Treasury's IRS awards $36.9M IT Financial Management contract to Maximus Federal Services

Contract Overview

Contract Amount: $36,933,985 ($36.9M)

Contractor: Maximus Federal Services, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2020-03-23

End Date: 2023-09-22

Contract Duration: 1,278 days

Daily Burn Rate: $28.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: IT

Official Description: IT FINANCIAL MANAGEMENT APPLICATIONS SUPPORT (ITFMAS)

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $36.9 million to MAXIMUS FEDERAL SERVICES, INC. for work described as: IT FINANCIAL MANAGEMENT APPLICATIONS SUPPORT (ITFMAS) Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract duration of 1278 days indicates a significant, long-term need for IT financial management support. 3. The primary service category is Computer Systems Design Services, aligning with IT infrastructure and application support. 4. The award was a delivery order, implying it was part of a larger existing contract vehicle. 5. The contract was not set aside for small businesses, potentially limiting direct opportunities for smaller firms. 6. The contract's value is substantial, reflecting the critical nature of financial management systems for the IRS.

Value Assessment

Rating: good

The contract value of $36.9 million over approximately 3.5 years for IT financial management applications support appears reasonable given the scope and duration. Benchmarking against similar large-scale IT support contracts for federal agencies suggests that pricing for specialized services like this can range significantly. Without specific details on the labor hours and rates, a precise value-for-money assessment is challenging, but the competitive award process provides some assurance of fair pricing.

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 number of bidders is not specified, but this procurement method generally fosters a competitive environment, which can lead to better pricing and service offerings for the government. The open competition suggests the IRS sought the best possible solution from the widest range of qualified contractors.

Taxpayer Impact: Taxpayers benefit from full and open competition as it typically drives down costs and encourages innovation, leading to more efficient use of public funds for essential services like IT financial management.

Public Impact

The IRS benefits directly through enhanced IT financial management applications support, crucial for its operational efficiency and fiscal responsibility. Federal employees within the IRS IT and finance departments will likely utilize the services provided, improving their ability to manage financial data and systems. The contract supports the core functions of the Internal Revenue Service, impacting its ability to collect taxes and manage government finances. The geographic impact is primarily national, as the IRS operates across the United States, though the direct service delivery may be concentrated in specific locations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the contractor becomes deeply integrated into IRS systems without clear exit strategies.
Risk of cost overruns if the scope of work expands beyond initial projections without adequate oversight.
Dependence on a single contractor for critical IT financial management functions could pose a risk if performance falters.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
The contract duration suggests a stable, long-term partnership for critical IT support.
Maximus Federal Services is a known entity in government contracting, implying a level of established capability.

Sector Analysis

The IT financial management applications support sector is a critical component of government operations, encompassing software development, system integration, and ongoing maintenance for financial systems. This contract falls within the broader IT services market, which is characterized by intense competition and rapid technological advancements. The size of this specific contract, at $36.9 million, is significant but represents a fraction of the overall federal IT spending, which runs into billions annually. Comparable contracts often involve custom software development, cloud migration, and cybersecurity enhancements for financial systems.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses in the provided data. This means that prime opportunities were likely pursued by larger, established IT service providers. While there's no direct set-aside, the prime contractor may still engage small businesses as subcontractors, but this is not explicitly mandated by the award details. The impact on the small business ecosystem is neutral to potentially limited for direct prime contracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. Accountability measures are embedded in the contract terms, including performance standards, delivery schedules, and payment milestones. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General for the Department of the Treasury may have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Federal IT Modernization Programs
IRS Financial Systems Modernization
Government Financial Management Systems
IT Services for Federal Agencies
Computer Systems Design Services Contracts

Risk Flags

Potential for vendor lock-in
Cybersecurity risks associated with financial data
Dependence on contractor performance
Risk of scope creep impacting budget

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $36.9 million to MAXIMUS FEDERAL SERVICES, INC.. IT FINANCIAL MANAGEMENT APPLICATIONS SUPPORT (ITFMAS)

Who is the contractor on this award?

The obligated recipient is MAXIMUS FEDERAL SERVICES, 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 $36.9 million.

What is the period of performance?

Start: 2020-03-23. End: 2023-09-22.

What is the track record of Maximus Federal Services in delivering similar IT financial management support to federal agencies?

Maximus Federal Services has a substantial history of providing IT and administrative support services to various U.S. federal agencies, including the IRS. Their experience often encompasses large-scale IT system development, modernization, and operational support. While specific details on past ITFMAS-like contracts are not provided here, their broader portfolio suggests a capacity to handle complex government IT projects. Performance reviews and past performance questionnaires from previous contracts would offer a more granular view of their success in delivering on time, within budget, and meeting technical requirements for financial management systems.

How does the awarded value of $36.9 million compare to similar IT financial management support contracts for federal agencies of the IRS's size?

The $36.9 million award for IT Financial Management Applications Support (ITFMAS) over approximately 3.5 years represents a significant investment. Benchmarking this against similar contracts is complex without detailed scope and labor rate information. However, large federal agencies like the IRS often award multi-million dollar contracts for specialized IT support. Contracts for enterprise resource planning (ERP) system support, financial system modernization, or comprehensive IT infrastructure management can range from tens to hundreds of millions of dollars over their lifecycle. This contract appears to be within the expected range for a critical IT function at an agency of the IRS's scale, especially considering the competitive award.

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

Key risks include potential scope creep, contractor performance issues, and cybersecurity vulnerabilities. Scope creep could lead to cost overruns if not managed through strict change control processes. Performance issues might arise if the contractor fails to meet service level agreements (SLAs), requiring robust monitoring and corrective action plans. Cybersecurity is paramount, given the sensitive financial data; mitigation involves stringent security protocols, regular audits, and compliance with federal cybersecurity mandates (e.g., NIST standards). The IRS likely has defined performance metrics, regular progress reviews, and contingency plans to address these risks.

How effective is the chosen procurement method (full and open competition) in ensuring value for money for this type of IT service?

Full and open competition is generally considered the most effective method for ensuring value for money, especially for complex IT services like financial management applications support. It allows the government to solicit proposals from the widest possible pool of qualified vendors, fostering robust competition that can drive down prices and encourage innovative solutions. By requiring all responsible sources to compete, the IRS increases its chances of securing the best technical solution at the most competitive price. While it requires more upfront effort in solicitation and evaluation, the long-term benefits in terms of cost savings and quality are typically substantial.

What is the historical spending pattern for IT financial management support at the IRS, and how does this contract fit within that trend?

Historical spending data for IT financial management support at the IRS would reveal trends in modernization efforts, system maintenance costs, and outsourcing strategies. This $36.9 million contract, awarded in March 2020 and ending in September 2023, represents a specific investment during that period. Understanding prior contracts for similar services would indicate whether this award is an increase, decrease, or continuation of previous spending levels. It's common for agencies like the IRS to have ongoing needs for financial system support, often through a series of competitive contracts or task orders against indefinite-delivery/indefinite-quantity (IDIQ) vehicles, reflecting a consistent but evolving requirement.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 1600 TYSONS BLVD STE 300, MC LEAN, VA, 22102

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $52,004,760

Exercised Options: $49,502,693

Current Obligation: $36,933,985

Actual Outlays: $36,933,985

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47QTCK18D0044

IDV Type: GWAC

Timeline