Treasury's IRS awards $9.4M for hybrid cloud services to Octo Metric LLC under full and open competition

Contract Overview

Contract Amount: $9,408,357 ($9.4M)

Contractor: Octo Metric LLC

Awarding Agency: Department of the Treasury

Start Date: 2022-08-25

End Date: 2025-09-15

Contract Duration: 1,117 days

Daily Burn Rate: $8.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: HYBRID- CLOUD IMPLEMENTATION AND OPERATION & MAINTENANCE (O&M)

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20220

State: District of Columbia Government Spending

Plain-Language Summary

Department of the Treasury obligated $9.4 million to OCTO METRIC LLC for work described as: HYBRID- CLOUD IMPLEMENTATION AND OPERATION & MAINTENANCE (O&M) Key points: 1. The contract value of $9.4 million for cloud services represents a moderate investment in modernizing IRS IT infrastructure. 2. Full and open competition suggests a potentially competitive bidding process, which can lead to better pricing. 3. The firm-fixed-price contract type shifts performance risk to the contractor, Octo Metric LLC. 4. The duration of over three years indicates a need for sustained support in hybrid cloud operations. 5. The contract is for custom computer programming services, aligning with the IRS's need for specialized IT support. 6. The award to Octo Metric LLC, a single entity, highlights the importance of specialized capabilities in this niche.

Value Assessment

Rating: good

The contract value of $9.4 million for hybrid cloud implementation and O&M appears reasonable given the scope and duration. Benchmarking against similar government contracts for cloud services suggests that pricing for custom programming and ongoing operations can vary significantly based on complexity and service level agreements. Without specific details on the services provided, a direct per-unit cost comparison is difficult, but the overall value seems aligned with industry standards for IT modernization projects of this scale.

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. A competitive process is expected to drive down costs and encourage innovation as contractors vie for the award. The IRS likely sought to leverage market competition to secure the best value for these critical IT services.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to ensure the government receives high-quality services at a fair price, preventing potential overspending that could occur with less competitive solicitations.

Public Impact

Taxpayers benefit from improved efficiency and security in IRS IT systems through modernized hybrid cloud infrastructure. IRS operations are supported by enhanced custom computer programming services, leading to more reliable tax administration. The District of Columbia benefits from the presence of IT services supporting a federal agency's critical functions. The contract supports the ongoing modernization of federal IT infrastructure, a key government objective.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specific proprietary technologies are heavily utilized.
Dependence on a single contractor for critical hybrid cloud operations and maintenance.
Risk of scope creep if requirements are not clearly defined and managed throughout the contract lifecycle.

Positive Signals

Firm-fixed-price contract structure transfers cost overrun risk to the contractor.
Awarded under full and open competition, suggesting a robust selection process and potential for competitive pricing.
Contract duration of over three years allows for stable service delivery and long-term planning.

Sector Analysis

The IT services sector, particularly custom computer programming and cloud services, is a rapidly growing segment of government contracting. Federal agencies are increasingly migrating to hybrid and cloud-based infrastructures to enhance scalability, security, and cost-efficiency. This contract fits within the broader trend of federal IT modernization, where agencies like the IRS are investing in advanced technologies to support their missions. Comparable spending benchmarks for similar cloud implementation and O&M contracts can range widely, but this $9.4 million award for a multi-year engagement appears to be within a typical range for specialized IT services.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a result, large businesses were likely the primary bidders. There is no explicit information on subcontracting plans for small businesses. The absence of a small business set-aside means that opportunities for small business participation may be limited unless Octo Metric LLC voluntarily includes them in its subcontracting efforts.

Oversight & Accountability

Oversight for this contract will likely be managed by the IRS's contracting officers and program managers, who are responsible for ensuring performance and compliance with contract terms. The firm-fixed-price nature of the contract provides a degree of accountability by fixing the cost. Transparency is facilitated through federal procurement databases where contract awards are reported. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract is suspected.

Related Government Programs

IRS IT Modernization Initiatives
Federal Cloud Computing Strategy
Custom Computer Programming Services
IT Operations and Maintenance Contracts
General Services Administration (GSA) IT Schedules

Risk Flags

Potential for vendor lock-in
Dependence on single contractor
Scope creep risk
Data security and compliance

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $9.4 million to OCTO METRIC LLC. HYBRID- CLOUD IMPLEMENTATION AND OPERATION & MAINTENANCE (O&M)

Who is the contractor on this award?

