT services sector sees substantial government spending, with this contract being a notable example. 6. Oversight of this large, sole-source contract is paramount to ensure value for taxpayer dollars.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and long duration. The fixed-price with economic price adjustment structure suggests that costs could fluctuate over the contract's life. Without comparable sole-source contracts for similar services, it's difficult to definitively assess if the pricing represents excellent value. However, the sheer scale of the award indicates a substantial commitment of resources that warrants scrutiny for cost-effectiveness.

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 is typically used when a specific vendor possesses unique capabilities or when circumstances do not permit full and open competition. The lack of competition means that price discovery through market forces was limited, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

Taxpayers benefit from accessible toll-free contact center services for inquiries and support. The Internal Revenue Service (IRS) receives essential IT infrastructure to manage taxpayer communications. Services are likely nationwide, supporting taxpayers across all geographic regions of the United States. The contract supports a significant workforce within Verizon, contributing to employment in the telecommunications and IT sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost efficiency.
Long-term nature of the contract may reduce flexibility to adopt newer technologies.
Economic price adjustment clause could lead to cost increases not tied to performance.
Lack of transparency in sole-source justification requires careful review.
Potential for vendor lock-in given the duration and specialized nature of services.

Positive Signals

Ensures continuity of essential taxpayer support services.
Provides a stable, long-term solution for critical IRS communication needs.
Leverages established infrastructure and expertise of a known provider.
Potential for economies of scale in service delivery due to contract size.

Sector Analysis

The Information Technology (IT) services sector is a vast and critical component of government operations. This contract falls under IT services, specifically focusing on telecommunications and contact center solutions. The government relies heavily on such services to maintain communication channels with citizens and stakeholders. Comparable spending benchmarks in this area are difficult to isolate due to the specialized nature of toll-free contact center operations and the sole-source award, but the overall IT services market is substantial, with billions spent annually by federal agencies.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the award to a large prime contractor like Verizon suggests that subcontracting opportunities for small businesses may exist but are not explicitly mandated or tracked within this specific data point. The impact on the small business ecosystem would depend on Verizon's subcontracting practices, which are not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Treasury and the Internal Revenue Service. As a sole-source award, it likely undergoes specific review processes. Transparency assessment is limited due to the non-competitive nature. Accountability measures would be tied to the contract's performance clauses and service level agreements. Inspector General jurisdiction would apply if any issues of fraud, waste, or abuse arise.

Related Government Programs

IRS Taxpayer Services
Federal Contact Center Services
Telecommunications Services Contracts
IT Infrastructure Support
Government Wide Acquisition Contracts (GWACs)

Risk Flags

Sole Source Award
Long Contract Duration
Economic Price Adjustment Clause
Lack of Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $192.8 million to VERIZON BUSINESS NETWORK SERVICES LLC. TOLL FREE CONTACT CENTER (TFCC)-VERIZON-EXERCISE OPTION PERIOD 1 YR 3

Who is the contractor on this award?

The obligated recipient is VERIZON BUSINESS NETWORK SERVICES LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $192.8 million.

What is the period of performance?

Start: 2012-01-13. End: 2023-05-31.

What is the track record of Verizon Business Network Services LLC in providing similar toll-free contact center services to federal agencies?

Verizon Business Network Services LLC has a long history of providing telecommunications and network services to the federal government. They are a major provider of various communication solutions, including voice, data, and internet services. While specific details on their performance for the IRS's Toll Free Contact Center (TFCC) are not provided in this data snippet, their extensive experience with government contracts suggests a capacity to manage large-scale, complex service delivery. Past performance evaluations, if available through federal procurement databases like the Federal Procurement Data System (FPDS) or Contractor Performance Assessment Reporting System (CPARS), would offer more granular insights into their reliability, quality of service, and adherence to contract terms for similar engagements.

How does the awarded amount of $192.8 million compare to similar federal contracts for toll-free contact center services?

Direct comparison of the $192.8 million award is challenging due to several factors. Firstly, the contract spans over 11 years (from 2012 to 2023), making a simple annual comparison difficult without knowing the exact spending distribution over time. Secondly, it was awarded on a sole-source basis, limiting the ability to benchmark against competitively bid contracts which typically yield lower prices. However, the scale of the award indicates a significant investment in a critical service. Federal agencies often spend tens to hundreds of millions on large-scale IT and telecommunications support contracts. To provide a more precise comparison, one would need to identify contracts with similar scope, duration, service level agreements, and competition levels, which are not readily available in the provided data.

What are the primary risks associated with a sole-source, long-term contract of this magnitude?

The primary risks associated with this sole-source, long-term contract include potential lack of cost efficiency due to the absence of competitive bidding, which could lead to overpayment. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single provider, making it difficult and costly to switch vendors or adopt newer technologies. The long duration (over 11 years) increases the risk of technological obsolescence if the contract doesn't adequately account for evolving communication standards and capabilities. Furthermore, without regular competition, there's a reduced incentive for the contractor to innovate or aggressively reduce costs throughout the contract life. Ensuring robust oversight and performance management becomes critical to mitigate these risks.

How effective has this contract been in ensuring the IRS's ability to provide taxpayer support services?

The effectiveness of this contract in ensuring the IRS's ability to provide taxpayer support services can be inferred from its long duration and the renewal/exercise of option periods. The fact that the contract was extended and exercised through multiple years suggests that the services provided by Verizon met the IRS's needs to a satisfactory degree. However, without specific performance metrics, taxpayer satisfaction data, or independent evaluations, a definitive assessment of 'effectiveness' is not possible from the provided data alone. The contract's objective was to provide toll-free contact center services, and its continuation implies a baseline level of success in meeting that objective.

What are the historical spending patterns for toll-free contact center services at the IRS or similar agencies?

Historical spending patterns for toll-free contact center services at the IRS or similar agencies can vary significantly based on agency size, taxpayer volume, and the scope of services offered. Large agencies like the IRS typically require substantial investments in communication infrastructure to handle millions of taxpayer interactions annually. Spending can range from tens of millions to hundreds of millions of dollars over several years, depending on the contract's duration, complexity, and whether it includes technology upgrades or managed services. This $192.8 million contract, spanning over a decade, represents a significant, albeit long-term, investment consistent with the scale of IRS operations. Analyzing historical data would require examining prior contracts for similar services, including their value, duration, and competitive nature.

What is the significance of the 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' contract type in this context?

The 'FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT' (FPEPA) contract type aims to balance cost certainty for the government with protection for the contractor against significant economic fluctuations. In this case, the base price is fixed, but it can be adjusted based on pre-defined economic factors, such as inflation indices or changes in labor/material costs. This is particularly relevant for long-term contracts like this one (over 11 years) where unforeseen economic shifts could significantly impact the contractor's profitability or the government's budget. While it provides some cost stability compared to cost-plus contracts, the economic price adjustment clause introduces a degree of uncertainty regarding the final total cost to the government, as it allows for price increases.

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: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Verizon Maryland LLC

Address: 22001 LOUDOUN COUNTY PKWY, ASHBURN, VA, 20147

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

Financial Breakdown

Contract Ceiling: $322,887,273

Exercised Options: $322,887,273

Current Obligation: $192,795,350

Actual Outlays: $26,053,831

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: TIRNO10S00001

IDV Type: BPA

Timeline