Treasury's $26M Palantir contract for IT services awarded to I3 Federal LLC, spanning four years

Contract Overview

Contract Amount: $26,166,677 ($26.2M)

Contractor: I3 Federal LLC

Awarding Agency: Department of the Treasury

Start Date: 2014-09-29

End Date: 2018-09-29

Contract Duration: 1,461 days

Daily Burn Rate: $17.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: PALANTIR PERPETUAL SOFTWARE, HARDWARE, MAINTENANCE AND OTHER ASSOCIATED SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20224

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $26.2 million to I3 FEDERAL LLC for work described as: PALANTIR PERPETUAL SOFTWARE, HARDWARE, MAINTENANCE AND OTHER ASSOCIATED SERVICES Key points: 1. The contract's value of $26.17 million over four years suggests a moderate investment in specialized IT services. 2. Competition was conducted under 'full and open competition after exclusion of sources,' indicating a specific justification for limiting initial bidders. 3. The fixed-price contract type aims to control costs, but the 'other computer related services' NAICS code is broad. 4. Performance occurred over a four-year period, allowing for sustained service delivery and potential for performance evaluation. 5. The contract was awarded to I3 Federal LLC, a company whose track record with this specific type of service warrants further investigation. 6. The lack of small business set-aside suggests this contract was not specifically targeted to boost small business participation.

Value Assessment

Rating: fair

Benchmarking the value of this $26.17 million contract is challenging without more specific details on the 'perpetual software, hardware, maintenance and other associated services' provided. The duration of four years (1461 days) suggests an average annual spend of approximately $6.54 million. This figure needs to be compared against the market rates for similar comprehensive IT support and software licensing for large government agencies. The firm fixed-price nature provides cost certainty, but the overall value depends heavily on the scope and criticality of the Palantir services delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'full and open competition after exclusion of sources.' This procurement method implies that while the competition was intended to be open, there was a prior exclusion of certain sources, suggesting a specific rationale or requirement that narrowed the initial pool of potential bidders. The number of bidders is not specified, but the 'exclusion of sources' phrasing indicates it was not a completely unrestricted open competition from the outset. This could potentially limit price discovery compared to a truly open solicitation.

Taxpayer Impact: The limited competition, even if initially open after exclusions, may have resulted in less aggressive pricing than a fully open solicitation with a wider range of bidders. Taxpayers benefit from cost certainty due to the firm fixed-price structure, but the ultimate value depends on whether the competitive process yielded the best possible price for the services.

Public Impact

The primary beneficiaries are likely the Internal Revenue Service (IRS) and its personnel, who receive enhanced IT capabilities. The services delivered likely support critical IRS functions related to data management, analytics, or operational efficiency through Palantir's software. The geographic impact is centered in Washington D.C., where the contract was awarded and likely performed. Workforce implications could include the need for specialized IT personnel to manage and utilize the Palantir systems, both within the government and potentially by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'exclusion of sources' in the competition method warrants scrutiny to ensure it was fully justified and did not unduly restrict competition.
Lack of specific details on the 'other associated services' makes it difficult to assess the full scope and potential cost drivers.
The reliance on a single vendor's software (Palantir) could lead to vendor lock-in and future dependency.
The broad NAICS code (541519) lacks specificity, making it harder to benchmark against comparable IT service contracts.

Positive Signals

The firm fixed-price contract type provides budget certainty for the government.
The four-year duration allowed for sustained support and integration of the IT services.
Awarding to I3 Federal LLC, assuming they have the necessary expertise, ensures a dedicated provider for these specialized services.

Sector Analysis

This contract falls within the broader IT services sector, specifically 'Other Computer Related Services.' The market for advanced data analytics and software platforms like Palantir is significant within government, driven by increasing needs for data processing, intelligence, and operational efficiency. Comparable spending benchmarks would involve analyzing other large-scale IT service contracts awarded to support federal agencies, particularly those involving complex software solutions and maintenance.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the primary focus was on securing the specific capabilities offered by the awardee, rather than using the contract as a vehicle to promote small business participation. The impact on the small business ecosystem is likely minimal, as this contract did not appear to be designed to create opportunities for them.

Oversight & Accountability

Oversight would typically be managed by the contracting officer's representative (COR) within the IRS, responsible for monitoring performance, delivery, and compliance with contract terms. Accountability measures are inherent in the firm fixed-price structure, linking payment to successful delivery. Transparency is facilitated through contract databases like FPDS, though detailed performance reports are often internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal IT Services
Software Licensing and Maintenance
Data Analytics Services
Department of the Treasury IT Modernization Efforts
IRS Technology Modernization

Risk Flags

Limited competition justification requires review.
Specificity of 'other associated services' is lacking.
Potential for vendor lock-in with proprietary software.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $26.2 million to I3 FEDERAL LLC. PALANTIR PERPETUAL SOFTWARE, HARDWARE, MAINTENANCE AND OTHER ASSOCIATED SERVICES

Who is the contractor on this award?

