IRS receives $2.1M in consulting for intercompany pricing analysis, awarded non-competitively

Contract Overview

Contract Amount: $2,141,959 ($2.1M)

Contractor: RON Barone Financial Consulting, LLC

Awarding Agency: Department of the Treasury

Start Date: 2020-09-28

End Date: 2025-09-27

Contract Duration: 1,825 days

Daily Burn Rate: $1.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: EXPERT TO ASSIST THE INTERNAL REVENUE SERVICE (IRS) IN UNDERSTANDING AND EVALUATING THE FUNCTIONS, RISKS AND INTERCOMPANY PRICING RELEVANT TO THE NOTES AND GUARANTEE ARRANGEMENTS

Place of Performance

Location: FERNANDINA BEACH, NASSAU County, FLORIDA, 32034

State: Florida Government Spending

Plain-Language Summary

Department of the Treasury obligated $2.1 million to RON BARONE FINANCIAL CONSULTING, LLC for work described as: EXPERT TO ASSIST THE INTERNAL REVENUE SERVICE (IRS) IN UNDERSTANDING AND EVALUATING THE FUNCTIONS, RISKS AND INTERCOMPANY PRICING RELEVANT TO THE NOTES AND GUARANTEE ARRANGEMENTS Key points: 1. Consulting services focus on complex financial arrangements, including notes and guarantees. 2. Contract awarded to a single vendor, raising questions about competition and potential cost savings. 3. The duration of the contract (5 years) suggests a long-term need for specialized financial expertise. 4. Fixed-price contract type offers cost certainty but may limit flexibility for evolving needs. 5. Geographic location of the contractor (Florida) may not be directly relevant to the IRS's national scope. 6. The specific nature of 'intercompany pricing' suggests a focus on transfer pricing issues.

Value Assessment

Rating: fair

The contract value of $2.14 million over five years for specialized financial consulting appears reasonable given the niche expertise required. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or determine if the government received the best possible value. The fixed-price nature provides cost predictability, but the absence of competition prevents a direct comparison of cost-effectiveness with other potential providers.

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 among multiple vendors. This approach is typically used when a specific contractor possesses unique qualifications or capabilities essential for the requirement, or in situations where only one vendor can fulfill the need. The lack of competition means that the IRS did not benefit from the price discovery and potential cost reductions that typically arise from a competitive bidding environment.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure, which could have driven down the price. The government did not leverage market forces to ensure the most economical outcome for this service.

Public Impact

The Internal Revenue Service (IRS) is the primary beneficiary, receiving expert assistance. Services delivered include analysis of functions, risks, and intercompany pricing related to financial arrangements. The geographic impact is national, as the IRS operates nationwide. Workforce implications are minimal, as this is a consulting service rather than a direct hiring action.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to suboptimal pricing.
Sole-source award raises concerns about the thoroughness of market research.
Contract duration might exceed the actual need for specialized expertise.

Positive Signals

Contract addresses a complex and specialized area of financial analysis.
Fixed-price contract provides budget certainty for the IRS.
Contractor is expected to provide expert assistance to a critical government function.

Sector Analysis

This contract falls within the 'Other Management Consulting Services' category, a broad sector encompassing advisory services across various business and government functions. The market for such services is highly fragmented, with numerous firms offering specialized expertise. The IRS's need for assistance with intercompany pricing, particularly concerning notes and guarantees, indicates a focus on complex financial and tax advisory services, a niche within the broader consulting landscape. Benchmarking spending in this specific sub-sector is challenging due to the proprietary nature of consulting engagements.

Small Business Impact

This contract was not awarded to a small business, nor does it appear to have specific provisions for small business set-asides or subcontracting. The award to Ron Barone Financial Consulting, LLC, suggests a focus on specialized expertise that may be more readily available from larger or more established firms in this niche consulting area. The absence of small business participation implies limited direct benefit to the small business ecosystem from this particular contract.

