IRS Cybersecurity Risk Management contract awarded to TERACORE INC. for over $36.3M, spanning 5 years

Contract Overview

Contract Amount: $36,301,062 ($36.3M)

Contractor: Teracore Inc.

Awarding Agency: Department of the Treasury

Start Date: 2020-09-30

End Date: 2026-07-05

Contract Duration: 2,104 days

Daily Burn Rate: $17.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 9

Pricing Type: FIXED PRICE LEVEL OF EFFORT

Sector: IT

Official Description: THE SCOPE OF THIS PWS ENCOMPASSES CONTRACTOR ASSISTANCE TO PROVIDE IRS CYBERSECURITY SECURITY RISK MANAGEMENT THE NECESSARY SUPPORT IN PERFORMING SECURITY ACTIVITIES.

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20703

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $36.3 million to TERACORE INC. for work described as: THE SCOPE OF THIS PWS ENCOMPASSES CONTRACTOR ASSISTANCE TO PROVIDE IRS CYBERSECURITY SECURITY RISK MANAGEMENT THE NECESSARY SUPPORT IN PERFORMING SECURITY ACTIVITIES. Key points: 1. Value for money assessed through fixed-price contract type, aiming to control costs for defined services. 2. Competition dynamics indicate a full and open competition after exclusion of sources, suggesting a robust bidding process. 3. Risk indicators include the fixed-price level of effort structure, which can shift risk to the contractor for performance. 4. Performance context is set against a 5-year period, allowing for sustained cybersecurity support. 5. Sector positioning within IT services, specifically computer systems design, highlights the critical nature of cybersecurity for government operations.

Value Assessment

Rating: good

The contract's fixed-price level of effort structure provides cost certainty for the government. Benchmarking against similar cybersecurity support contracts is challenging without more granular data on specific services rendered. However, the total award value of over $36.3 million for a 5-year period suggests a significant investment in critical IT infrastructure protection. The pricing appears reasonable given the scope and duration, assuming the contractor delivers on all required security activities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition after exclusion of sources.' While the 'exclusion of sources' part might initially seem restrictive, it typically refers to a specific scenario where certain sources were excluded from a broader initial pool, but the competition among the remaining eligible sources was still full and open. The presence of 9 bidders indicates a healthy level of competition, which generally leads to better price discovery and value for the government.

Taxpayer Impact: A competitive bidding process with multiple bidders helps ensure that taxpayer dollars are used efficiently by driving down costs and encouraging innovative solutions for essential cybersecurity services.

Public Impact

The Internal Revenue Service (IRS) benefits directly through enhanced cybersecurity risk management, protecting sensitive taxpayer data. Essential cybersecurity support services are delivered, ensuring the integrity and security of IRS IT systems. The primary geographic impact is within the IRS's operational centers, likely concentrated in Maryland where the contractor is based. The contract supports a specialized workforce in cybersecurity and IT services, contributing to the federal IT sector's employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if 'necessary support' is not clearly defined and managed.
Reliance on a single contractor for critical cybersecurity functions could pose a risk if performance degrades.
The 'exclusion of sources' aspect of the competition warrants further understanding to ensure no viable competitors were unfairly barred.

Positive Signals

Fixed-price contract type helps control costs and shifts performance risk to the contractor.
A 5-year duration allows for long-term strategic planning and consistent security posture.
Multiple bidders (9) suggest a competitive market for these specialized services.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computer systems design and cybersecurity. The market for cybersecurity services is substantial and growing, driven by increasing cyber threats and the digitization of government operations. Comparable spending benchmarks for cybersecurity support can vary widely based on the scope, duration, and specific technologies involved. The IRS's significant investment reflects the critical need to protect financial data and maintain public trust.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false). There is no explicit information on subcontracting plans. Without specific set-aside goals or reporting on small business participation, the direct impact on the small business ecosystem is unclear, though large contracts often involve subcontracting opportunities.

Oversight & Accountability

Oversight is likely managed by the contracting officer's representative (COR) within the IRS, responsible for monitoring performance and ensuring compliance with the PWS. Accountability measures are embedded in the fixed-price level of effort contract, where payment is contingent on satisfactory performance. Transparency is facilitated by contract award data, but detailed performance reports and specific oversight activities are typically internal.