The obligated recipient is OCTO METRIC 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 $9.4 million.

What is the period of performance?

Start: 2022-08-25. End: 2025-09-15.

What is Octo Metric LLC's track record with federal IT contracts, particularly in cloud services?

Octo Metric LLC has a history of performing federal IT contracts. While specific details on their cloud service expertise require deeper analysis of past performance data, their selection for this hybrid cloud implementation and O&M contract suggests they possess the necessary qualifications and experience. Examining their past contract awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any past issues or successes would provide a clearer picture of their capabilities and reliability in delivering complex IT solutions for government agencies. Their ability to secure this contract under full and open competition indicates they met the government's stringent requirements.

How does the $9.4 million contract value compare to similar hybrid cloud implementation and O&M contracts awarded by the IRS or other agencies?

The $9.4 million contract value for a duration of over three years for hybrid cloud implementation and O&M is within a reasonable range for federal IT projects of this nature. However, direct comparisons are challenging without detailed service level agreements, scope of work, and specific technology stacks. Similar contracts for custom computer programming and cloud services can vary significantly in price based on factors like the number of users supported, data volume, security requirements, and the level of managed services. Generally, larger agencies with complex IT needs might award larger contracts, but the per-year cost for this award appears moderate, suggesting a potentially good value if performance is satisfactory.

What are the primary risks associated with this hybrid cloud implementation and O&M contract for the IRS?

Key risks include potential vendor lock-in if proprietary cloud solutions are heavily integrated, making future transitions difficult or costly. There's also the risk of performance degradation if Octo Metric LLC fails to meet service level agreements for uptime, security, or responsiveness. Scope creep is another concern, where the project's requirements may expand beyond the initial agreement, potentially leading to cost overruns or delays, although the firm-fixed-price structure aims to mitigate this. Ensuring robust data security and compliance with federal regulations within the hybrid environment is also a critical risk area that requires continuous monitoring.

How effective is the firm-fixed-price contract type in ensuring value for money in this context?

The firm-fixed-price (FFP) contract type is generally effective in ensuring value for money by shifting the risk of cost overruns to the contractor, Octo Metric LLC. This means the IRS pays a set price regardless of the contractor's actual costs, incentivizing the contractor to manage expenses efficiently. For services like hybrid cloud implementation and O&M, where the scope can be well-defined, FFP encourages the contractor to deliver the specified services within budget. However, if the scope is poorly defined or unforeseen technical challenges arise, the contractor might be disincentivized from addressing them fully, or the IRS might need to issue change orders, potentially increasing the overall cost.

What are the historical spending patterns for custom computer programming services at the IRS?

Historical spending patterns for custom computer programming services at the IRS, and federal agencies generally, show a consistent and often increasing investment in IT modernization and specialized software development. Agencies frequently contract for these services to develop new systems, update legacy applications, and integrate diverse IT platforms. The IRS, in particular, relies heavily on complex IT systems for tax processing, taxpayer services, and enforcement. Analyzing past IRS spending on similar NAICS codes (like 541511) would reveal trends in contract values, durations, and the types of services procured, providing context for the current $9.4 million award.

What are the implications of awarding this contract under 'full and open competition' for the IRS's IT modernization goals?

Awarding this contract under 'full and open competition' is highly beneficial for the IRS's IT modernization goals. It ensures that the IRS has access to the broadest possible pool of qualified vendors, increasing the likelihood of selecting a contractor with the most innovative solutions and competitive pricing. This competitive environment drives efficiency and encourages vendors to propose cost-effective approaches to hybrid cloud implementation and O&M. It also provides greater assurance that the chosen solution aligns with best practices and emerging technologies, supporting the IRS's objective to maintain a modern, secure, and efficient IT infrastructure.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › ADMINISTRATIVE SUPPORT SERVICES

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: 1175 PEACHTREE ST NE STE 1000 FL 10, ATLANTA, GA, 30361

Business Categories: Category Business, Limited Liability Corporation, Partnership or Limited Liability Partnership, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $14,140,882

Exercised Options: $9,408,361

Current Obligation: $9,408,357

Actual Outlays: $9,601,845

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $9,604,981

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 2032H521A00026

IDV Type: BPA

Timeline