The obligated recipient is I3 FEDERAL 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 $26.2 million.

What is the period of performance?

Start: 2014-09-29. End: 2018-09-29.

What specific Palantir software and hardware were procured under this contract, and what were their intended uses by the IRS?

The contract details mention 'PALANTIR PERPETUAL SOFTWARE, HARDWARE, MAINTENANCE AND OTHER ASSOCIATED SERVICES.' However, the specific Palantir software modules (e.g., Palantir Gotham, Palantir Foundry) and hardware configurations are not explicitly itemized in the provided data. Typically, Palantir's offerings are used for advanced data integration, analysis, and operational decision-making. For the IRS, these services could have been applied to areas such as tax fraud detection, taxpayer compliance analysis, internal operational efficiency, or managing large datasets related to tax administration. Without further documentation, the precise applications remain inferred based on Palantir's known capabilities and the IRS's mission.

How does the per-unit cost or overall value of this contract compare to similar IT service contracts awarded by the Treasury or other agencies for comparable services?

Directly comparing the value of this $26.17 million contract is difficult without granular data on the specific services rendered and the market rates for those exact services. The NAICS code 541519 ('Other Computer Related Services') is very broad. To conduct a meaningful comparison, one would need to identify contracts with similar scope, duration, and technology focus (e.g., advanced analytics platforms, large-scale data management). Benchmarking against other large federal IT contracts, especially those involving specialized software and integration, would be necessary. The firm fixed-price nature provides cost certainty, but the 'value for money' hinges on whether the delivered capabilities significantly improved IRS operations or achieved specific mission objectives at a competitive market price.

What was the justification for 'exclusion of sources' in the procurement process, and what impact did this have on competition?

The 'full and open competition after exclusion of sources' designation implies that the agency initially identified a need and then, for specific reasons, excluded certain potential offerors before proceeding with a broader competition among the remaining eligible sources. Justifications for such exclusions often relate to unique capabilities, existing infrastructure compatibility, urgent needs, or specific performance requirements that only a limited number of contractors could meet. While the competition was 'open' after exclusions, this process inherently limits the pool of bidders compared to a truly unrestricted solicitation. The impact on competition is that it may reduce the number of proposals received, potentially leading to less aggressive pricing and innovation than might occur in a completely open market. The specific rationale for excluding sources in this Treasury contract would need to be detailed in the contract's Justification and Approval (J&A) document.

What is the track record of I3 Federal LLC in delivering complex IT services, particularly those involving data analytics platforms like Palantir?

Assessing the track record of I3 Federal LLC requires examining their past performance on federal contracts, specifically focusing on IT services, software implementation, and data analytics. Information from sources like the Federal Procurement Data System (FPDS) or contractor performance databases would be crucial. Key indicators include contract values, types of services performed, customer satisfaction ratings (if available), and any history of contract modifications, disputes, or terminations. Without specific performance data related to this contract or similar engagements, it's difficult to definitively assess their expertise with Palantir or comparable complex systems. A review of their portfolio and client testimonials would provide further insight into their capabilities and reliability in delivering sophisticated IT solutions.

What were the key performance indicators (KPIs) for this contract, and how was I3 Federal LLC's performance measured against them?

The provided data does not include the specific Key Performance Indicators (KPIs) established for this contract. In a firm fixed-price contract for IT services, KPIs typically relate to system uptime, software performance metrics, response times for maintenance and support, successful delivery of defined services, and adherence to security protocols. Performance measurement would likely involve regular reporting by the contractor, government acceptance of deliverables, and oversight by the Contracting Officer's Representative (COR). The effectiveness of the measurement would depend on the clarity and measurability of the defined KPIs and the rigor of the government's oversight process throughout the contract's four-year duration.

How has federal spending on 'Other Computer Related Services' (NAICS 541519) evolved, and where does this contract fit within that trend?

Federal spending on NAICS code 541519, 'Other Computer Related Services,' has generally trended upwards over the past decade, reflecting the increasing reliance of government agencies on specialized IT support beyond standard software development or IT management. This category often encompasses niche services like IT consulting, data analytics support, system integration for non-standard systems, and specialized hardware maintenance. This $26.17 million contract for Palantir services fits within this trend as an example of agencies procuring advanced, often proprietary, data analysis and management capabilities that fall outside more common IT service classifications. It represents a significant, albeit specific, investment within the broader landscape of federal IT expenditures.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11400 QUAILWOOD MANOR, FAIRFAX STATION, VA, 22039

Business Categories: Category Business, Service Disabled Veteran Owned Business, Small Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $30,835,098

Exercised Options: $30,835,098

Current Obligation: $26,166,677

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: NNG07DA42B

IDV Type: GWAC

Timeline