Treasury's $168M CADE 2 LTIS contract awarded to Deloitte Consulting LLP for IT support

Contract Overview

Contract Amount: $167,931,624 ($167.9M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of the Treasury

Start Date: 2018-02-01

End Date: 2020-11-30

Contract Duration: 1,033 days

Daily Burn Rate: $162.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: CUSTOMER ACCOUNT DATA ENGINE 2 (CADE 2) LONG TERM INTEGRATION SUPPORT (LTIS)

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $167.9 million to DELOITTE CONSULTING LLP for work described as: CUSTOMER ACCOUNT DATA ENGINE 2 (CADE 2) LONG TERM INTEGRATION SUPPORT (LTIS) Key points: 1. Contract provides long-term integration support for critical tax data systems. 2. Awarded under full and open competition, suggesting a robust bidding process. 3. Firm Fixed Price contract type aims to control costs and manage risk. 4. Duration of over 1000 days indicates a significant, ongoing need for services. 5. Contractor has a strong track record in federal IT services. 6. Focus on IT services aligns with modernization efforts within the IRS. 7. Geographic concentration in Maryland suggests a localized support team.

Value Assessment

Rating: good

The contract's value of approximately $168 million over its period of performance appears reasonable for long-term IT integration support for a major federal agency like the IRS. Benchmarking against similar large-scale IT support contracts within the federal government would provide a more precise value-for-money assessment. The firm fixed-price structure suggests that the government has negotiated a defined cost for the services, which can be advantageous if the scope is well-defined. However, without detailed breakdowns of the services provided and their associated costs, a definitive value assessment is challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of multiple bidders, though not explicitly stated in the provided data, is implied by this competition type. A competitive process generally leads to better price discovery and encourages contractors to offer their best value propositions to secure the award. The government likely benefited from a range of technical solutions and pricing strategies presented by potential offerors.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down costs through market forces and ensures the government receives competitive pricing for essential services.

Public Impact

Benefits the Internal Revenue Service by ensuring the continued operation and integration of its Customer Account Data Engine 2 (CADE 2) system. Delivers essential IT integration support services, crucial for maintaining taxpayer data integrity and processing capabilities. Primarily impacts federal IT operations and the workforce involved in managing and supporting complex financial systems. Geographic impact is concentrated in Maryland, where the contractor's support operations are likely based.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if integration requirements evolve significantly beyond the initial contract.
Reliance on a single contractor for critical IT infrastructure support could pose a risk if performance issues arise.
Long-term nature of the contract may limit opportunities for adopting newer technologies if not proactively managed.

Positive Signals

Awarded through full and open competition, suggesting a competitive and potentially cost-effective selection process.
Firm Fixed Price contract type provides cost certainty for the government.
Contractor's established presence and experience in federal IT services indicate a lower risk of performance failure.
The contract supports a critical IRS system, highlighting its importance and the likely focus on successful execution.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on computer-related services and integration support. The market for federal IT services is substantial, with agencies continually investing in modernizing their systems and ensuring data integrity. Contracts like this are essential for maintaining the operational backbone of agencies such as the IRS, which handle vast amounts of sensitive financial data. Comparable spending benchmarks would involve analyzing other large-scale IT integration and support contracts awarded to major IT service providers within the federal government.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific benefits to the small business ecosystem stemming from a small business set-aside. The prime contractor, Deloitte Consulting LLP, is a large business, and any subcontracting would likely be at their discretion to fulfill contract requirements.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program management office within the IRS or the Department of the Treasury. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver specified services within the agreed-upon budget. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IRS IT Modernization Programs
Federal Cloud Computing Strategy
Data Management and Analytics Services
Enterprise Resource Planning (ERP) Systems Support

Risk Flags

Long-term contract duration may require careful management to avoid technological obsolescence.
Reliance on a single vendor for critical integration support.
Potential for cost increases if contract scope expands significantly.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $167.9 million to DELOITTE CONSULTING LLP. CUSTOMER ACCOUNT DATA ENGINE 2 (CADE 2) LONG TERM INTEGRATION SUPPORT (LTIS)

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING 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 $167.9 million.

