General Dynamics IT's $254M contract for IRS infrastructure shared services awarded in 2004, ending 2009

Contract Overview

Contract Amount: $254,627,459 ($254.6M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2004-02-21

End Date: 2009-05-29

Contract Duration: 1,924 days

Daily Burn Rate: $132.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: PRIME CONTRACT - INFRASTRUCTURE SHARED SERVICES

Place of Performance

Location: LANHAM, PRINCE GEORGE'S County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $254.6 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: PRIME CONTRACT - INFRASTRUCTURE SHARED SERVICES Key points: 1. Contract value of $254.6 million over its life. 2. Awarded under full and open competition. 3. Contract type is Cost Plus Fixed Fee. 4. Services provided are Computer Systems Design. 5. The contract duration was 1924 days. 6. The contract was awarded to General Dynamics Information Technology, Inc.

Value Assessment

Rating: fair

The contract's Cost Plus Fixed Fee structure can lead to cost overruns if not managed tightly. Benchmarking value is difficult without detailed cost breakdowns and comparison to similar IT infrastructure contracts from the same period. The fixed fee component provides some cost certainty for the contractor's profit, but the overall cost is variable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple vendors had the opportunity to bid. The fact that it was competed suggests a competitive environment, which typically drives better pricing and service offerings. The number of bids received (2) is on the lower side for a contract of this magnitude, which could suggest limited market interest or a highly specialized requirement.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through market forces. However, a low number of bidders might indicate that the competition was not as robust as it could have been, potentially impacting the final price achieved.

Public Impact

Benefits the Internal Revenue Service by providing essential IT infrastructure shared services. Ensures the continuity and efficiency of critical IRS operations. Supports the agency's mission to administer and enforce tax laws. Impacts the IT workforce within the IRS and potentially its contractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize contractors to increase costs to achieve a higher fixed fee if not properly monitored.
Limited number of bidders (2) may indicate less competitive pressure than ideal for a contract of this size.

Positive Signals

Awarded through full and open competition, suggesting an effort to maximize market participation.
The contract was awarded to a well-established IT services provider, General Dynamics Information Technology, Inc.

Sector Analysis

This contract falls within the IT services sector, specifically focusing on computer systems design and infrastructure support. The market for such services is large and competitive, with numerous large and small businesses offering solutions. This contract represents a significant investment in maintaining and upgrading the IT backbone of a major federal agency, comparable to other large-scale IT modernization efforts within government.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. The prime contractor, General Dynamics Information Technology, Inc., would typically be responsible for meeting any overall small business subcontracting goals set by the agency, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of the Treasury's Internal Revenue Service. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing would be expected to ensure costs are reasonable and allocable. Transparency would be facilitated through contract reporting mechanisms, and any specific Inspector General jurisdiction would be determined by the Treasury OIG.

Related Government Programs

Federal IT Infrastructure Modernization Programs
IRS IT Modernization Efforts
Government-wide IT Shared Services Contracts

Risk Flags

Potential for cost overruns due to CPFF structure
Limited competition may have impacted price
Risk of technological obsolescence over contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $254.6 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. PRIME CONTRACT - INFRASTRUCTURE SHARED 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 $254.6 million.

What is the period of performance?

Start: 2004-02-21. End: 2009-05-29.

What was the specific nature of the 'Infrastructure Shared Services' provided under this contract?

The 'Infrastructure Shared Services' under this contract likely encompassed a range of IT support functions critical to the IRS's operations. This could include data center management, network operations, server maintenance, storage solutions, and potentially help desk support for IT infrastructure. The 'Computer Systems Design Services' (NAICS 541512) classification suggests a focus on the design, development, integration, and maintenance of IT systems and infrastructure, rather than just off-the-shelf software procurement. These services are foundational for ensuring the reliability, security, and performance of the IRS's technological backbone, enabling the agency to process tax information and serve taxpayers effectively.

How does the Cost Plus Fixed Fee (CPFF) contract type typically impact cost control and contractor performance?

The Cost Plus Fixed Fee (CPFF) contract type is characterized by the government reimbursing the contractor for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to complete the work efficiently to maximize their profit margin, as the fee is fixed regardless of the final cost. However, it also places a significant burden on the government to meticulously monitor and audit contractor costs to ensure they are reasonable, allocable, and allowable. Without stringent oversight, CPFF contracts can be susceptible to cost growth if the scope is not well-defined or if the contractor inflates costs. For this specific contract, the fixed fee component provided a degree of profit certainty for General Dynamics Information Technology, Inc., but the overall expenditure was subject to the actual costs incurred in delivering the IT infrastructure services.

What does the low number of bidders (2) for a 'Full and Open Competition' suggest about this contract?

A 'Full and Open Competition' with only two bidders for a contract valued at over $254 million suggests several possibilities. It could indicate that the market for this specific type of specialized IT infrastructure shared services was limited, with only a few companies possessing the necessary expertise, security clearances, and capacity to bid. Alternatively, it might imply that the solicitation process or the requirements were structured in a way that deterred broader participation, or that the timing of the solicitation coincided with other major industry activities. While competition is generally preferred, a low number of bidders can sometimes lead to less aggressive pricing than if there were numerous competitors vying for the contract, potentially impacting the value achieved for taxpayers.

What are the potential risks associated with a contract of this duration (1924 days, approx. 5.3 years)?

Contracts spanning over five years, like this one, carry inherent risks related to technological obsolescence, evolving requirements, and market changes. Technology can advance rapidly, potentially making the initially contracted systems or services outdated before the contract's end. Requirements for IT infrastructure can also shift due to changes in agency priorities, legislation, or security threats. Furthermore, the longer the contract duration, the greater the potential for cost increases due to inflation or unforeseen issues. Effective contract management, including regular reviews and potential modifications, is crucial to mitigate these risks and ensure the services remain relevant and cost-effective throughout the contract's life.

How does the award date (2004) and end date (2009) position this contract in terms of modern IT infrastructure standards?

Awarded in 2004 and ending in 2009, this contract predates many of the significant advancements and shifts in IT infrastructure that define modern standards. This period was before the widespread adoption of cloud computing, the dominance of agile development methodologies, and the current emphasis on cybersecurity as a primary design principle. Therefore, the infrastructure and services procured under this contract likely reflect the IT paradigms of the mid-2000s, which may differ substantially from current best practices in terms of scalability, flexibility, security, and cost-efficiency. Benchmarking its performance against today's standards would require careful consideration of the technological context of its time.

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

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Computer Sciences Corporation (UEI: 009581091)

Address: MARYLAND TECHNOLOGY CENTER, LANHAM, MD, 04

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $255,182,888

Exercised Options: $254,627,659

Current Obligation: $254,627,459

Parent Contract

Parent Award PIID: TIRNO99D00001

IDV Type: IDC

Timeline