Treasury's IRS Spends $60M on Cisco Network Gear, Replacing End-of-Life Equipment
Contract Overview
Contract Amount: $60,060,861 ($60.1M)
Contractor: FCN, Inc.
Awarding Agency: Department of the Treasury
Start Date: 2019-09-30
End Date: 2023-09-07
Contract Duration: 1,438 days
Daily Burn Rate: $41.8K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 6
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: PURCHASE OF CISCO SWITCHES, ROUTERS, NETWORK TOOLS AND ASSOCIATED SOFTWARE LICENSES, MAINTENANCES TO SUPPORT END OF LIFE EQUIPMENT, AND REPLACEMENT WITH NEW TECHNOLOGY
Place of Performance
Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20852
State: Maryland Government Spending
Plain-Language Summary
Department of the Treasury obligated $60.1 million to FCN, INC. for work described as: PURCHASE OF CISCO SWITCHES, ROUTERS, NETWORK TOOLS AND ASSOCIATED SOFTWARE LICENSES, MAINTENANCES TO SUPPORT END OF LIFE EQUIPMENT, AND REPLACEMENT WITH NEW TECHNOLOGY Key points: 1. Significant investment in network infrastructure upgrades for the IRS. 2. Competition method suggests potential for price discovery, but details are limited. 3. Reliance on a single vendor (Cisco) for hardware and software raises potential lock-in risks. 4. The contract supports critical IT modernization efforts within the agency.
Value Assessment
Rating: fair
The $60M price tag for Cisco network equipment and licenses appears substantial. Benchmarking against similar large-scale network refresh contracts is difficult without detailed component breakdowns, but the duration and scope suggest a significant investment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating a limited competition approach. This method may not have achieved the best possible pricing compared to a truly open solicitation, potentially impacting price discovery.
Taxpayer Impact: Taxpayers bear the cost of this network upgrade, which is essential for IRS operations but requires careful scrutiny to ensure value for money.
Public Impact
Ensures IRS can maintain and upgrade its critical network infrastructure. Supports the agency's ability to process tax information securely and efficiently. Potential for improved network performance and reliability for IRS employees. Addresses risks associated with using outdated and unsupported network hardware.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Vendor lock-in risk with Cisco hardware and software.
- Limited competition may have inflated costs.
- Long contract duration could lead to price increases over time.
Positive Signals
- Addresses end-of-life equipment concerns.
- Supports technology modernization.
- Firm Fixed Price contract provides cost certainty.
Sector Analysis
This contract falls within the IT services sector, specifically focusing on network hardware and software. Spending benchmarks for similar network infrastructure upgrades vary widely based on agency size and complexity, but $60M represents a considerable investment for a single agency's network refresh.
Small Business Impact
The data indicates this contract did not involve small businesses, as neither 'sb' nor 'ss' flags are set to true. The focus appears to be on established IT vendors capable of fulfilling large-scale network infrastructure requirements.
Oversight & Accountability
The contract was awarded as a delivery order under a larger agreement, suggesting some level of pre-existing oversight. However, the limited competition aspect warrants closer examination by oversight bodies to ensure the pricing and vendor selection were justified.
Related Government Programs
- Other Computer Related Services
- Department of the Treasury Contracting
- Internal Revenue Service Programs
Risk Flags
- Potential for vendor lock-in.
- Limited competition may have resulted in suboptimal pricing.
- Lack of transparency regarding the justification for excluding sources.
- Long contract duration increases exposure to price escalations.
- Reliance on a single vendor for critical infrastructure.
Tags
other-computer-related-services, department-of-the-treasury, md, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of the Treasury awarded $60.1 million to FCN, INC.. PURCHASE OF CISCO SWITCHES, ROUTERS, NETWORK TOOLS AND ASSOCIATED SOFTWARE LICENSES, MAINTENANCES TO SUPPORT END OF LIFE EQUIPMENT, AND REPLACEMENT WITH NEW TECHNOLOGY
Who is the contractor on this award?
The obligated recipient is FCN, 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 $60.1 million.
What is the period of performance?
Start: 2019-09-30. End: 2023-09-07.
What was the specific justification for excluding other sources, and how did this impact the final price?
The exclusion of sources suggests a belief that only certain vendors could meet the technical requirements or that a limited competition was deemed more efficient. However, this approach inherently restricts price discovery. Without a detailed justification, it's difficult to assess if the government received the best possible value or if alternative solutions from other vendors were overlooked, potentially leading to a higher cost for taxpayers.
What are the long-term cost implications of relying heavily on Cisco for both hardware and software licenses and maintenance?
Long-term reliance on a single vendor like Cisco can lead to significant vendor lock-in. This means the IRS may face escalating costs for software renewals, maintenance, and future upgrades, as competitive alternatives become harder to integrate. The agency should have a strategy to mitigate these rising costs, perhaps through periodic re-evaluation of the market or negotiating multi-year discounts.
How effectively does this network upgrade address the IRS's future technological needs beyond simply replacing end-of-life equipment?
While the primary driver is replacing end-of-life equipment, the effectiveness of this upgrade hinges on whether the new Cisco technology aligns with the IRS's long-term IT roadmap. Simply replacing old gear with new doesn't guarantee future readiness. The agency needs to ensure the chosen solutions support scalability, emerging cybersecurity threats, cloud integration, and advanced data analytics capabilities required for modern tax administration.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services
Product/Service Code: COMM/DETECT/COHERENT RADIATION
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 6
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 12501 ARDENNES AVE STE 101, ROCKVILLE, MD, 20852
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business
Financial Breakdown
Contract Ceiling: $101,509,378
Exercised Options: $88,759,958
Current Obligation: $60,060,861
Actual Outlays: $60,060,861
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Parent Contract
Parent Award PIID: NNG15SC71B
IDV Type: GWAC
Timeline
Start Date: 2019-09-30
Current End Date: 2023-09-07
Potential End Date: 2024-09-29 09:48:58
Last Modified: 2025-05-27
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