Deloitte Consulting LLP awarded $20.8M for IRS IT integration support, highlighting a need for specialized program management

Contract Overview

Contract Amount: $20,760,508 ($20.8M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of the Treasury

Start Date: 2013-06-01

End Date: 2014-08-31

Contract Duration: 456 days

Daily Burn Rate: $45.5K/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 CADE 2 SHORT TERM INTEGRATION SUPPORT FOR PROGRAM MANGEMENT OPERATIONS/INTEGRATION SUPPORT

Place of Performance

Location: LANHAM, PRINCE GEORGE'S County, MARYLAND, 20706, UNITED STATES OF AMERICA

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $20.8 million to DELOITTE CONSULTING LLP for work described as: IGF::CT::IGF FOR CRITICAL FUNCTIONS CADE 2 SHORT TERM INTEGRATION SUPPORT FOR PROGRAM MANGEMENT OPERATIONS/INTEGRATION SUPPORT Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract value of $20.8M for a 15-month period indicates a significant investment in IT support. 3. Focus on 'Critical Functions CADE 2' suggests a high-priority area within the IRS. 4. The award to a single contractor, Deloitte Consulting LLP, warrants examination of performance and pricing. 5. The duration of the contract (456 days) is relatively short for a complex IT integration project. 6. The 'Computer Systems Design Services' NAICS code points to a need for technical expertise in system integration.

Value Assessment

Rating: fair

The contract value of $20.8 million over approximately 15 months equates to roughly $1.39 million per month. Benchmarking this against similar IT integration support contracts for large federal agencies is challenging without more specific service details. However, the fixed-price nature suggests the government sought to control costs, but the ultimate value for money depends on the successful delivery of critical integration services for the CADE 2 program.

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. The fact that only one bid was received, as suggested by the 'no': 1 field, is a critical point. While the competition was open, the lack of multiple bids could imply challenges in the market, the complexity of the requirement, or potentially a lack of sufficient outreach to potential bidders. This could impact price discovery.

Taxpayer Impact: A lack of robust competition, even in an open solicitation, may lead to higher prices for taxpayers if the single bidder did not face significant pressure to offer the most competitive rates.

Public Impact

The Internal Revenue Service (IRS) benefits from enhanced IT integration capabilities for its CADE 2 program. Taxpayer services and internal operations are expected to improve through better system integration. The primary geographic impact is within the IRS's operational centers, likely concentrated in Maryland where the contract was awarded. The contract supports specialized IT roles, potentially impacting the workforce within Deloitte Consulting LLP and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (only one bid received) raises concerns about potential price inflation and lack of alternative solutions.
The fixed-price contract type, while aiming for cost control, could lead to cost overruns if unforeseen complexities arise during integration.
The short duration for a critical integration project might indicate a rushed timeline or potential for follow-on contracts.

Positive Signals

Awarded through full and open competition, adhering to principles of fair opportunity.
The contractor, Deloitte Consulting LLP, is a well-established firm with significant experience in government IT services.
The focus on 'Critical Functions CADE 2' suggests alignment with essential IRS modernization efforts.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader Information Technology (IT) industry. This sector is characterized by high demand for specialized expertise in software development, system integration, and IT consulting. The market size for federal IT services is substantial, with agencies like the IRS consistently investing in modernization and operational efficiency. This contract appears to be a specific, targeted effort to address integration challenges within a key IRS program, CADE 2.

Small Business Impact

The contract details indicate that small business participation was not a primary focus, as the 'sb' field is false and the 'ss' field is also false, suggesting no small business set-aside. This implies that the prime contract was not specifically targeted towards small businesses. However, it is possible that Deloitte Consulting LLP may engage small businesses as subcontractors to fulfill parts of the contract, depending on their subcontracting plans and the nature of the services required.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury's Inspector General, given the agency is the IRS. The contract's fixed-price nature provides a degree of cost accountability. Transparency is generally maintained through contract award databases like FPDS. The IRS likely has internal program managers and contracting officers responsible for monitoring performance, deliverables, and adherence to the contract terms.

Related Government Programs

IRS Modernization Programs
Taxpayer Systems Modernization
Federal IT Services Contracts
Large-Scale System Integration Projects
Financial Management Systems Support

Risk Flags

Limited competition (one bid received)
Potential for cost overruns if scope is not well-defined
Risk of quality compromise due to fixed-price nature and short duration

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $20.8 million to DELOITTE CONSULTING LLP. IGF::CT::IGF FOR CRITICAL FUNCTIONS CADE 2 SHORT TERM INTEGRATION SUPPORT FOR PROGRAM MANGEMENT OPERATIONS/INTEGRATION SUPPORT

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING LLP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $20.8 million.

What is the period of performance?

Start: 2013-06-01. End: 2014-08-31.

What is the specific nature of the 'Critical Functions CADE 2' program and why does it require short-term integration support?

The 'Critical Functions CADE 2' (Customer Account Data Engine 2) program is a major initiative by the IRS to modernize its core taxpayer account processing system. CADE 2 aims to replace legacy systems with a more efficient, scalable, and modern platform capable of handling the increasing volume and complexity of taxpayer data. The need for 'short-term integration support' suggests that this contract likely focused on specific, time-bound tasks related to integrating components of the CADE 2 system, or integrating CADE 2 with other IRS systems, during a particular phase of its development or deployment. This could involve testing, data migration, or bridging functionalities between older and newer systems before full implementation.

How does the $20.8 million contract value compare to other IT integration support contracts awarded by the IRS or similar agencies?

Without specific details on the scope of work and duration, a direct comparison of the $20.8 million contract value is difficult. However, for a 15-month period, this represents a significant investment, averaging over $1.3 million per month. Large federal agencies like the IRS frequently award multi-million dollar contracts for IT modernization and integration. Contracts for enterprise-wide system overhauls or major component integrations can range from tens to hundreds of millions of dollars over several years. This particular contract appears to be a focused effort within a larger modernization program, suggesting its value is proportionate to the specific integration tasks assigned.

What are the potential risks associated with awarding a critical IT integration contract to a single bidder, even under full and open competition?

Awarding a critical IT integration contract to a single bidder, despite an open competition, carries several risks. Firstly, it raises concerns about price discovery; without competing bids, the government may not have secured the most competitive pricing. Secondly, it limits the government's options if the sole bidder fails to perform adequately or encounters unforeseen issues, potentially leading to delays and cost overruns. Thirdly, it could indicate a lack of market interest or capability among other potential contractors, suggesting a niche or highly specialized requirement that might be difficult to source in the future. This situation warrants close monitoring of performance and costs.

What is Deloitte Consulting LLP's track record with the IRS and similar federal agencies for IT integration projects?

Deloitte Consulting LLP is a major federal contractor with extensive experience across numerous government agencies, including the IRS. They have a well-documented history of providing IT consulting, system integration, and program management services. For the IRS specifically, Deloitte has been involved in various modernization efforts and IT support contracts over the years. Their track record generally includes large-scale system implementations and digital transformation initiatives. While specific performance details for every contract are not publicly available, their continued success in winning significant federal contracts suggests a generally positive performance history and capability in delivering complex IT solutions.

How does the fixed-price contract type (PT: FIRM FIXED PRICE) influence the risk and value proposition for this IT integration support contract?

A Firm Fixed Price (FFP) contract type is designed to provide price certainty for the government. Under an FFP contract, the contractor assumes the primary risk for cost overruns. This means Deloitte Consulting LLP is obligated to complete the work for the agreed-upon price, regardless of their actual costs. For the government, this offers a clear budget ceiling and reduces financial risk related to performance. However, if the scope of work is not precisely defined or if unforeseen technical challenges arise, the contractor might be incentivized to cut corners on quality or scope to maintain profitability, or conversely, may seek change orders. The value proposition hinges on the contractor's ability to accurately estimate costs and manage the project efficiently within the fixed price.

What are the implications of the contract's relatively short duration (456 days) for a critical IT integration project?

A duration of 456 days (approximately 15 months) for a critical IT integration project, especially within a program as significant as CADE 2, suggests that this contract likely addressed a specific, well-defined phase or set of tasks rather than the entire integration lifecycle. It could indicate a focused effort, such as integrating a particular module, migrating a specific dataset, or providing support during a critical testing or deployment window. The brevity might also imply that this is one component of a larger, multi-phase integration strategy, potentially leading to follow-on contracts. However, it could also signal a compressed timeline, increasing the risk of schedule slippage or requiring intensive resource allocation from the contractor.

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: 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: Deloitte LLP (UEI: 014127109)

Address: 1725 DUKE ST, ALEXANDRIA, VA, 22314

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,190,777

Exercised Options: $20,760,508

Current Obligation: $20,760,508

Parent Contract

Parent Award PIID: GS35F0617Y

IDV Type: FSS

Timeline