Treasury's $18.5M IT contract to General Dynamics for systems integration awarded without competition

Contract Overview

Contract Amount: $18,546,492 ($18.5M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2004-08-14

End Date: 2014-12-03

Contract Duration: 3,763 days

Daily Burn Rate: $4.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: PRIME SYSTEMS INTEGRATION SERVICES CONTR

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $18.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: PRIME SYSTEMS INTEGRATION SERVICES CONTR Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns. 2. Lack of competition suggests potential for higher prices and reduced innovation. 3. Long contract duration (over 10 years) may not reflect current technological needs. 4. The contract's value is moderate within the IT services sector. 5. Performance was in Maryland, a hub for federal IT contracts. 6. The contractor, General Dynamics Information Technology, is a major federal IT provider.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its age and lack of competitive bidding. Cost-plus-fixed-fee contracts inherently carry more risk for the government compared to fixed-price contracts, as costs can escalate. Without a competitive process, it's difficult to ascertain if the pricing reflects fair market value for computer systems design services. The extended duration also raises questions about whether the services remained relevant and cost-effective throughout its lifecycle.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This approach bypasses the standard procurement process where multiple vendors submit bids, which is typically used to ensure the best value and price for the government. The absence of competition limits the government's ability to explore alternative solutions or negotiate more favorable terms.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no market pressure to drive down prices. It also reduces transparency and the opportunity for a wider range of businesses to secure government work.

Public Impact

The Internal Revenue Service (IRS) benefited from this contract by receiving IT systems integration services. These services likely supported critical IRS operations and data management. The geographic impact was primarily within Maryland, where the contractor performed the work. The contract supported a workforce of IT professionals employed by General Dynamics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to inflated costs.
Cost-plus-fixed-fee structure can incentivize spending.
Long contract duration might have resulted in outdated technology or services.
Sole-source awards reduce accountability through market forces.

Positive Signals

General Dynamics is an established federal contractor with a track record.
The contract supported essential IRS IT infrastructure.
The fixed-fee component provides some cost control.

Sector Analysis

This contract falls within the broader IT services sector, specifically computer systems design. This sector is a significant area of federal spending, with agencies relying heavily on contractors for system development, integration, and maintenance. The market is characterized by large, established players like General Dynamics, as well as numerous smaller specialized firms. Federal spending in this area often focuses on modernizing legacy systems and implementing new digital capabilities.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. The award to a large prime contractor like General Dynamics suggests that the focus was on leveraging established capabilities rather than fostering small business participation through this specific procurement vehicle.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of the Treasury and the IRS. As a sole-source award, the justification for not competing would have been subject to review. Performance monitoring and financial oversight would be standard procedures, though the effectiveness of oversight can be impacted by the contract type and duration.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian Agency IT Services
General Dynamics IT Contracts
Computer Systems Design Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $18.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. PRIME SYSTEMS INTEGRATION SERVICES CONTR

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 $18.5 million.

What is the period of performance?

Start: 2004-08-14. End: 2014-12-03.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. Typically, sole-source awards require a justification, such as a critical need, lack of available competition, or a specific technological requirement that only one vendor can meet. Without the specific justification document, it's impossible to know the exact reasoning. However, for IT services, justifications often relate to proprietary technology, urgent needs, or the continuation of services provided by a specific incumbent where switching would be disruptive or cost-prohibitive.

How did the cost-plus-fixed-fee structure impact the final cost compared to a fixed-price contract?

Cost-plus-fixed-fee (CPFF) contracts reimburse the contractor for allowable costs plus a fixed fee representing profit. This structure can lead to higher final costs than fixed-price contracts if costs escalate beyond initial estimates, as the government bears the risk of cost overruns. The fixed fee, however, provides some incentive for the contractor to control costs, as their profit is predetermined. Without knowing the initial estimated costs and the final incurred costs, a direct comparison is difficult, but CPFF generally carries a higher cost risk for the government.

What was the contractor's performance history on this contract?

The provided data does not include performance metrics or contractor performance assessments (like CPARS). General Dynamics Information Technology, Inc. is a large, established federal contractor, suggesting they likely have the capacity and experience to perform such services. However, without specific performance reviews or feedback, it's impossible to definitively assess their performance on this particular contract. Long-term contracts, especially sole-source ones, can sometimes face challenges in maintaining optimal performance without competitive pressure.

How does the $18.5 million total contract value compare to similar IT systems integration contracts during that period?

The total contract value of approximately $18.5 million over its duration (roughly 10 years) averages around $1.85 million per year. This is a moderate value for IT systems integration services, especially for a large agency like the IRS. Major IT modernization efforts or enterprise-wide system implementations could easily run into tens or hundreds of millions of dollars. This contract likely supported specific, albeit significant, integration needs rather than a complete overhaul, placing it in the mid-range for such services during its period of performance.

What were the potential risks associated with a contract of this duration (over 10 years)?

A contract spanning over a decade carries several risks. Technology evolves rapidly, meaning services or systems developed early in the contract could become obsolete or inefficient by its end. Maintaining relevance and ensuring the contractor stays current with technological advancements becomes a challenge. Furthermore, long-term sole-source contracts can lead to complacency, reduced innovation, and potentially higher costs over time due to the lack of market re-evaluation. There's also a risk that the initial scope or requirements may no longer align with the agency's current strategic objectives.

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: NOT COMPETED

Offers Received: 1

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: $18,546,582

Exercised Options: $18,546,582

Current Obligation: $18,546,492

Parent Contract

Parent Award PIID: TIRNO99D00001

IDV Type: IDC

Timeline