Related Government Programs

IRS IT Modernization
Federal Cybersecurity Initiatives
Department of the Treasury IT Services
Computer Systems Design Services
Information Security Services

Risk Flags

Potential for outdated scope in long-term fixed-price contracts.
Cybersecurity is a constantly evolving threat landscape.
Reliance on contractor for critical security functions.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $36.3 million to TERACORE INC.. THE SCOPE OF THIS PWS ENCOMPASSES CONTRACTOR ASSISTANCE TO PROVIDE IRS CYBERSECURITY SECURITY RISK MANAGEMENT THE NECESSARY SUPPORT IN PERFORMING SECURITY ACTIVITIES.

Who is the contractor on this award?

The obligated recipient is TERACORE 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 $36.3 million.

What is the period of performance?

Start: 2020-09-30. End: 2026-07-05.

What is the specific nature of the 'security activities' TERACORE INC. is contracted to perform under this cybersecurity risk management PWS?

The PWS states the scope encompasses 'contractor assistance to provide IRS cybersecurity security risk management the necessary support in performing security activities.' While specific details are not provided in the summary data, typical security activities in such contracts include vulnerability assessments, penetration testing, security control implementation and monitoring, incident response support, security policy development and enforcement, and risk analysis. The 'necessary support' implies a broad range of tasks required to maintain and improve the IRS's cybersecurity posture against evolving threats.

How does the 'full and open competition after exclusion of sources' procurement method compare to standard full and open competition?

Standard 'full and open competition' allows all responsible sources to submit offers. 'Full and open competition after exclusion of sources' is a specific statutory exception (41 U.S.C. 3301(b)(1)) that allows agencies to exclude certain sources from a competitive solicitation if it is necessary and justified. This exclusion must be documented and typically occurs when specific capabilities or circumstances warrant limiting the pool. While it still aims for competition among the remaining sources, it is less broad than standard full and open competition and requires a stronger justification for the exclusion.

What are the potential risks associated with a 5-year fixed-price level of effort contract for cybersecurity services?

A significant risk with a 5-year fixed-price level of effort contract is the potential for the defined effort to become outdated or insufficient as technology and threats evolve rapidly in cybersecurity. If the 'level of effort' is not continuously reviewed and potentially adjusted (through contract modifications), the contractor may be overpaid for outdated tasks or under-resourced for new, critical threats. Additionally, the fixed price might disincentivize the contractor from finding more efficient methods if the effort is estimated too high, or conversely, lead to cutting corners if estimated too low and the contractor struggles to meet the required effort within budget.

What is the historical spending pattern for cybersecurity risk management at the IRS, and how does this $36.3M award compare?

The provided data only includes details for this specific contract (awarded Sept 30, 2020, with an end date of July 5, 2026, and a total value of $36,301,061.84). To assess historical spending patterns, one would need access to prior IRS contracts for similar cybersecurity risk management services. Without that comparative data, it's difficult to definitively state if this $36.3M award represents an increase, decrease, or stable level of investment. However, the duration (nearly 6 years) and the substantial value suggest a significant and sustained commitment to cybersecurity by the IRS during this period.

Given the critical nature of IRS data, what specific performance metrics or KPIs are likely being used to evaluate TERACORE INC.'s success?

While not detailed in the summary data, performance metrics (KPIs) for such a contract would typically focus on measurable aspects of cybersecurity risk management. These could include the number of vulnerabilities identified and remediated, the time to detect and respond to security incidents, the success rate of security control implementations, compliance with relevant security standards (e.g., NIST), and the reduction in the overall risk score for critical systems. Regular reporting on these KPIs, alongside contractor performance assessments by the COR, would be crucial for evaluating TERACORE INC.'s effectiveness.

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: 9

Pricing Type: FIXED PRICE LEVEL OF EFFORT (B)

Evaluated Preference: NONE

Contractor Details

Address: 103 SPRINGFIELD CENTER DR STE 202, WOODSTOCK, GA, 30188

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Hispanic American Owned Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $39,400,230

Exercised Options: $39,400,230

Current Obligation: $36,301,062

Actual Outlays: $31,757,140

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47QTCH18D0062

IDV Type: GWAC

Timeline