What is the period of performance?

Start: 2018-02-01. End: 2020-11-30.

What is the track record of Deloitte Consulting LLP in delivering similar IT integration support services to federal agencies?

Deloitte Consulting LLP has a well-established and extensive track record of providing IT integration, modernization, and support services to numerous federal agencies, including the Department of the Treasury and the IRS. Their experience spans a wide range of complex systems, from financial management and tax administration to defense and civilian agency operations. They are known for their capabilities in areas such as cloud migration, cybersecurity, data analytics, and enterprise resource planning (ERP) implementations. The company consistently wins large federal contracts, indicating a strong performance history and the ability to meet stringent government requirements. Their involvement in projects like CADE 2 LTIS is consistent with their strategic focus on supporting critical government IT infrastructure and digital transformation initiatives.

How does the value of this contract compare to similar IT integration support contracts awarded by the IRS or other large federal agencies?

The approximate value of $168 million for the CADE 2 LTIS contract, spread over its performance period, is substantial but falls within the range of large-scale IT support and integration contracts awarded by major federal agencies. For instance, the IRS itself has awarded multi-billion dollar contracts for broader IT modernization efforts. Other agencies like the Department of Defense or Health and Human Services frequently award contracts in the tens to hundreds of millions of dollars for specialized IT services, including system integration, maintenance, and long-term support. The specific nature of CADE 2, a critical component of tax administration, justifies a significant investment. A precise comparison would require analyzing contracts with similar scopes (e.g., long-term integration support for core financial or citizen-facing systems) and durations, considering factors like the number of users supported and the complexity of the systems involved.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract include potential technical challenges in integrating complex systems, the possibility of scope creep if requirements evolve, and performance issues from the contractor. Mitigation strategies are likely embedded within the contract's structure and oversight. The firm fixed-price nature helps mitigate cost overruns if the scope is well-defined. The use of full and open competition suggests a thorough vetting of potential contractors, reducing the risk of selecting an underqualified vendor. Ongoing oversight by the contracting officer and program management, along with defined performance metrics and reporting requirements, would further mitigate performance risks. The long duration also necessitates proactive contract management to ensure the technology remains relevant and efficient.

How effective is the CADE 2 LTIS contract in supporting the IRS's overall mission and modernization goals?

The CADE 2 LTIS contract is likely highly effective in supporting the IRS's mission by ensuring the stability, reliability, and interoperability of a critical component of its tax administration infrastructure. CADE 2 is fundamental to processing taxpayer accounts and financial data. Long-term integration support ensures that this system can adapt to evolving tax laws, security requirements, and technological advancements, thereby maintaining the integrity and efficiency of tax collection and processing. By providing sustained support, the contract directly contributes to the IRS's goals of modernizing its IT systems, improving taxpayer services, and enhancing operational efficiency. The success of this contract is crucial for the seamless functioning of the IRS's core operations.

What are the historical spending patterns for IT integration support services at the IRS, and how does this contract fit within them?

The IRS has historically allocated significant portions of its budget to IT services, including system modernization, maintenance, and integration support, reflecting the complexity and scale of its operations. Spending patterns often show a mix of large, long-term contracts for core systems like CADE, alongside smaller, more agile contracts for specific upgrades or new technology implementations. This CADE 2 LTIS contract, valued at approximately $168 million over its term, represents a substantial but likely consistent investment in maintaining and integrating a vital tax processing system. It fits within a pattern of the IRS prioritizing robust support for its foundational IT infrastructure to ensure operational continuity and compliance with evolving regulations and technological standards.

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte Financial Advisory Services LLP (UEI: 216754602)

Address: 1725 DUKE ST, ALEXANDRIA, VA, 22314

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

Financial Breakdown

Contract Ceiling: $363,404,325

Exercised Options: $167,931,624

Current Obligation: $167,931,624

Actual Outlays: $52,830,155

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $10,803,827

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00016

IDV Type: IDC

Timeline