Treasury's IRS awards $4.3M for IBM mainframe support, raising value-for-money questions

Contract Overview

Contract Amount: $4,313,539 ($4.3M)

Contractor: Project Services Group, LLC

Awarding Agency: Department of the Treasury

Start Date: 2020-09-17

End Date: 2023-09-16

Contract Duration: 1,094 days

Daily Burn Rate: $3.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IBM MAINFRAME SERVICE SUPPORT - COVID19

Place of Performance

Location: SUWANEE, GWINNETT County, GEORGIA, 30024

State: Georgia Government Spending

Plain-Language Summary

Department of the Treasury obligated $4.3 million to PROJECT SERVICES GROUP, LLC for work described as: IBM MAINFRAME SERVICE SUPPORT - COVID19 Key points: 1. Contract awarded to Project Services Group, LLC for critical IT infrastructure support. 2. Duration of over three years suggests a need for sustained, specialized expertise. 3. The contract's fixed-price nature aims to control costs, but requires careful monitoring of scope. 4. Competition was limited after exclusion of sources, potentially impacting price discovery. 5. The service category, Computer Systems Design Services, is broad and requires detailed performance metrics. 6. Geographic location in Georgia may indicate specific operational needs or contractor presence.

Value Assessment

Rating: fair

Benchmarking the value for this specific IBM mainframe support contract is challenging without more granular data on the services provided and the specific IBM systems supported. The $4.3 million award over three years averages to approximately $1.4 million annually. This figure needs to be compared against similar support contracts for legacy mainframe systems, which can vary significantly based on the complexity of the hardware and software involved, as well as the level of support required (e.g., 24/7 critical support vs. standard maintenance). The firm fixed-price contract type suggests an attempt to cap costs, but the true value will depend on the efficiency and effectiveness of the contractor's service delivery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while a competitive process was intended, certain sources were excluded. The specific reasons for exclusion are not detailed here, but this approach typically suggests a limited pool of eligible bidders. A limited competition can sometimes lead to higher prices compared to full and open competition with a larger number of bidders, as the contractor may face less pressure to offer the most competitive pricing. Further investigation into the exclusion criteria would be necessary to fully assess the impact on price discovery.

Taxpayer Impact: The limited competition may mean taxpayers did not benefit from the lowest possible price that could have been achieved through a broader bidding process. This could result in a less efficient use of taxpayer funds if the awarded price is higher than what a more competitive market would dictate.

Public Impact

Federal taxpayers benefit from the continued operation of critical IRS IT systems. The contract ensures the availability and performance of IBM mainframe services essential for tax processing. Services are likely delivered to the Internal Revenue Service, supporting its national operations. Workforce implications may include specialized IT professionals with mainframe expertise, potentially sourced by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to suboptimal pricing for taxpayers.
Lack of transparency regarding source exclusion hinders full value assessment.
Reliance on legacy mainframe technology presents long-term modernization challenges.

Positive Signals

Contract ensures continuity of essential IRS IT operations.
Firm fixed-price contract provides cost certainty for a defined scope.
Award to Project Services Group, LLC addresses a specific IT support need.

Sector Analysis

This contract falls within the IT services sector, specifically focusing on computer systems design and support for legacy mainframe infrastructure. The market for specialized mainframe support is often niche, with a limited number of firms possessing the required expertise. The IRS's reliance on mainframes for critical functions like tax processing is common across government agencies and large enterprises, highlighting the ongoing need for such services despite the trend towards cloud computing. Comparable spending benchmarks would involve analyzing other government contracts for similar mainframe support, which can range from hundreds of thousands to millions of dollars annually depending on the scope and criticality.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a primary focus for this specific contract award. There is no indication of a small business set-aside. This suggests that the prime contractor, Project Services Group, LLC, is likely not a small business, and subcontracting opportunities for small businesses are not explicitly mandated or highlighted in this award notice. The impact on the small business ecosystem would therefore be minimal unless the prime contractor voluntarily engages small businesses for specialized support.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Treasury's Internal Revenue Service contracting officers and program managers. Accountability measures would be defined within the contract's Performance Work Statement (PWS), outlining deliverables, service levels, and key performance indicators. Transparency is facilitated through contract award databases like FPDS, though detailed justifications for limited competition or specific performance metrics may not always be publicly available. The Inspector General for the Department of the Treasury would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

IRS IT Modernization Efforts
Legacy System Support Contracts
Federal Mainframe Modernization Programs
IT Services for Tax Administration

Risk Flags

Limited Competition
Potential for Overpricing
Legacy Technology Dependence

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $4.3 million to PROJECT SERVICES GROUP, LLC. IBM MAINFRAME SERVICE SUPPORT - COVID19

Who is the contractor on this award?

The obligated recipient is PROJECT SERVICES GROUP, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $4.3 million.

What is the period of performance?

Start: 2020-09-17. End: 2023-09-16.

What specific IBM mainframe systems and services are covered under this contract, and what is the criticality of these systems to IRS operations?

The contract details 'IBM MAINFRAME SERVICE SUPPORT' and falls under the 'Computer Systems Design Services' NAICS code (541512). While the specific IBM mainframe models (e.g., z/OS versions, associated hardware) are not explicitly listed in the provided data, the award to Project Services Group, LLC for nearly $4.3 million over three years suggests a significant scope of work. Mainframes are often the backbone for large-scale transaction processing, data management, and core business applications. For the IRS, these systems are critical for processing tax returns, managing taxpayer accounts, and ensuring compliance. The criticality implies that any disruption could have severe consequences for tax collection and public service delivery, necessitating robust and reliable support services.

How does the $4.3 million contract value compare to historical spending on similar IBM mainframe support services by the IRS or other federal agencies?

Comparing the $4.3 million award requires context on the duration and scope. Over its 1094-day (approx. 3-year) term, this contract represents an average annual expenditure of roughly $1.4 million. To benchmark this, one would need to analyze historical data for similar 'Computer Systems Design Services' contracts (NAICS 541512) specifically for IBM mainframe support within the IRS or across agencies like the SSA or DOD, which also operate large mainframe environments. Factors influencing cost include the specific mainframe models, the operating system versions, the required support levels (e.g., 24/7 critical incident response vs. routine maintenance), and the number of systems supported. Without access to detailed historical spending patterns for comparable IRS mainframe support contracts, a precise comparison is difficult, but $1.4 million annually for specialized mainframe support is within a plausible range for critical government systems.

What were the specific reasons for excluding other potential sources in this 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award?

The designation 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' implies that a competitive solicitation was issued, but certain potential offerors were deemed ineligible or were not considered for reasons specified in the solicitation or federal acquisition regulations. Common reasons for excluding sources include failure to meet mandatory pre-qualification criteria (e.g., specific certifications, past performance requirements, security clearances), non-responsiveness to solicitation requirements, or if the agency determined that only a limited number of sources could meet the specialized needs of the requirement. Without the specific justification document or details from the solicitation, it's impossible to know the exact reasons for exclusion. This lack of transparency can obscure whether the exclusions were justified and if they unduly limited competition, potentially impacting the final price.

What performance metrics or service level agreements (SLAs) are in place to ensure Project Services Group, LLC delivers effective IBM mainframe support?

The provided data does not detail the specific performance metrics or Service Level Agreements (SLAs) associated with this contract. However, for a contract of this nature and duration, it is standard practice for the Performance Work Statement (PWS) to include measurable performance standards. These typically cover aspects such as system uptime, response times for incident resolution, availability of technical support personnel, successful completion of maintenance tasks, and adherence to security protocols. The contracting officer and program management office within the IRS would be responsible for monitoring these metrics and holding Project Services Group, LLC accountable for meeting the contract's performance requirements. Failure to meet SLAs could result in contract remedies, including financial penalties or termination.

What is the track record of Project Services Group, LLC in supporting complex government IT infrastructure, particularly mainframe systems?

Information on Project Services Group, LLC's specific track record in supporting complex government IT infrastructure, especially mainframe systems, is not detailed in the provided data. To assess their capabilities, one would typically review their past performance evaluations on similar federal contracts, their financial stability, and any reported issues or successes. Federal procurement databases often contain past performance information, though it may not always be publicly accessible in detail. Given the critical nature of IRS mainframe operations, the award suggests that the agency assessed Project Services Group, LLC as having the necessary qualifications and experience, potentially based on prior relevant work or demonstrated expertise in the mainframe domain.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 780 BUFORD HWY STE 202A, SUWANEE, GA, 30024

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $4,313,539

Exercised Options: $4,313,539

Current Obligation: $4,313,539

Actual Outlays: $4,313,539

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS00Q17GWD2272

IDV Type: GWAC

Timeline