Booz Allen Hamilton awarded $35.3M for IRS Electronic Fraud Detection System, a significant IT services contract

Contract Overview

Contract Amount: $35,314,876 ($35.3M)

Contractor: Booz Allen Hamilton Inc

Awarding Agency: Department of the Treasury

Start Date: 2015-04-15

End Date: 2019-07-14

Contract Duration: 1,551 days

Daily Burn Rate: $22.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CL::IGF ELECTRONIC FRAUD DETECTION SYSTEM

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $35.3 million to BOOZ ALLEN HAMILTON INC for work described as: IGF::CL::IGF ELECTRONIC FRAUD DETECTION SYSTEM Key points: 1. The contract value represents a substantial investment in modernizing IRS fraud detection capabilities. 2. Competition dynamics for this contract are crucial for ensuring cost-effectiveness and innovation. 3. Performance metrics and delivery timelines will be key indicators of success. 4. This contract positions Booz Allen Hamilton as a key player in government IT modernization. 5. The fixed-price nature of the contract shifts some financial risk to the contractor.

Value Assessment

Rating: good

The contract value of $35.3 million for an Electronic Fraud Detection System appears reasonable given the scope of IT services involved. Benchmarking against similar large-scale IT system development and implementation contracts within federal agencies suggests this is within a typical range. The firm-fixed-price structure implies that the contractor bears the risk of cost overruns, which can be a positive indicator of value if the contractor manages costs effectively. Further analysis would require comparing specific deliverables and performance standards to similar contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. This competitive process is generally expected to yield better pricing and innovative solutions as contractors vie for the award. The number of bidders, if available, would provide further insight into the level of competition. A robust competition suggests that the government received a range of proposals and pricing, increasing the likelihood of a fair market price.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down costs through market forces and encourages a wider pool of contractors to offer their best solutions, ultimately leading to more efficient use of public funds.

Public Impact

Taxpayers benefit from improved accuracy and efficiency in fraud detection, potentially leading to increased revenue collection and reduced tax evasion. The IRS gains enhanced capabilities to identify and prevent fraudulent activities, safeguarding the integrity of the tax system. The contract supports the development and implementation of advanced technological solutions within a critical government function. Workforce implications may include the need for specialized IT personnel within the IRS to manage and utilize the new system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if requirements are not clearly defined and managed.
Dependence on contractor expertise could create knowledge transfer challenges.
Ensuring data security and privacy within the new fraud detection system is paramount.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
Firm-fixed-price contract structure aligns contractor incentives with cost control.
Focus on fraud detection directly supports government revenue integrity and taxpayer trust.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on software development and data analytics for fraud detection. The market for government IT services is substantial, with agencies continually seeking to upgrade systems for efficiency and security. Comparable spending benchmarks would involve looking at other large IT system procurements for agencies like the IRS, FBI, or Social Security Administration, particularly those involving complex data analysis and security features. The trend is towards leveraging advanced analytics and AI for such critical functions.

Small Business Impact

As this contract was awarded under full and open competition and does not explicitly mention small business set-asides, its direct impact on small businesses is likely limited unless they were subcontractors. The prime contractor, Booz Allen Hamilton, is a large business. Analysis of subcontracting plans would be necessary to determine the extent to which small businesses participated in fulfilling the contract requirements. Without this information, it's difficult to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. The firm-fixed-price nature provides a degree of financial oversight by capping the government's liability. Transparency is generally maintained through contract award notices and public reporting mechanisms. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse related to the contract arise.

Related Government Programs

IRS Taxpayer Advocate Service
IRS Information Technology Modernization
Federal Fraud Prevention Initiatives
Government Data Analytics Programs

Risk Flags

Potential for vendor lock-in if system is highly proprietary.
Data security and privacy concerns inherent in fraud detection systems.
Reliance on contractor for specialized technical expertise.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $35.3 million to BOOZ ALLEN HAMILTON INC. IGF::CL::IGF ELECTRONIC FRAUD DETECTION SYSTEM

Who is the contractor on this award?

The obligated recipient is BOOZ ALLEN HAMILTON 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 $35.3 million.

What is the period of performance?

Start: 2015-04-15. End: 2019-07-14.

What is Booz Allen Hamilton's track record with the IRS and similar federal agencies for IT system development?

Booz Allen Hamilton has a long-standing relationship with the IRS and numerous other federal agencies, providing a wide range of IT, cybersecurity, and management consulting services. Their track record includes significant work on complex systems and data analytics projects. For the IRS specifically, they have been involved in various initiatives aimed at improving tax administration and taxpayer services. Their experience with large-scale government IT procurements suggests a familiarity with the agency's requirements and operational environment. However, a detailed review of past performance evaluations and any past issues or successes on similar contracts would be necessary for a comprehensive assessment.

How does the $35.3 million contract value compare to similar IRS IT system procurements?

The $35.3 million contract value for an Electronic Fraud Detection System is substantial but falls within the expected range for major IT system development and implementation projects within large federal agencies like the IRS. Similar procurements for enterprise resource planning (ERP) systems, large database management solutions, or advanced analytics platforms can often range from tens to hundreds of millions of dollars over their lifecycle. The specific nature of fraud detection, involving complex algorithms and large datasets, justifies a significant investment. To provide a precise comparison, one would need to identify contracts with similar objectives, scope, and duration within the IRS or comparable agencies, considering factors like the number of users, data volume, and required functionalities.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks for this contract include technical challenges in developing and integrating a sophisticated fraud detection system, potential cybersecurity vulnerabilities, and the risk of the system not achieving the desired accuracy or efficiency gains. Mitigation strategies likely involve rigorous testing and validation phases, adherence to strict cybersecurity protocols mandated by the government, clear performance metrics and service level agreements (SLAs), and ongoing collaboration between the IRS and Booz Allen Hamilton. The firm-fixed-price contract structure also mitigates financial risk for the government by capping costs, provided the scope is well-defined and managed.

How effective is the IRS's current fraud detection system, and what improvements are expected from this new contract?

Information on the specific effectiveness of the IRS's current fraud detection systems is generally not publicly detailed due to security concerns. However, the decision to award a new contract for an 'Electronic Fraud Detection System' implies a need for enhanced capabilities beyond existing tools. Improvements are expected to include greater accuracy in identifying fraudulent returns or claims, faster processing times, the ability to detect novel or evolving fraud schemes through advanced analytics (potentially AI/ML), and better integration with other IRS data systems. The goal is to increase the recovery of illicit funds and deter future fraudulent activities more effectively.

What has been the historical spending trend for IT services related to fraud detection at the IRS?

Historical spending trends for IT services related to fraud detection at the IRS have likely shown a consistent and increasing investment over time, mirroring the broader government push towards digital transformation and data-driven decision-making. Early systems may have been rule-based, requiring less complex IT infrastructure. However, with the rise of big data, machine learning, and sophisticated cyber threats, the IRS has progressively invested in more advanced technological solutions. This $35.3 million contract represents a significant, but likely part of a larger, ongoing strategic investment in modernizing these critical capabilities, rather than an isolated expenditure.

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Booz Allen Hamilton Holding Corporation

Address: 8283 GREENSBORO DR, MCLEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $39,475,098

Exercised Options: $35,584,599

Current Obligation: $35,314,876

Actual Outlays: $-0

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00011

IDV Type: IDC

Timeline