Oversight & Accountability

Oversight for this contract would typically reside with the contracting officer and program managers within the IRS. As a sole-source award, there may be heightened scrutiny regarding the justification and necessity of the services. Transparency is limited due to the non-competitive nature, but contract details should be publicly available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IRS Taxpayer Services
IRS Financial Management
Treasury Department Financial Advisory Services
Federal Tax Consulting Services
Intercompany Transaction Analysis

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to non-competitive nature.
Limited transparency in vendor selection process.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $2.1 million to RON BARONE FINANCIAL CONSULTING, LLC. EXPERT TO ASSIST THE INTERNAL REVENUE SERVICE (IRS) IN UNDERSTANDING AND EVALUATING THE FUNCTIONS, RISKS AND INTERCOMPANY PRICING RELEVANT TO THE NOTES AND GUARANTEE ARRANGEMENTS

Who is the contractor on this award?

The obligated recipient is RON BARONE FINANCIAL CONSULTING, LLC.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $2.1 million.

What is the period of performance?

Start: 2020-09-28. End: 2025-09-27.

What specific expertise does Ron Barone Financial Consulting, LLC possess that justified a sole-source award for intercompany pricing analysis?

The provided data does not detail the specific expertise of Ron Barone Financial Consulting, LLC. However, sole-source awards are typically justified when the contractor possesses unique qualifications, specialized knowledge, or proprietary technology essential for the requirement that cannot be met by other sources. For intercompany pricing, this could involve deep expertise in international tax law, complex financial modeling, specific industry knowledge relevant to the IRS's focus, and a proven track record in analyzing intricate financial instruments like notes and guarantees. The IRS would have had to document why no other firm could provide these specific capabilities to justify the non-competitive award.

How does the $2.14 million contract value compare to similar IRS or Treasury consulting engagements for financial analysis?

Benchmarking this contract's value is challenging without access to a broader dataset of comparable IRS or Treasury consulting engagements specifically focused on intercompany pricing analysis of notes and guarantees. Consulting fees can vary significantly based on the complexity of the issue, the duration of the engagement, the level of expertise required, and the specific deliverables. Given that this is a sole-source award over five years, the $2.14 million ($428,000 annually) might be considered reasonable if the scope is extensive and requires highly specialized, niche expertise. However, a competitive process would have provided a clearer indication of fair market value.

What are the primary risks associated with a sole-source award for critical financial consulting services?

The primary risks associated with a sole-source award include a lack of price competition, which can lead to paying a higher price than might be achieved through a competitive process. There's also a potential for reduced innovation and service quality, as the contractor faces less pressure to outperform competitors. Furthermore, it raises concerns about whether the government adequately explored all available sources and whether the chosen contractor is truly the only viable option. This can also create a perception of favoritism or a lack of transparency, potentially undermining public trust.

What specific functions, risks, and intercompany pricing issues are likely being addressed by this contract?

This contract likely addresses the IRS's need to understand and evaluate the financial implications of complex intercompany transactions, particularly those involving loans (notes) and financial assurances (guarantees) between related entities within multinational corporations. The 'functions' likely involve mapping out how these entities operate and generate revenue. 'Risks' could pertain to financial stability, tax evasion, or improper profit shifting. 'Intercompany pricing' specifically refers to the valuation of goods, services, and intangible assets transferred between related companies, ensuring these prices reflect arm's-length market rates to prevent artificial profit shifting and ensure accurate tax assessments.

What is the historical spending pattern for 'Other Management Consulting Services' at the IRS or Treasury?

Historical spending patterns for 'Other Management Consulting Services' at the IRS or Treasury are not detailed in the provided data. However, federal agencies frequently engage consulting firms for specialized expertise that may not be available in-house or for short-term project needs. Spending in this category can fluctuate based on agency priorities, budget allocations, and the complexity of challenges faced. Without specific historical data, it's difficult to determine if this $2.14 million contract represents a significant increase or deviation from typical spending levels for such services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Other Management Consulting Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2735 OCEAN OAKS DR N, FERNANDINA BEACH, FL, 32034

Business Categories: Category Business, Limited Liability Corporation, Small Business, Sole Proprietorship, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,141,959

Exercised Options: $2,141,959

Current Obligation: $2,141,959

Actual Outlays: $2,057,307

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline