Treasury's $63.7M CADE 2 contract for application development awarded to Accenture LLP

Contract Overview

Contract Amount: $63,709,922 ($63.7M)

Contractor: Accenture LLP

Awarding Agency: Department of the Treasury

Start Date: 2017-12-22

End Date: 2020-12-21

Contract Duration: 1,095 days

Daily Burn Rate: $58.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: APPLICATIONS DEVELOPMENT (AD) INTEGRATED CUSTOMER ACCOUNT DATA ENGINE 2 (CADE 2) DEVELOPMENT TASK ORDER

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $63.7 million to ACCENTURE LLP for work described as: APPLICATIONS DEVELOPMENT (AD) INTEGRATED CUSTOMER ACCOUNT DATA ENGINE 2 (CADE 2) DEVELOPMENT TASK ORDER Key points: 1. The contract focuses on developing an integrated customer account data engine, crucial for IRS operations. 2. Awarded under full and open competition, suggesting a broad market search for qualified vendors. 3. The firm-fixed-price contract type aims to control costs by establishing a set price for services. 4. The duration of the task order is three years, indicating a significant, multi-year development effort. 5. The contract's value of over $63 million warrants scrutiny for cost-effectiveness and performance. 6. The North American Industry Classification System (NAICS) code 541519 points to specialized computer services.

Value Assessment

Rating: fair

The contract value of $63.7 million for a three-year application development task order appears substantial. Benchmarking this against similar large-scale IT development projects within the federal government is challenging without more granular data on scope and deliverables. However, the firm-fixed-price structure suggests an attempt to manage costs upfront. The absence of specific performance metrics or cost-per-unit data makes a definitive value-for-money assessment difficult, but the scale of the investment necessitates close monitoring of outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the IRS sought proposals from all responsible sources. The data shows two bids were received, which is a relatively low number for a large federal contract. While full and open competition is generally preferred, a low number of bidders could suggest potential barriers to entry for smaller firms or a highly specialized market. This limited competition might impact price discovery and potentially lead to less aggressive pricing than if more vendors had participated.

Taxpayer Impact: A low number of bidders in a full and open competition may mean taxpayers did not benefit from the most competitive pricing possible. This could translate to higher overall costs for the government.

Public Impact

Taxpayers will benefit from improved customer account data management, potentially leading to more efficient tax processing and services. The contract delivers critical application development services for the IRS's core IT infrastructure. The primary geographic impact is within the IRS's operational centers, likely supporting national taxpayer services. The contract supports a specialized IT workforce, requiring skilled software developers and project managers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only two bids received could indicate potential market concentration or barriers to entry.
The substantial contract value requires diligent oversight to ensure funds are used effectively and efficiently.
Assessing the true value for money is difficult without detailed performance metrics and cost breakdowns.

Positive Signals

Awarded under full and open competition, adhering to best practices for government procurement.
The firm-fixed-price contract type provides cost certainty for the government.
The contract addresses a critical need for integrated customer account data, essential for IRS functions.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on application development and data management. The federal IT services market is vast, with significant spending allocated to software development, system integration, and data analytics. The IRS, as a major federal agency, consistently invests in modernizing its IT infrastructure to handle vast amounts of taxpayer data and improve service delivery. This contract for the CADE 2 system is likely part of a larger modernization effort, aiming to create a unified view of taxpayer information. Comparable spending benchmarks would typically involve looking at other large-scale data engine or CRM development projects within civilian agencies.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and there is no specific mention of small business subcontracting goals. This suggests that the primary awardee, Accenture LLP, is a large business. Consequently, the direct impact on small businesses through this specific contract may be limited unless Accenture actively engages them as subcontractors. The absence of set-aside provisions means that opportunities for small businesses to directly compete for this work were likely minimal.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. As a task order under a larger contract vehicle, it likely falls under existing agency oversight frameworks. Transparency is generally facilitated through contract award databases like FPDS. Accountability measures would be tied to the firm-fixed-price contract terms and performance expectations. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise.

Related Government Programs

IRS Modernization Programs
Federal Civilian IT Development Contracts
Customer Relationship Management (CRM) Systems
Data Warehousing and Analytics Solutions
Application Development Services

Risk Flags

Low Bidder Count
Potential for Scope Creep
Value for Money Assessment Difficulty

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $63.7 million to ACCENTURE LLP. APPLICATIONS DEVELOPMENT (AD) INTEGRATED CUSTOMER ACCOUNT DATA ENGINE 2 (CADE 2) DEVELOPMENT TASK ORDER

Who is the contractor on this award?

The obligated recipient is ACCENTURE LLP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $63.7 million.

What is the period of performance?

Start: 2017-12-22. End: 2020-12-21.

What is the specific functionality and intended impact of the CADE 2 system on IRS operations?

The Applications Development (AD) Integrated Customer Account Data Engine 2 (CADE 2) Development Task Order aims to enhance the Internal Revenue Service's (IRS) ability to manage and utilize taxpayer data. The CADE 2 system is designed to create a more integrated and comprehensive view of customer account information. This is crucial for improving various IRS functions, including tax processing, compliance, taxpayer services, and fraud detection. By consolidating disparate data sources into a unified engine, the IRS can achieve greater data accuracy, reduce redundancy, and enable more sophisticated data analysis. The intended impact is a more efficient, effective, and modern tax administration system that can better serve taxpayers and enforce tax laws.

How does the $63.7 million cost compare to similar large-scale IT development projects within the federal government?

Comparing the $63.7 million cost for the CADE 2 development task order requires context regarding the scope, complexity, and duration of similar federal IT projects. Large-scale application development and data integration initiatives within agencies like the IRS, Social Security Administration, or Department of Defense can range from tens of millions to hundreds of millions of dollars over several years. Factors influencing cost include the number of users, data volume, system integration requirements, cybersecurity mandates, and the level of customization needed. While $63.7 million over three years is a significant investment, it may be within the expected range for a critical data infrastructure project of this nature. A more precise comparison would necessitate analyzing the specific deliverables, technical architecture, and performance metrics of comparable projects.

What are the potential risks associated with a firm-fixed-price contract for complex application development?

Firm-fixed-price (FFP) contracts are generally preferred for their cost certainty, but they carry specific risks, especially in complex application development. A primary risk is that the contractor may cut corners on quality or scope to maintain profitability if unforeseen technical challenges arise or if initial cost estimates were too low. Conversely, if the government's requirements change significantly, scope creep can lead to costly change orders, negating the FFP benefit. For the CADE 2 project, risks include potential underestimation of development complexity, integration challenges with legacy systems, and the possibility that the final product may not fully meet evolving IRS needs due to the fixed nature of the agreement. Effective contract management and clear initial requirements are crucial to mitigate these risks.

Given only two bids were received, what does this suggest about the competition for this specific IT service requirement?

The receipt of only two bids for this $63.7 million task order, despite being awarded under full and open competition, suggests several possibilities regarding the market dynamics for this specific IT service. It could indicate that the requirement is highly specialized, requiring unique technical expertise or clearances that limit the pool of qualified bidders. Alternatively, the perceived complexity, duration, or specific requirements of the solicitation might have deterred other potential bidders. It's also possible that the contracting process itself, or the timing of the solicitation, may have influenced participation. A low number of bidders, even in a full and open competition, can sometimes lead to less competitive pricing and potentially limit the government's options, raising questions about whether the best possible value was achieved.

What is Accenture LLP's track record with large federal IT development contracts, particularly for civilian agencies?

Accenture LLP is a major global professional services company with a significant presence in the federal IT contracting space. They have a well-established track record of delivering large-scale IT solutions, system integrations, and digital transformation services across various federal agencies, including civilian departments. Historically, Accenture has been awarded numerous large contracts for application development, cloud migration, data analytics, and cybersecurity. Their experience often involves complex projects requiring deep technical expertise and program management capabilities. While specific performance details for every contract are not publicly available, their continued success in winning substantial federal contracts suggests a generally positive performance history and capability in meeting government requirements, though like any large contractor, they may have faced challenges on specific projects.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Accenture Public Limited Company

Address: 11951 FREEDOM DR STE 1000, RESTON, VA, 20190

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $78,907,299

Exercised Options: $67,267,395

Current Obligation: $63,709,922

Actual Outlays: $35,911,635

Subaward Activity

Number of Subawards: 96

Total Subaward Amount: $42,961,149

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00007

IDV Type: IDC

Timeline