Treasury's IRS awards $24.1M for Zscaler licenses and maintenance, with FCN, Inc. as the contractor

Contract Overview

Contract Amount: $24,102,952 ($24.1M)

Contractor: FCN, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2022-06-13

End Date: 2026-06-12

Contract Duration: 1,460 days

Daily Burn Rate: $16.5K/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: ZSCALER LICENSES AND MAINTENANCE SUPPORT

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20852

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $24.1 million to FCN, INC. for work described as: ZSCALER LICENSES AND MAINTENANCE SUPPORT Key points: 1. Value for money appears reasonable given the critical cybersecurity function and multi-year term. 2. Competition was full and open after exclusion of sources, suggesting a competitive process. 3. Risk indicators are moderate, primarily related to contract performance and potential vendor lock-in. 4. Performance context involves essential IT infrastructure support for tax administration. 5. Sector positioning is within IT services, specifically cybersecurity solutions for government agencies.

Value Assessment

Rating: good

The contract value of $24.1 million over four years for Zscaler licenses and maintenance appears competitive for enterprise-level cybersecurity solutions. Benchmarking against similar government contracts for endpoint security and cloud access security broker (CASB) solutions suggests this pricing is within the expected range. The firm-fixed-price structure provides cost certainty for the IRS. However, a detailed cost breakdown of the licenses versus maintenance would offer further insight into value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be broad, certain sources may have been excluded prior to the solicitation, potentially limiting the pool of bidders. The specific reasons for exclusion are not detailed here, but it suggests a more targeted approach than a completely unrestricted full and open competition. The number of bidders is not specified, making it difficult to fully assess the intensity of the competition.

Taxpayer Impact: While the competition was not fully unrestricted, the 'after exclusion of sources' approach aims to balance competition with specific agency needs. Taxpayers benefit from a secure IT environment, but the potential for fewer bidders could theoretically impact price optimization compared to a completely open bid.

Public Impact

Federal employees within the IRS will benefit from enhanced cybersecurity capabilities. The services delivered include essential licenses and maintenance for Zscaler's security platform. The geographic impact is primarily within the IRS's operational centers, likely nationwide. Workforce implications include enabling IT staff to manage and maintain advanced security tools.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with a specific cybersecurity solution.
Reliance on a single vendor for critical security infrastructure.
Ensuring adequate technical support and timely updates for the Zscaler platform.

Positive Signals

Provides critical cybersecurity protection for sensitive taxpayer data.
Leverages a widely recognized and robust cybersecurity solution.
Multi-year contract provides stability for IT security planning and budgeting.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on cybersecurity solutions. The market for cloud security and endpoint protection is highly competitive, with numerous vendors offering similar capabilities. Government spending in this area has been steadily increasing due to evolving cyber threats. Comparable spending benchmarks for enterprise-wide cybersecurity platforms can range from millions to tens of millions annually, depending on the scope and user base.

Small Business Impact

The contract details do not indicate any specific small business set-aside provisions. Given the nature of enterprise cybersecurity solutions and the contractor's likely size, it is improbable that small businesses would be the primary awardees or subcontractors for the core technology. However, opportunities for small businesses may exist in related IT support services or subcontracting roles if FCN, Inc. chooses to engage them.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury's contracting officers and program managers. The IRS likely has internal audit and IT security oversight functions. The Inspector General for Tax Administration (TIGTA) may also have jurisdiction to investigate potential fraud, waste, or abuse related to this spending. Transparency is facilitated through contract databases like FPDS, though detailed performance metrics are often internal.

Related Government Programs

Cybersecurity Services
Software Licenses
IT Infrastructure Support
Cloud Security Solutions
Endpoint Protection

Risk Flags

Potential for limited competition due to source exclusion.
Reliance on a single vendor for critical cybersecurity infrastructure.
Need for skilled personnel to manage and maintain the platform.
Ensuring continuous adaptation to evolving cyber threats.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $24.1 million to FCN, INC.. ZSCALER LICENSES AND MAINTENANCE SUPPORT

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 $24.1 million.

