General Dynamics IT awarded $28.5M for critical tax processing services, highlighting IT support needs

Contract Overview

Contract Amount: $28,491,214 ($28.5M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2015-09-01

End Date: 2017-08-16

Contract Duration: 715 days

Daily Burn Rate: $39.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CT::IGF FOR CRITICAL FUNCTIONS - TAX PROCESSING SERVICES

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $28.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: IGF::CT::IGF FOR CRITICAL FUNCTIONS - TAX PROCESSING SERVICES Key points: 1. Contract value represents a significant investment in maintaining essential tax processing functions. 2. Full and open competition suggests a potentially competitive bidding environment for this service. 3. The fixed-price contract type aims to control costs and provide predictable spending. 4. This award falls within the 'Other Computer Related Services' NAICS code, indicating a focus on IT infrastructure and support. 5. The contract duration of nearly two years suggests a need for sustained operational support. 6. The award was a delivery order, implying it was part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Value Assessment

Rating: good

The contract value of $28.5 million for two years of tax processing services appears reasonable given the critical nature of the function and the vendor's IT specialization. Benchmarking against similar IT support contracts for large federal agencies would provide a more precise value-for-money assessment. The firm fixed-price structure is a positive indicator for cost control. Without specific per-unit metrics for tax processing tasks, a direct cost comparison is challenging, but the overall award seems aligned with the scope of services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This suggests a robust bidding process where multiple vendors likely had the opportunity to compete. The presence of a single award for this delivery order implies that General Dynamics Information Technology, Inc. was selected as the most advantageous offer based on the evaluation criteria outlined in the parent IDIQ contract.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and better service quality, maximizing the value of federal spending.

Public Impact

Taxpayers benefit from the reliable and secure processing of their tax information. Essential tax processing services are maintained, ensuring the continuity of government revenue collection. The contract supports IT infrastructure and services critical to the Internal Revenue Service's operations. Workforce implications include the need for skilled IT professionals to manage and execute the contract, potentially supporting jobs within the IT sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if this is a critical, long-term system.
Dependence on a single vendor for essential tax processing functions could pose a risk.
Ensuring data security and privacy for sensitive taxpayer information is paramount.

Positive Signals

Awarded under full and open competition, suggesting a competitive process.
Firm fixed-price contract type helps manage cost certainty.
General Dynamics Information Technology is a large, established IT services provider with a track record in government contracting.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on IT services and support for critical government functions. The market for IT services supporting federal agencies is substantial, with significant spending allocated to maintaining and upgrading legacy systems, as well as implementing new technological solutions. Comparable spending benchmarks would involve analyzing IT support contracts across various agencies, particularly those with similar operational complexities and data security requirements.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to a major IT provider, the primary impact on small businesses would likely be through subcontracting opportunities. The extent of small business participation would depend on the prime contractor's subcontracting plan and the specific requirements of the tax processing services.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Internal Revenue Service. The firm fixed-price nature of the contract provides a degree of cost oversight. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

IRS Taxpayer Services
Federal IT Infrastructure Modernization
Government Cloud Computing Services
Cybersecurity for Federal Agencies
Data Processing and Hosting Services

Risk Flags

Critical Function Support
Data Security Sensitivity
Large IT Services Contract
Fixed-Price Cost Control

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $28.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. IGF::CT::IGF FOR CRITICAL FUNCTIONS - TAX PROCESSING SERVICES

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 $28.5 million.

What is the period of performance?

Start: 2015-09-01. End: 2017-08-16.

What is the track record of General Dynamics Information Technology, Inc. in delivering similar IT services to federal agencies, particularly for critical financial systems?

General Dynamics Information Technology, Inc. (GDIT) has a long history of providing IT services to the federal government, including extensive experience with large-scale systems and critical infrastructure. They have held numerous contracts with agencies like the IRS, Department of Defense, and Department of Veterans Affairs, covering areas such as IT modernization, cloud migration, cybersecurity, and data management. Their experience with financial systems and sensitive data processing is substantial, often involving complex integration and stringent security requirements. While specific performance metrics for past contracts are not detailed here, GDIT's consistent presence as a major federal IT contractor suggests a generally accepted capability to meet government demands, though like any large contractor, they may have faced performance challenges on specific projects that would require deeper investigation.

How does the awarded amount of $28.5 million compare to similar IT support contracts for tax processing or critical financial functions within the federal government?

The $28.5 million award for approximately two years of service for critical tax processing functions appears to be within a reasonable range for large-scale federal IT support contracts. However, a precise comparison is difficult without knowing the exact scope of services, service level agreements, and the specific technological environment. Contracts for similar functions, such as managing large databases, ensuring system uptime, and providing user support for millions of users, can range from tens to hundreds of millions of dollars annually, depending on the agency's size and complexity. For instance, contracts supporting the Social Security Administration's IT infrastructure or the Department of Defense's financial management systems often involve significantly higher figures due to their scale and criticality. The firm fixed-price nature of this contract suggests an effort to cap costs, which is a positive indicator for value.

What are the primary risks associated with this contract, and what mitigation strategies are likely in place?

Key risks include potential service disruptions impacting tax processing, data breaches compromising sensitive taxpayer information, and cost overruns if the fixed-price model proves inadequate for unforeseen technical challenges. Vendor lock-in is also a risk, making it difficult to switch providers if performance degrades. Mitigation strategies likely involve robust Service Level Agreements (SLAs) with penalties for non-performance, stringent cybersecurity protocols and regular audits, contingency planning for system failures, and strong contract management by the IRS to monitor performance and compliance. The use of a delivery order under a potentially larger IDIQ contract might also offer some flexibility in managing scope and vendor relationships over time.

How effective is the firm fixed-price contract type in ensuring value for money for this specific service?

The firm fixed-price (FFP) contract type is generally effective in controlling costs and providing budget certainty for well-defined services, which tax processing largely is. It shifts the risk of cost overruns to the contractor, incentivizing efficiency. For this contract, the IRS benefits from a predictable expenditure. However, if the scope of work is not perfectly defined or if unforeseen technical issues arise that require significant additional effort not covered by the initial scope, the contractor might be disincentivized from addressing them, or the IRS might need to issue change orders, potentially increasing costs. The effectiveness hinges on the accuracy of the initial scope definition and the contractor's ability to manage their internal costs efficiently.

What does the historical spending pattern for tax processing IT services at the IRS reveal about this contract's significance?

Historical spending data for IT services related to tax processing at the IRS would likely show a consistent and substantial investment over many years. The IRS manages one of the most complex and critical IT infrastructures in the federal government, processing vast amounts of sensitive financial data. Annual spending on IT support, system maintenance, and modernization for these functions typically runs into the hundreds of millions, if not billions, of dollars across the agency. This $28.5 million award, while significant, represents a specific component or delivery order within that larger IT budget. Understanding the historical trend of such awards can indicate whether spending is increasing, decreasing, or remaining stable, and whether the agency is consolidating contracts or diversifying its vendor base.

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

Solicitation ID: RTCP#4262

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 7900 HARKINS RD, LANHAM, MD, 20706

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

Financial Breakdown

Contract Ceiling: $90,635,684

Exercised Options: $59,768,271

Current Obligation: $28,491,214

Actual Outlays: $1,214

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00014

IDV Type: IDC

Timeline