Treasury's $95.8M ServiceNow contract leverages industry standard for IRS operations, awarded via full and open competition

Contract Overview

Contract Amount: $95,833,965 ($95.8M)

Contractor: Carahsoft Technology Corp

Awarding Agency: Department of the Treasury

Start Date: 2021-09-29

End Date: 2026-09-28

Contract Duration: 1,825 days

Daily Burn Rate: $52.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SERVICENOW HAS BEEN APPROVED FOR USE AS THE INDUSTRY STANDARD SOLUTION & OPERATES ON THE FEDRAMP APPROVED GOV COMMUNITY CLOUD INFRASTRUCTURE AS PROVISIONED FOR IRS.

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $95.8 million to CARAHSOFT TECHNOLOGY CORP for work described as: SERVICENOW HAS BEEN APPROVED FOR USE AS THE INDUSTRY STANDARD SOLUTION & OPERATES ON THE FEDRAMP APPROVED GOV COMMUNITY CLOUD INFRASTRUCTURE AS PROVISIONED FOR IRS. Key points: 1. The contract utilizes a widely adopted platform, suggesting potential for efficient integration and user adoption. 2. Awarded through full and open competition, indicating a competitive bidding process that likely influenced pricing. 3. The use of a FedRAMP-approved cloud infrastructure mitigates security and compliance risks. 4. A firm-fixed-price contract type provides cost certainty for the government. 5. The duration of the contract (5 years) allows for sustained service delivery and potential for long-term benefits. 6. The contractor, Carahsoft Technology Corp, is a major reseller of enterprise software, suggesting established market presence.

Value Assessment

Rating: good

The contract's value of $95.8 million over five years for software licensing and support appears reasonable given the enterprise-wide nature of ServiceNow. Benchmarking against similar large-scale government software procurements suggests this is within expected ranges for a widely adopted platform. The firm-fixed-price structure provides predictability, though detailed cost breakdowns for specific modules or user counts would be needed for a more granular value assessment. The use of an industry-standard solution also implies that the government is benefiting from economies of scale already realized by the vendor in the commercial market.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing. The specific number of bidders is not provided, but the open competition mechanism implies a robust process. The use of a BPA Call indicates it was likely sourced from an existing Blanket Purchase Agreement, which itself would have undergone a competitive process.

Taxpayer Impact: Full and open competition typically leads to better value for taxpayers by driving down prices through market forces. It ensures that the government is not locked into a single vendor without exploring alternatives.

Public Impact

IRS employees benefit from a standardized, modern platform for managing internal operations, potentially improving efficiency and service delivery. The contract supports the modernization of IT infrastructure within the Department of the Treasury. Geographic impact is nationwide, as the IRS operates across all states. Workforce implications include the need for training IRS personnel on the ServiceNow platform and potential for streamlined workflows.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if future expansions or customizations are heavily reliant on specific ServiceNow features.
Dependence on a single software provider for critical operational functions carries inherent business continuity risks.
The success of the implementation hinges on effective change management and user adoption across a large, diverse workforce.

Positive Signals

Leveraging an industry-standard platform reduces the learning curve for new employees and facilitates integration with other government systems.
FedRAMP authorization provides assurance of robust security controls for sensitive government data.
The firm-fixed-price contract offers budget certainty and limits the government's exposure to cost overruns.

Sector Analysis

The Software Publishers (NAICS 511210) sector is characterized by companies that develop, publish, and distribute software. This contract falls within the enterprise software sub-sector, specifically for IT service management (ITSM) and workflow automation. ServiceNow is a leading provider in this space, competing with other major players like Salesforce, Microsoft, and Oracle. Government spending on enterprise software solutions has been steadily increasing as agencies seek to modernize operations and improve efficiency. This contract represents a significant investment in a platform that aims to consolidate various IT and business processes.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by 'sb': false. Furthermore, the prime contractor, Carahsoft Technology Corp, is a large business. While Carahsoft is known for its extensive network of small business partners and subcontractors, the direct impact on small business set-asides for this specific award is minimal. However, there may be subcontracting opportunities for small businesses that provide specialized services or support related to the ServiceNow platform, depending on Carahsoft's subcontracting plan.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Treasury's contracting officers and program managers. The IRS likely has internal IT governance and oversight bodies responsible for monitoring software performance, security, and adherence to contract terms. Given the use of FedRAMP-approved cloud infrastructure, there are inherent security oversight mechanisms in place. Transparency is facilitated through contract award databases, though detailed performance metrics and spending breakdowns may be internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

IRS IT Modernization Initiatives
Treasury Enterprise Software Licensing
Government-Wide Enterprise Resource Planning (ERP) Systems
FedRAMP Cloud Services
IT Service Management (ITSM) Solutions

Risk Flags

Potential for vendor lock-in
Reliance on a single software provider
Implementation and adoption challenges
Data security and privacy risks

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $95.8 million to CARAHSOFT TECHNOLOGY CORP. SERVICENOW HAS BEEN APPROVED FOR USE AS THE INDUSTRY STANDARD SOLUTION & OPERATES ON THE FEDRAMP APPROVED GOV COMMUNITY CLOUD INFRASTRUCTURE AS PROVISIONED FOR IRS.

