State Street Corporation awarded $51.6M contract for payroll services by Pension Benefit Guaranty Corporation

Contract Overview

Contract Amount: $51,642,126 ($51.6M)

Contractor: State Street Corporation

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2017-10-01

End Date: 2023-03-31

Contract Duration: 2,007 days

Daily Burn Rate: $25.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: PRIMARY PAYING AGENT

Place of Performance

Location: BOSTON, SUFFOLK County, MASSACHUSETTS, 02111

State: Massachusetts Government Spending

Plain-Language Summary

Pension Benefit Guaranty Corporation obligated $51.6 million to STATE STREET CORPORATION for work described as: PRIMARY PAYING AGENT Key points: 1. Contract value of $51.6M over its period of performance suggests a significant investment in payroll processing. 2. The contract was awarded under full and open competition, indicating a potentially competitive bidding process. 3. A firm fixed-price contract type generally provides cost certainty for the government. 4. The duration of the contract, spanning over 2000 days, points to a long-term need for these services. 5. The primary paying agent is identified as State Street Corporation, a major financial services firm. 6. The contract falls under the Payroll Services NAICS code (541214), specifying the nature of the services.

Value Assessment

Rating: good

The contract value of $51.6 million for payroll services over approximately 5.5 years appears reasonable given the scale of operations for an agency like the Pension Benefit Guaranty Corporation. Benchmarking against similar government-wide payroll contracts would provide a more precise value-for-money assessment. The firm fixed-price structure helps manage cost predictability. Without specific per-employee or per-transaction data, a detailed cost comparison is challenging, but the overall award suggests a competitive outcome for a critical administrative function.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' suggesting that all responsible sources were permitted to submit offers. This typically implies a robust bidding process where multiple vendors likely participated. The level of competition can influence pricing by encouraging bidders to offer competitive rates to secure the contract. The presence of multiple bidders generally leads to better price discovery and potentially lower costs for the government compared to sole-source or limited competition scenarios.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of securing the best possible price and service quality through a diverse range of offers, fostering a more efficient use of public funds.

Public Impact

Employees of the Pension Benefit Guaranty Corporation benefit from accurate and timely payroll processing. The contract ensures the continuity of essential payroll services for the agency. The services delivered are critical for maintaining employee morale and operational efficiency. The geographic impact is primarily focused on the agency's operational locations, likely within the United States. Workforce implications are positive, ensuring that the agency's personnel are compensated correctly, supporting its mission.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to the long contract duration if not managed carefully.
Reliance on a single vendor for critical payroll functions could pose a risk if the vendor experiences operational disruptions.
Ensuring ongoing cost-effectiveness throughout the contract term requires diligent performance monitoring.

Positive Signals

Awarded through full and open competition, suggesting a competitive market for these services.
Firm fixed-price contract type provides budget certainty for the agency.
State Street Corporation is a large, established financial services provider with significant experience.

Sector Analysis

Payroll services fall within the broader professional, scientific, and technical services sector. This sector is characterized by a wide range of specialized services, including accounting, tax preparation, and payroll processing. The market for government payroll services is competitive, with both large financial institutions and specialized payroll providers vying for contracts. Government spending in this area is driven by the need for accurate, compliant, and efficient employee compensation management across various agencies. Comparable spending benchmarks would typically be assessed against other large federal agency payroll contracts.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). While this contract was awarded to a large firm, State Street Corporation, there may be opportunities for small businesses to participate as subcontractors. The extent of subcontracting to small businesses would depend on the prime contractor's strategy and the specific requirements of the payroll services. Analysis of subcontracting plans would be necessary to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Pension Benefit Guaranty Corporation's contracting officers and program managers. Accountability measures are embedded in the firm fixed-price contract terms, performance standards, and reporting requirements. Transparency is generally maintained through contract award databases and public reporting mechanisms. The Inspector General's office for the Department of Labor (which oversees PBGC) may have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Federal Payroll Processing Services
Financial Services Contracts
Administrative Support Services
Employee Compensation Management

Risk Flags

Long-term contract duration may require careful performance management.
Reliance on a single vendor for critical payroll functions.
Potential for cost increases not fully captured in fixed price if scope changes significantly.

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $51.6 million to STATE STREET CORPORATION. PRIMARY PAYING AGENT

Who is the contractor on this award?

The obligated recipient is STATE STREET CORPORATION.

Which agency awarded this contract?