What is the period of performance?

Start: 2022-06-13. End: 2026-06-12.

What is the track record of FCN, Inc. in providing similar cybersecurity solutions to federal agencies?

FCN, Inc. has a significant track record of providing IT services and solutions to various federal agencies, including cybersecurity. They have held numerous contracts for network infrastructure, software, and IT support. Their experience often includes working with complex government requirements and security protocols. While specific performance data for Zscaler contracts is not detailed here, their broader federal contracting history suggests a capacity to manage and deliver such services. Reviewing past performance evaluations and contract awards for FCN, Inc. would provide a more granular understanding of their reliability in delivering cybersecurity solutions.

How does the per-unit cost of Zscaler licenses compare to market rates or other government contracts?

Determining the exact per-unit cost is challenging without a detailed breakdown of licenses and maintenance tiers within the $24.1 million award. Zscaler's pricing is typically tiered based on features, user count, and support levels. Government contracts often benefit from negotiated discounts through programs like NASA SEWP or GSA Schedules, which can lead to lower per-unit costs compared to commercial list prices. Benchmarking would require comparing the specific Zscaler package (e.g., ZIA, ZPA, endpoint protection) and user volume against publicly available government contract data or commercial quotes for similar enterprise deployments. Without this granular data, a precise comparison is difficult, but the overall contract value suggests a substantial deployment.

What are the primary risks associated with this contract, and how are they being mitigated?

Primary risks include potential vendor lock-in, where the IRS becomes heavily reliant on Zscaler, making future transitions difficult or costly. There's also a risk related to the effective implementation and ongoing management of the cybersecurity platform, requiring skilled personnel. Performance risk, ensuring the solution meets evolving threats, is another concern. Mitigation strategies likely involve clear performance standards in the contract, regular reviews of the technology's effectiveness, and potentially building internal expertise to manage the solution. The multi-year nature also implies a commitment that needs careful management to ensure continued value.

How effective is Zscaler's platform in meeting the IRS's specific cybersecurity needs?

Zscaler provides a cloud-native security platform designed to protect users and data across various environments, including endpoint security, secure web gateways, and zero trust network access. For the IRS, this platform is crucial for securing access to sensitive taxpayer information and internal systems against a wide array of cyber threats. Its effectiveness hinges on proper configuration, integration with existing infrastructure, and continuous monitoring. While Zscaler is a recognized leader in its field, the IRS's specific implementation and the platform's ability to adapt to unique tax administration security challenges would determine its ultimate effectiveness. Regular security audits and performance reviews are key to assessing this.

What are the historical spending patterns for Zscaler or similar cybersecurity solutions at the IRS or Treasury?

Historical spending data for Zscaler specifically at the IRS or Treasury would require a deep dive into contract databases over several years. However, it's reasonable to assume that federal agencies, particularly those handling sensitive data like the IRS, have consistently invested in cybersecurity solutions. Spending on endpoint security, network protection, and cloud security has generally trended upwards across the government due to increasing cyber threats. This $24.1 million award represents a significant, multi-year investment, suggesting either a new large-scale deployment or a substantial renewal/expansion of existing Zscaler services. Understanding prior investments would provide context on the scale and evolution of the IRS's cybersecurity strategy.

What is the significance of the 'Full and Open Competition After Exclusion of Sources' award type?

This award type signifies a competitive process where the solicitation was made available to all responsible sources, but certain sources were excluded prior to the solicitation. This exclusion must be justified, often based on factors like prior performance, specific technical capabilities, or national security considerations. While it aims for competition, the exclusion means the pool of potential bidders was narrower than in a completely unrestricted 'full and open' competition. The justification for excluding sources is critical for understanding the extent of competition achieved and its potential impact on pricing and innovation. It suggests a deliberate selection process rather than a completely open market approach.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services

Product/Service Code: IT AND TELECOM - END USER

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: 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: $46,754,868

Exercised Options: $24,102,952

Current Obligation: $24,102,952

Actual Outlays: $21,087,319

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC71B

IDV Type: GWAC

Timeline