Who is the contractor on this award?

The obligated recipient is CARAHSOFT TECHNOLOGY CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $95.8 million.

What is the period of performance?

Start: 2021-09-29. End: 2026-09-28.

What is the track record of Carahsoft Technology Corp in delivering similar large-scale enterprise software solutions to federal agencies?

Carahsoft Technology Corp is a major reseller of enterprise software solutions to the public sector, including federal, state, and local governments. They act as a prime contractor for numerous software vendors, facilitating procurement through various contract vehicles like GSA Schedules and Blanket Purchase Agreements (BPAs). Their business model relies on establishing strong partnerships with software manufacturers and navigating complex government procurement regulations. While Carahsoft itself does not develop the software, its track record is demonstrated by the successful delivery and support of solutions from vendors like ServiceNow, Microsoft, and Adobe to a wide array of federal agencies. Their extensive experience in government contracting suggests a robust understanding of agency needs and procurement processes, contributing to the successful deployment of platforms like ServiceNow.

How does the per-user cost of ServiceNow under this contract compare to other federal agencies or commercial entities?

Determining the exact per-user cost for ServiceNow under this specific Treasury contract is challenging without access to the detailed pricing structure within the BPA Call. Contract awards often list the total value and duration, but not granular per-unit costs, especially for complex software suites with various modules and user tiers. However, ServiceNow is a premium enterprise solution, and its pricing can vary significantly based on the modules licensed (e.g., ITSM, HR Service Delivery, Customer Service Management), the number of users, and the level of support required. Generally, government pricing negotiated through large contracts and BPAs aims to be competitive with commercial enterprise rates, often benefiting from volume discounts. Without specific per-user data or comparable contract details, a precise benchmark is difficult, but it's reasonable to assume the pricing reflects enterprise-level agreements.

What are the primary risks associated with relying on a single software platform like ServiceNow for critical IRS operations?

The primary risks associated with relying on a single software platform like ServiceNow for critical IRS operations include vendor lock-in, operational disruption, and security vulnerabilities. Vendor lock-in can occur if the IRS becomes heavily dependent on proprietary features or customizations, making it difficult and costly to switch to an alternative solution in the future. Operational disruption is a risk if the platform experiences significant outages, performance degradation, or if the vendor discontinues support for certain versions or features. Security vulnerabilities, although mitigated by FedRAMP authorization, remain a concern as new threats emerge; a breach in the platform could have widespread consequences for sensitive taxpayer data. Furthermore, the success of the platform is contingent on continuous innovation and support from ServiceNow, making the IRS susceptible to the vendor's strategic decisions and financial health.

How effective has ServiceNow been in improving IT service management and operational efficiency in other large government agencies?

ServiceNow has been widely adopted across numerous large government agencies, including the Department of Defense, NASA, and various civilian departments, for IT Service Management (ITSM) and workflow automation. Case studies and public reports often highlight improvements in areas such as incident resolution times, request fulfillment efficiency, and enhanced visibility into IT operations. Agencies typically leverage ServiceNow to consolidate disparate systems, automate manual processes, and provide a single platform for employees to access services. Its effectiveness is often attributed to its configurable nature, allowing agencies to tailor workflows to their specific needs. However, achieving these benefits requires significant investment in implementation, training, and ongoing management, and success is not guaranteed without strong project leadership and user adoption strategies.

What has been the historical spending trend for ServiceNow or similar enterprise software solutions within the Department of the Treasury?

Historical spending trends for ServiceNow or similar enterprise software solutions within the Department of the Treasury are not publicly detailed in a consolidated manner. However, like most large federal agencies, the Treasury has been engaged in ongoing efforts to modernize its IT infrastructure and consolidate systems. This typically involves significant investments in enterprise software for functions ranging from IT service management to financial management and human resources. Spending on platforms like ServiceNow is often part of broader digital transformation initiatives aimed at improving efficiency, security, and service delivery. While specific figures for Treasury's ServiceNow spending prior to this contract are not readily available, the increasing reliance on cloud-based, integrated platforms across government suggests a growing trend in this category of IT expenditure.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - END USER

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11493 SUNSET HILLS RD, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $98,887,310

Exercised Options: $98,887,310

Current Obligation: $95,833,965

Actual Outlays: $95,647,054

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 2032H520A00026

IDV Type: BPA

Timeline