Awarding agency: Pension Benefit Guaranty Corporation (Pension Benefit Guaranty Corporation).

What is the total obligated amount?

The obligated amount is $51.6 million.

What is the period of performance?

Start: 2017-10-01. End: 2023-03-31.

What is the historical spending pattern for payroll services by the Pension Benefit Guaranty Corporation?

Analyzing historical spending for payroll services by the Pension Benefit Guaranty Corporation (PBGC) requires accessing historical contract data. While this specific contract award is for $51.6 million, understanding the PBGC's spending trends over time would involve looking at previous contracts for similar services. This could reveal whether spending has been consistent, increasing, or decreasing, and whether it has been awarded through competitive or non-competitive means. For instance, if previous contracts were significantly smaller or awarded differently, it might indicate a change in service scope, vendor, or market conditions. Without access to PBGC's complete contract history for payroll services, a definitive trend analysis is not possible, but this $51.6M award suggests a substantial and ongoing requirement.

How does the per-employee cost of this contract compare to industry benchmarks?

Determining the per-employee cost requires knowing the number of employees serviced by this contract. Assuming the $51.6 million contract covers approximately 5.5 years (2007 days / 365 days/year ≈ 5.5 years), the annual cost is roughly $9.4 million ($51.6M / 5.5 years). If the PBGC has, for example, 1,000 employees, the annual per-employee cost would be approximately $9,400. Industry benchmarks for payroll processing services vary widely based on the complexity of services, number of employees, and specific features required. Large enterprise solutions can range from $5 to $50+ per employee per month, translating to $60 to $600+ per employee annually. If the PBGC's employee count is high, this contract's implied per-employee cost might be on the higher end, suggesting a comprehensive service package or potentially room for negotiation. A precise comparison necessitates the exact employee count and detailed service scope.

What is State Street Corporation's track record with federal payroll contracts?

State Street Corporation is a major global financial services company with extensive experience in handling large-scale financial operations, including payroll and payment processing. While specific details on their federal payroll contract history are not provided in this data snippet, their established presence in the financial sector suggests a capacity to manage complex government contracts. Federal agencies often engage large financial institutions for critical services due to their robust infrastructure, security protocols, and compliance expertise. A deeper dive into federal procurement databases (like FPDS or SAM.gov) would reveal the full scope of State Street's past federal awards, including performance ratings, contract types, and agencies served, to fully assess their track record specifically for payroll services.

What are the key performance indicators (KPIs) for this payroll services contract?

Key Performance Indicators (KPIs) for a federal payroll services contract typically focus on accuracy, timeliness, compliance, and security. For this contract with State Street Corporation, expected KPIs would likely include: 1. Payroll Accuracy Rate: Ensuring that all payments, deductions, and tax withholdings are calculated correctly, often aiming for a 99.9% or higher accuracy. 2. On-Time Payment Delivery: Guaranteeing that employees receive their pay on the scheduled dates without delays. 3. Tax Filing Compliance: Adhering to all federal, state, and local tax filing deadlines and regulations. 4. Data Security and Privacy: Maintaining strict confidentiality and security of sensitive employee payroll data, complying with relevant privacy laws. 5. Help Desk Responsiveness: Providing timely and effective support for employee payroll inquiries. The specific KPIs and their associated metrics would be detailed in the contract's Performance Work Statement (PWS).

What is the risk associated with a firm fixed-price contract for payroll services?

A firm fixed-price (FFP) contract for payroll services, while offering cost certainty to the government, carries certain risks. The primary risk for the contractor (State Street Corporation) is that if their costs for delivering the service increase unexpectedly (e.g., due to rising labor costs, technology upgrades, or unforeseen regulatory changes), they must absorb those increased costs, potentially reducing their profit margin. For the government, the risk is that the contractor might be incentivized to cut corners on service quality or innovation to maintain profitability if costs rise significantly, especially if performance monitoring is not robust. However, for a well-defined service like payroll processing, where the scope is relatively stable, FFP is often a suitable choice. The government's risk is mitigated by clearly defined service level agreements and performance standards within the contract.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Accounting, Tax Preparation, Bookkeeping, and Payroll Services › Payroll Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: PBGC01RP170022

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 LINCOLN ST, BOSTON, MA, 02111

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

Financial Breakdown

Contract Ceiling: $51,844,594

Exercised Options: $51,844,594

Current Obligation: $51,642,126

Actual Outlays: $17,161,084

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline