Treasury's IRS awards $49.8M contract for critical IT systems design to Accenture Federal Services

Contract Overview

Contract Amount: $49,768,666 ($49.8M)

Contractor: Accenture Federal Services LLC

Awarding Agency: Department of the Treasury

Start Date: 2017-09-30

End Date: 2018-09-30

Contract Duration: 365 days

Daily Burn Rate: $136.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: CRITICAL FUNCTION. PSC D318.

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $49.8 million to ACCENTURE FEDERAL SERVICES LLC for work described as: CRITICAL FUNCTION. PSC D318. Key points: 1. Contract value represents a significant investment in essential IT infrastructure. 2. Accenture Federal Services, a large established firm, secured this award. 3. The contract's fixed-price nature aims to control costs and manage risk. 4. Performance is situated within the IT services sector, supporting tax administration. 5. The duration of the contract suggests a need for sustained IT support. 6. This award falls under the broader category of IT systems design and integration.

Value Assessment

Rating: good

The contract value of approximately $49.8 million for a one-year period appears reasonable for complex IT systems design services. Benchmarking against similar large-scale IT contracts within federal agencies suggests that pricing is likely competitive, especially given the firm-fixed-price structure which shifts some risk to the contractor. The specific nature of 'Computer Systems Design Services' (NAICS 541512) often involves substantial labor and expertise, justifying the investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The specific number of bidders is not provided, but the designation suggests a robust competitive process. Full and open competition is generally expected to yield the best value and pricing for the government by encouraging a wide range of proposals and driving down costs through market forces.

Taxpayer Impact: Taxpayers benefit from full and open competition as it promotes efficient use of funds and reduces the likelihood of inflated prices due to limited vendor options.

Public Impact

Federal taxpayers benefit from the efficient administration of the tax system. The Internal Revenue Service (IRS) receives critical IT systems design services. The contract supports the operational capabilities of a key federal agency. Workforce implications may include IT professionals and system designers, potentially in Virginia. Improved IT systems can lead to better service delivery for taxpayers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if requirements are not clearly defined and managed.
Dependence on a single contractor for critical IT systems design could pose long-term risks.
Ensuring continued innovation and adaptation to evolving technological landscapes.

Positive Signals

Firm-fixed-price contract structure helps control costs and provides budget certainty.
Award to a well-established contractor like Accenture Federal Services suggests a degree of reliability.
Full and open competition likely ensured a competitive bidding process, driving value.

Sector Analysis

The IT services sector is a vast and critical component of federal spending, encompassing everything from software development to cybersecurity and systems integration. Contracts like this, for computer systems design services (NAICS 541512), are fundamental to maintaining and modernizing the technological backbone of government agencies. The IRS, as a major agency, consistently requires significant IT investment to manage tax administration, process returns, and serve taxpayers. Spending in this category is benchmarked against the overall federal IT budget, which runs into the tens of billions annually.

Small Business Impact

This contract was awarded under full and open competition and does not indicate a specific small business set-aside. While the prime contractor is Accenture Federal Services, a large business, there is no explicit information provided regarding subcontracting plans or goals for small businesses. The impact on the small business ecosystem would depend on whether Accenture actively seeks small business partners for specialized services or components of this contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officers and program managers within the IRS and the Department of the Treasury. Accountability measures are inherent in the firm-fixed-price contract type, requiring the contractor to deliver specified services within the agreed-upon budget. Transparency is facilitated through contract award databases, though detailed performance metrics and internal oversight processes are generally not publicly disclosed.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian IT Services
Computer Systems Design Services
Department of the Treasury IT Contracts

Risk Flags

Potential for vendor lock-in
Dependence on contractor expertise
Cybersecurity risks during design phase
Complexity of integrating new systems

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $49.8 million to ACCENTURE FEDERAL SERVICES LLC. CRITICAL FUNCTION. PSC D318.

Who is the contractor on this award?

The obligated recipient is ACCENTURE FEDERAL 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 $49.8 million.

What is the period of performance?

Start: 2017-09-30. End: 2018-09-30.

What is Accenture Federal Services' track record with the IRS and similar federal agencies for IT systems design contracts?

Accenture Federal Services has a significant history of performing IT services for various federal agencies, including the IRS. Their track record often includes large-scale system modernization, implementation, and support contracts. For the IRS specifically, they have been involved in projects related to tax processing systems, data management, and digital transformation initiatives. While specific performance details for this particular $49.8 million contract are not publicly detailed, Accenture's general experience in complex government IT projects suggests a capacity to handle such requirements. However, as with any large contractor, past performance reviews and any past issues or successes on similar contracts would be crucial for a comprehensive assessment.

How does the $49.8 million award compare to typical spending on IT systems design services by the IRS or other large federal agencies?

The $49.8 million award for a one-year contract for computer systems design services is substantial, reflecting the complexity and critical nature of IT infrastructure for an agency like the IRS. Large federal agencies, particularly those with extensive citizen-facing services or complex data processing needs, often award IT contracts in the tens to hundreds of millions of dollars annually. For context, the IRS's overall IT budget is in the billions, and specific system design or modernization projects can easily reach these figures. Compared to similar contracts for system design and integration within agencies like the Department of Defense or Health and Human Services, this award appears to be within the expected range for a significant, focused IT project.

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

Primary risks for this contract include potential cost overruns if the scope is not well-defined (though mitigated by firm-fixed-price), schedule delays due to technical complexities or resource issues, and performance deficiencies where the designed systems do not meet IRS requirements. Risks also include contractor performance issues, cybersecurity vulnerabilities introduced during design, and the potential for vendor lock-in. Mitigation strategies typically involve rigorous contract management, clear performance metrics and milestones, regular progress reviews, robust testing and validation phases, and adherence to cybersecurity best practices throughout the design lifecycle. The firm-fixed-price structure inherently places cost risk on the contractor, incentivizing them to manage these factors effectively.

What is the expected effectiveness of the IT systems designed under this contract for the IRS's mission?

The effectiveness of the IT systems designed under this contract is directly tied to the IRS's mission of tax administration and taxpayer service. Improved systems are expected to enhance efficiency in processing tax returns, managing taxpayer data securely, detecting fraud, and providing better support to taxpayers. If the design services lead to more robust, scalable, and user-friendly systems, the IRS can operate more effectively, potentially reducing processing times, improving accuracy, and enhancing compliance. The ultimate effectiveness will be measured by the successful implementation and operational performance of the systems developed based on these design services.

How has IRS spending on computer systems design services evolved over the past five years, and does this award align with historical patterns?

IRS spending on computer systems design services has likely seen fluctuations driven by modernization needs, legislative changes, and budget allocations over the past five years. Agencies like the IRS are under constant pressure to update legacy systems and adopt new technologies to improve efficiency and security. Awards in the range of $40-50 million for specific IT design projects are not uncommon for the IRS, especially for critical functions. Historical data would show if there's been a trend towards larger or smaller contracts in this category. This $49.8 million award aligns with the expectation of significant, targeted investments in IT infrastructure necessary for the IRS's complex operations.

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: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Accenture Inc.

Address: 800 NORTH GLEBE RD #300, ARLINGTON, VA, 22203

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

Financial Breakdown

Contract Ceiling: $210,023,068

Exercised Options: $199,074,664

Current Obligation: $49,768,666

Subaward Activity

Number of Subawards: 107

Total Subaward Amount: $26,370,659

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO17D00004

IDV Type: IDC

Timeline