Treasury's IRS contract for IT systems design services awarded to General Dynamics IT for over $39M

Contract Overview

Contract Amount: $39,101,809 ($39.1M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2011-06-24

End Date: 2016-04-26

Contract Duration: 1,768 days

Daily Burn Rate: $22.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: EOPS FUNDS/IFS CONTRACT SUPPORT FY11

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $39.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: EOPS FUNDS/IFS CONTRACT SUPPORT FY11 Key points: 1. The contract value of over $39 million for computer systems design services indicates a significant investment in IT infrastructure. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The contract duration of 1768 days (approximately 4.8 years) points to a long-term need for these IT services. 4. The award to General Dynamics Information Technology, Inc. places it as a key contractor for the IRS's IT needs. 5. The contract type (Cost Plus Fixed Fee) can sometimes lead to cost overruns if not managed carefully. 6. The absence of small business set-aside flags indicates this was not specifically targeted for small business participation.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more specific details on the services rendered and comparable market rates for similar IT systems design projects. The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility, can sometimes result in higher final costs compared to fixed-price contracts if not meticulously managed. The total award amount of over $39 million over nearly five years suggests a substantial investment, but its value-for-money can only be truly assessed against the delivered outcomes and the efficiency of the services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit a bid. The presence of two bidders suggests a moderate level of competition for this specific contract. While two bidders are better than one, a higher number of bidders typically fosters more aggressive pricing and a wider range of innovative solutions.

Taxpayer Impact: A full and open competition, even with only two bidders, generally provides a better opportunity for taxpayers to receive competitive pricing compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries of this contract are the Internal Revenue Service (IRS) and its employees, who will utilize the improved IT systems. The services delivered are crucial for the modernization and efficient operation of the IRS's internal computer systems. The geographic impact is likely nationwide, as the IRS operates across the United States, and its IT systems support all its functions. Workforce implications may include the need for IT professionals to manage, maintain, and develop these systems, both within the government and at the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts carry inherent risks of cost escalation if scope creep or inefficiencies are not tightly controlled.
With only two bidders, the potential for truly disruptive innovation or the most cost-effective solution may have been limited.
The long duration of the contract could lead to technology obsolescence if not actively managed and updated.

Positive Signals

Awarding through full and open competition suggests a commitment to seeking the best value from the market.
The selection of a large, established IT contractor like General Dynamics Information Technology, Inc. may indicate a focus on reliability and proven performance.
The contract's focus on computer systems design implies an investment in critical infrastructure that could improve IRS operational efficiency.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. The IT services market is vast and highly competitive, with significant government spending allocated to maintaining and upgrading federal IT infrastructure. Contracts for systems design are foundational for developing robust and secure IT environments, often involving complex software development, integration, and maintenance. Comparable spending benchmarks would typically involve analyzing other large-scale IT system design and integration contracts awarded to federal agencies.

Small Business Impact

The contract details indicate that this was not a small business set-aside, and the contractor, General Dynamics Information Technology, Inc., is a large business. This means that small businesses were not specifically targeted for this prime contract award. However, large federal contractors are often required to subcontract a portion of their work to small businesses. The extent to which General Dynamics IT will engage small businesses as subcontractors will determine the indirect impact on the small business ecosystem for this contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of the Treasury's Internal Revenue Service. Accountability measures would be defined in the contract's terms and conditions, including performance standards and reporting requirements. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected or identified.

Related Government Programs

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

Risk Flags

Cost Plus Fixed Fee contract type may lead to cost overruns.
Limited competition (2 bidders) may not yield the best possible price.
Long contract duration increases risk of technology obsolescence.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $39.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. EOPS FUNDS/IFS CONTRACT SUPPORT FY11

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 $39.1 million.

What is the period of performance?

Start: 2011-06-24. End: 2016-04-26.

What specific IT systems or components were designed or improved under this contract?

The provided data indicates the contract was for 'Computer Systems Design Services' (NAICS 541512) awarded to General Dynamics Information Technology, Inc. by the IRS. While the specific systems are not detailed, this category typically encompasses a wide range of activities including designing new computer systems, modifying existing ones, and integrating hardware and software components. This could involve anything from tax processing systems, taxpayer account management platforms, internal operational support systems, or data management and security infrastructure. Further details would require reviewing the contract's Statement of Work (SOW) or Performance Work Statement (PWS).

How does the $39 million contract value compare to other IRS IT system design contracts?

The $39.1 million contract value for IRS IT systems design services over approximately 4.8 years (1768 days) represents a significant but not extraordinary investment for a federal agency of the IRS's size and complexity. Large federal agencies frequently award multi-million dollar contracts for IT modernization and system design. To provide a precise comparison, one would need to analyze historical spending patterns for similar NAICS codes (541512) within the IRS and across other large civilian agencies like Treasury, HHS, or SSA, looking at contract values, durations, and the scope of services. This figure appears to be within a typical range for such long-term, critical IT support.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract for IT systems design?

Cost Plus Fixed Fee (CPFF) contracts, like the one awarded to General Dynamics IT, present specific risks. The 'cost-plus' aspect means the government reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. The primary risk is that the contractor may have less incentive to control costs compared to fixed-price contracts, as cost overruns are generally reimbursed. This can lead to the final contract price exceeding initial estimates, especially if the scope of work is not clearly defined or if unforeseen technical challenges arise. Effective oversight, rigorous cost tracking, and strong program management are crucial to mitigate these risks and ensure value for the government.

What was the track record of General Dynamics Information Technology, Inc. with the IRS or similar agencies prior to this award?

General Dynamics Information Technology, Inc. (GDIT) is a major federal IT contractor with a long history of serving various government agencies, including the IRS and Department of the Treasury. Prior to this specific award in 2011, GDIT would have had numerous existing contracts and a demonstrated performance history. Agencies typically evaluate past performance as a key factor in the source selection process for competitive procurements. While specific details of their prior IRS performance aren't in this data snippet, GDIT's status as a large, established player suggests they likely had a substantial portfolio of relevant IT services contracts with the federal government, indicating experience in managing large-scale IT projects.

How has IRS spending on computer systems design services evolved since this contract was awarded in 2011?

Since the 2011 award of this $39.1 million contract, IRS spending on computer systems design services has likely continued to be substantial, driven by ongoing needs for modernization, cybersecurity, and enhanced taxpayer services. Federal IT spending trends generally show consistent investment, often increasing with the complexity of digital transformation initiatives and evolving technological landscapes. To assess the evolution, one would need to examine subsequent contract awards for similar services (NAICS 541512) by the IRS and other Treasury bureaus, looking at overall budget allocations for IT, the number and value of new contracts, and the types of technologies being procured. The trend is likely one of sustained, and potentially increasing, investment in IT infrastructure and services.

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 082

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, 20706

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $40,021,645

Exercised Options: $40,021,645

Current Obligation: $39,101,809

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: TIRNO99D00001

IDV Type: IDC

Timeline