Treasury's $15.26M contract for digitalization services awarded to 22nd Century Technologies, Inc

Contract Overview

Contract Amount: $15,259,080 ($15.3M)

Contractor: 22ND Century Technologies, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2025-09-15

End Date: 2026-09-14

Contract Duration: 364 days

Daily Burn Rate: $41.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DIGITALIZATION-AS-A-SERVICE, DIGITALIZING PAPER TAX AND INFORMATION RETURNS.

Place of Performance

Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $15.3 million to 22ND CENTURY TECHNOLOGIES, INC. for work described as: DIGITALIZATION-AS-A-SERVICE, DIGITALIZING PAPER TAX AND INFORMATION RETURNS. Key points: 1. Value for money assessed through benchmarking against similar IT service contracts. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include contract duration and the specific nature of IT service delivery. 4. Performance context relies on the successful digitalization of tax and information returns. 5. Sector positioning within IT services, specifically computer systems design. 6. The contract type is a firm-fixed-price delivery order, providing cost certainty.

Value Assessment

Rating: good

The contract's firm-fixed-price nature provides cost certainty for the government. Benchmarking against similar IT service contracts for digitalization efforts will be crucial to assess value for money. Given the $15.26 million ceiling and a 364-day duration, the per-period cost appears reasonable, but a detailed analysis of the scope of work and deliverables is needed for a definitive value assessment. Comparison to historical IRS digitalization projects could offer further insights.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 8 bids suggests a healthy level of interest and competition for this requirement. This broad competition is generally expected to lead to more favorable pricing and innovative solutions for the government.

Taxpayer Impact: A full and open competition ensures that taxpayer dollars are likely being used efficiently by fostering a competitive environment that drives down costs and improves service quality.

Public Impact

Taxpayers benefit from potentially more efficient and accurate processing of tax and information returns through digitalization. The Internal Revenue Service (IRS) will receive services aimed at modernizing its data management systems. The geographic impact is primarily national, supporting the IRS's nationwide operations. Workforce implications may involve the need for specialized IT skills within the IRS or reliance on contractor expertise for system implementation and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep in digitalization projects if not clearly defined.
Dependence on contractor expertise for successful system implementation and data integrity.
Ensuring data security and privacy during the digitalization process is paramount.

Positive Signals

Firm-fixed-price contract provides cost predictability.
Full and open competition suggests a robust market offering competitive solutions.
Award to a single vendor for a defined period simplifies management.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer systems design and related services. The market for digitalization and document management solutions is substantial, driven by government mandates for efficiency and modernization. Comparable spending benchmarks would involve analyzing other federal contracts for similar IT modernization and data processing services, particularly within agencies handling large volumes of sensitive information like the IRS.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem appears limited unless the prime contractor voluntarily engages small businesses for subcontracting opportunities. Further investigation into the contractor's subcontracting plan would be necessary to fully assess the impact.

Oversight & Accountability

Oversight will likely be managed by the contracting officer's representative (COR) within the IRS, responsible for monitoring performance, deliverables, and compliance with contract terms. The firm-fixed-price nature of the contract provides a degree of accountability by linking payment to successful completion of defined tasks. Transparency is facilitated through contract award databases, though detailed performance metrics may not be publicly available.

Related Government Programs

IRS Taxpayer Data Modernization Initiatives
Federal Government IT Modernization Programs
Digital Transformation Services for Government Agencies
Information Management and Archiving Systems

Risk Flags

Cybersecurity Risk
Data Integrity Risk
Project Schedule Risk
Scope Creep Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $15.3 million to 22ND CENTURY TECHNOLOGIES, INC.. DIGITALIZATION-AS-A-SERVICE, DIGITALIZING PAPER TAX AND INFORMATION RETURNS.

Who is the contractor on this award?

The obligated recipient is 22ND CENTURY TECHNOLOGIES, 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 $15.3 million.

What is the period of performance?

Start: 2025-09-15. End: 2026-09-14.

What is the track record of 22nd Century Technologies, Inc. in delivering similar digitalization or IT modernization services to federal agencies?

A review of federal procurement data indicates that 22nd Century Technologies, Inc. has a history of receiving federal contracts, including those related to IT services. To assess their track record for this specific digitalization contract, a deeper dive into their past performance on similar projects is necessary. This would involve examining past contract performance evaluations (e.g., CPARS), the complexity and scale of previous digitalization efforts they managed, and client satisfaction feedback. Understanding their experience with large-scale data conversion, information systems integration, and adherence to government security protocols would be key indicators of their capability to successfully execute this IRS contract.

How does the awarded price of $15.26 million compare to market rates for similar digitalization services?

Benchmarking the $15.26 million contract value requires comparing it against the market rates for similar digitalization services, considering the contract's duration (364 days) and scope. This involves analyzing data from other federal and commercial contracts for IT systems design, data conversion, and information management. Factors such as the volume of documents to be digitized, the complexity of the source material (e.g., handwritten vs. typed forms), required data extraction, and integration with existing IRS systems are critical. Without specific details on these factors, a precise comparison is difficult, but the number of bids (8) suggests the price was competitive within the market's perception of fair value for the anticipated services.

What are the primary risks associated with this contract, and what mitigation strategies are in place?

Key risks for this digitalization contract include potential technical challenges in converting legacy paper records to digital formats, ensuring data accuracy and integrity throughout the process, and maintaining robust cybersecurity measures to protect sensitive taxpayer information. There's also a risk of project delays if the scope is not well-managed or if contractor performance falters. Mitigation strategies likely involve clearly defined performance standards, regular progress reviews by the COR, stringent data validation protocols, and adherence to IRS and federal cybersecurity guidelines. The firm-fixed-price contract structure incentivizes the contractor to manage costs and timelines effectively to avoid financial penalties.

How effective is the digitalization of tax and information returns expected to be in improving IRS operational efficiency?

The digitalization of tax and information returns is expected to significantly improve the IRS's operational efficiency by enabling faster data retrieval, reducing physical storage needs, enhancing search capabilities, and facilitating automated processing. This modernization can lead to quicker response times for taxpayer inquiries, more streamlined audits, and improved data analytics for tax policy and enforcement. The success of this improvement hinges on the quality of the digitalization process, the usability of the new digital systems, and the IRS's ability to integrate these systems into their existing workflows. Effective implementation should reduce manual handling of documents and associated errors.

What has been the historical spending trend for similar IT modernization and digitalization contracts at the IRS or Treasury?

Historical spending on IT modernization and digitalization at the IRS and Treasury has generally been substantial, reflecting the agencies' critical need to update aging infrastructure and improve data management capabilities. Over the past decade, there has been a consistent trend towards increasing investment in digital transformation initiatives across federal agencies, driven by mandates for efficiency, security, and improved citizen services. Specific spending on digitalization projects for tax-related documents would likely show fluctuations based on strategic priorities and available funding cycles. Analyzing past IRS budgets and contract awards for similar services would provide a clearer picture of the scale and frequency of such investments.

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 › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 2023H2-25-Q-00048

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8251 GREENSBORO DR, MCLEAN, VA, 22102

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $664,081,703

Exercised Options: $60,454,330

Current Obligation: $15,259,080

Actual Outlays: $106,306

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47QTCA24D002S

IDV Type: FSS

Timeline