Treasury's $18.2M IT contract for Release 5.2 systems design awarded to General Dynamics

Contract Overview

Contract Amount: $18,235,796 ($18.2M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2009-06-01

End Date: 2010-09-24

Contract Duration: 480 days

Daily Burn Rate: $38.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE

Sector: IT

Official Description: BASE FUNDING IN SUPPORT OF RELEASE 5.2

Place of Performance

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

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $18.2 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: BASE FUNDING IN SUPPORT OF RELEASE 5.2 Key points: 1. Contract awarded on a cost-plus incentive fee basis, suggesting potential for cost overruns if not managed closely. 2. The contract was competed on a full and open basis, indicating a competitive environment for this service. 3. The duration of the contract (480 days) is relatively short for a system design project, potentially indicating a phased approach or a specific component focus. 4. The base funding of $18.2M is a significant investment in IT infrastructure for the IRS. 5. The contract's primary focus is on computer systems design services, a critical function for modernizing tax systems. 6. The award to a single contractor, General Dynamics Information Technology, Inc., highlights their established presence in government IT services.

Value Assessment

Rating: fair

The contract's cost-plus incentive fee structure requires careful monitoring to ensure value for money. While specific performance metrics and their impact on final cost are not detailed here, this contract type can incentivize efficiency. Benchmarking against similar IT system design contracts for federal agencies would provide a clearer picture of whether the pricing is competitive. The base funding of $18.2M for a 480-day duration suggests a substantial per-day expenditure, necessitating scrutiny of resource allocation and project management.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, suggesting that multiple vendors had the opportunity to bid. The fact that it was competed openly is a positive sign for price discovery and potentially achieving a fair market price. However, without knowing the number of bids received, it's difficult to fully assess the intensity of the competition and its impact on the final award price.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and better service quality.

Public Impact

The primary beneficiaries are the Internal Revenue Service (IRS) and its employees, who will utilize the enhanced systems. The services delivered are crucial for the design and development of IT systems supporting tax administration. The geographic impact is primarily national, as the IRS operates nationwide, though specific implementation may be localized. Workforce implications include potential needs for IT specialists and project managers within the IRS and its contractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus incentive fee contracts can lead to higher costs if not managed stringently.
The specific performance incentives and their effectiveness in driving desired outcomes are not detailed.
Potential for scope creep in system design projects if requirements are not clearly defined and managed.

Positive Signals

Awarded through full and open competition, indicating a potentially competitive bidding process.
Contract awarded to a known entity, General Dynamics Information Technology, Inc., suggesting established capabilities.
Focus on computer systems design is critical for modernizing essential government functions.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. The federal IT market is vast, with agencies consistently investing in modernizing their infrastructure and software. Contracts for system design are fundamental to developing new capabilities or upgrading existing ones. Comparable spending benchmarks would involve looking at other large-scale IT system design and development contracts awarded by agencies like the IRS, Department of Defense, or other large civilian agencies.

Small Business Impact

The contract details indicate that small business participation was not a specific set-aside (ss: false, sb: false). This suggests that the primary award was made without a specific requirement for small business involvement. However, the prime contractor, General Dynamics, may engage small businesses as subcontractors to fulfill certain aspects of the contract, which would be a positive outcome for the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the IRS's contracting officers and program managers. The Department of the Treasury's Inspector General may also have jurisdiction to audit or investigate the contract's performance and financial aspects, particularly concerning cost-plus incentive fee arrangements. Transparency would be enhanced through regular reporting requirements and potentially public contract data, though specific oversight mechanisms are not detailed in the provided data.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian Agency IT Services
Computer Systems Design and Related Services
Cost-Plus Incentive Fee Contracts

Risk Flags

Cost-plus incentive fee contracts require diligent oversight to manage costs.
System design projects can be prone to scope creep if requirements are not well-defined.
Performance metrics for incentive fees must be carefully chosen to align with critical project goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $18.2 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. BASE FUNDING IN SUPPORT OF RELEASE 5.2

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 $18.2 million.

What is the period of performance?

Start: 2009-06-01. End: 2010-09-24.

What is the track record of General Dynamics Information Technology, Inc. with similar IRS contracts?

General Dynamics Information Technology, Inc. (GDIT) has a significant history of performing IT services for various government agencies, including the IRS. Their experience often spans large-scale system modernization, infrastructure support, and application development. For the IRS specifically, GDIT has been involved in contracts related to tax processing systems, data management, and cybersecurity. Assessing their past performance on similar IRS contracts would involve reviewing contract award histories, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any documented issues or successes. A strong track record with the IRS suggests familiarity with their unique operational environment, security requirements, and existing technological landscape, which can be a positive indicator for contract success.

How does the $18.2M base funding compare to similar IRS IT system design contracts?

The $18.2 million base funding for this 480-day contract (approximately 16 months) represents a significant investment in computer systems design services for the IRS. To benchmark this, one would need to analyze historical IRS contracts for similar scope and duration. For instance, contracts focused on designing new tax processing modules, modernizing data warehouses, or developing new taxpayer portals could serve as comparisons. The average cost per day for this contract is roughly $38,000. If similar IRS system design projects of comparable complexity have historically cost more or less per day, it would indicate whether this contract's funding level is within the expected range. Factors like the complexity of the system, the level of innovation required, and the specific technologies involved heavily influence these costs.

What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for system design?

Cost Plus Incentive Fee (CPIF) contracts, like the one awarded to General Dynamics for IRS system design, carry inherent risks. The primary risk is that the contractor may not achieve the target cost savings or performance improvements outlined in the incentive structure, potentially leading to higher final costs for the government than anticipated. There's also a risk of 'cost-plus creep,' where the contractor might be less motivated to control costs rigorously because a portion of them are reimbursed. For system design, poorly defined performance metrics or incentives can lead to the contractor focusing on easily achievable targets rather than the most critical system functionalities. Effective oversight, clear performance metrics tied to desired outcomes, and robust negotiation of the incentive sharing formula are crucial to mitigate these risks and ensure value for taxpayers.

How effective is 'full and open competition' in ensuring value for money for IT services at the IRS?

Full and open competition is generally considered the most effective method for ensuring value for money in government IT procurements, including those at the IRS. By allowing all responsible sources to submit bids, it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive pricing and innovative solutions. This broad competition puts pressure on contractors to offer their best value propositions. For the IRS, this means potentially securing advanced IT system design services at more favorable rates and with higher quality standards than might be achieved through limited or sole-source approaches. The effectiveness is further amplified when the solicitation clearly defines requirements and evaluation criteria, allowing the IRS to select the offer that provides the best overall value, not just the lowest price.

What are the implications of the 480-day duration for this system design contract?

A duration of 480 days (approximately 16 months) for a system design contract suggests a focused scope or a specific phase of a larger project. It implies that the IRS likely has a defined set of objectives for this period, possibly related to the design of a particular module, the development of initial system architecture, or the creation of prototypes. A shorter duration can sometimes indicate a more agile approach or a need for rapid development of specific components. However, it also means that follow-on contracts may be necessary to complete the full system development and implementation. The IRS must ensure that the design work completed within this timeframe is comprehensive enough to transition smoothly to subsequent development or implementation phases without significant rework or delays.

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 ID: RFP R067

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

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: $25,113,002

Exercised Options: $25,113,002

Current Obligation: $18,235,796

Parent Contract

Parent Award PIID: TIRNO99D00001

IDV Type: IDC

Timeline