Treasury's IRS awards $16.5M sole-source contract for inserter hardware maintenance

Contract Overview

Contract Amount: $16,464,698 ($16.5M)

Contractor: Bell and Howell, LLC

Awarding Agency: Department of the Treasury

Start Date: 2023-08-01

End Date: 2027-01-31

Contract Duration: 1,279 days

Daily Burn Rate: $12.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: BASE YEAR INSERTER HARDWARE MAINTENANCE FOR 10 INSERTERS AT OGDEN SITE AND DETROIT SITE.

Place of Performance

Location: OGDEN, WEBER County, UTAH, 84201

State: Utah Government Spending

Plain-Language Summary

Department of the Treasury obligated $16.5 million to BELL AND HOWELL, LLC for work described as: BASE YEAR INSERTER HARDWARE MAINTENANCE FOR 10 INSERTERS AT OGDEN SITE AND DETROIT SITE. Key points: 1. The contract's value of $16.5 million over its period of performance raises questions about cost-effectiveness for essential maintenance services. 2. Sole-source procurement limits competitive pressure, potentially leading to higher prices and reduced innovation. 3. The lack of competition is a significant risk indicator, suggesting potential overpayment or inadequate service levels. 4. Performance context is limited due to the sole-source nature, making it difficult to benchmark against industry standards. 5. This contract falls within the industrial machinery repair and maintenance sector, a critical but often overlooked area for government operations. 6. The contract's duration of over three years suggests a long-term reliance on a single provider for essential equipment.

Value Assessment

Rating: questionable

Benchmarking the value of this $16.5 million contract for inserter hardware maintenance is challenging without competitive data. As a sole-source award, there's no direct comparison to market rates derived from a bidding process. The fixed-price nature provides some cost certainty, but the absence of competition means the IRS may not be achieving the best possible price or service quality. Further analysis would require understanding the specific maintenance requirements and comparing them to industry benchmarks for similar equipment and service levels.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Bell and Howell, LLC, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition means that the IRS did not benefit from the price discovery and potential cost savings that a competitive environment usually provides. It suggests that either the agency determined only one vendor could meet the requirements or that a competitive process was deemed impractical or not in the government's best interest for reasons not fully detailed.

Taxpayer Impact: Taxpayers may be paying a premium for these maintenance services due to the absence of competitive bidding. The lack of price pressure from multiple vendors could lead to higher overall costs for the government.

Public Impact

The Internal Revenue Service (IRS) is the primary beneficiary, ensuring the operational continuity of its inserter equipment. Essential hardware maintenance services for 10 inserters at two key IRS sites (Ogden and Detroit) are delivered. The geographic impact is concentrated at the Ogden, Utah, and Detroit, Michigan, IRS facilities. The contract supports the operational workforce by ensuring the tools they rely on are functional and maintained.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Lack of transparency in the justification for sole-source procurement.
Potential for vendor lock-in and reduced service quality over time.
No clear mechanism for performance benchmarking against competitors.
High contract value without competitive validation.

Positive Signals

Contract ensures operational continuity for critical IRS equipment.
Fixed-price contract provides some cost predictability.
Awardee has a direct relationship with the equipment, potentially leading to specialized knowledge.
Maintenance services are essential for the functioning of mail processing operations.

Sector Analysis

This contract falls within the Commercial and Industrial Machinery and Equipment Repair and Maintenance sector, specifically NAICS code 811310. This sector is vital for ensuring the operational readiness of various government and commercial equipment. While specific spending benchmarks for inserter maintenance are not readily available, the overall government spending on industrial equipment maintenance is substantial. This contract represents a small but critical component of the IRS's operational infrastructure, ensuring the smooth functioning of its mail processing capabilities.

Small Business Impact

This contract was not awarded to a small business, nor does it appear to include specific small business set-aside provisions. There is no explicit mention of subcontracting requirements for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem is likely minimal, and opportunities for small business participation in this specific contract are not apparent from the available information.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the IRS's contracting officers and program managers. As a definitive contract, it is subject to standard federal procurement regulations and oversight mechanisms. Transparency regarding the justification for the sole-source award and ongoing performance monitoring would be key aspects of oversight. The Inspector General for the Department of the Treasury may also have jurisdiction for audits or investigations if concerns arise regarding the contract's execution or value.

Related Government Programs

IRS Mail Processing Equipment Maintenance
Federal Office Equipment Services
Government Logistics and Operations Support
Department of the Treasury IT and Equipment Maintenance

Risk Flags

Sole-source procurement
Lack of competitive bidding
High contract value without competition
Potential for cost overruns
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $16.5 million to BELL AND HOWELL, LLC. BASE YEAR INSERTER HARDWARE MAINTENANCE FOR 10 INSERTERS AT OGDEN SITE AND DETROIT SITE.

Who is the contractor on this award?

The obligated recipient is BELL AND HOWELL, 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 $16.5 million.

What is the period of performance?

Start: 2023-08-01. End: 2027-01-31.

What is the track record of Bell and Howell, LLC in performing similar government contracts?

Bell and Howell, LLC has a history of providing services related to mail processing and document management solutions. While specific details on their performance for similar government maintenance contracts are not provided in this data snippet, their specialization in inserter technology suggests they possess the necessary expertise. A deeper dive into their contract history, including past performance evaluations and any reported issues on federal contracts, would be necessary to fully assess their track record. This would involve reviewing contract databases and agency performance reports to understand their reliability, quality of service, and adherence to contractual terms in previous engagements.

How does the $16.5 million contract value compare to industry benchmarks for inserter maintenance?

Directly comparing the $16.5 million contract value to industry benchmarks is difficult without more specific information on the type and age of the inserters, the scope of maintenance required (e.g., preventative vs. corrective, response times), and the specific service level agreements. As a sole-source award, the price was not validated through competition. However, for context, large-scale mailroom operations often involve significant maintenance budgets. To assess value, one would typically benchmark against rates for similar equipment from other service providers or analyze the cost per inserter per year. Given the duration and value, it suggests a comprehensive maintenance plan is in place, but the lack of competitive bids prevents a definitive value-for-money assessment against market alternatives.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to inflated pricing and potentially suboptimal service quality. Without competing bids, the IRS has less leverage to negotiate favorable terms or ensure they are receiving the best value. There's also a risk of vendor lock-in, where the agency becomes heavily reliant on Bell and Howell, LLC, making it difficult and costly to switch providers in the future. Furthermore, the absence of competition can reduce the incentive for the contractor to innovate or proactively improve service delivery. Finally, the justification for the sole-source award itself could be a point of scrutiny if it's not robustly documented.

What is the expected effectiveness of this contract in ensuring IRS mail processing continuity?

The effectiveness of this contract in ensuring IRS mail processing continuity is expected to be high, provided Bell and Howell, LLC performs as contracted. The contract specifically addresses the maintenance of 10 inserters at two critical IRS sites, which are essential for mail operations. The fixed-price nature and defined period of performance offer a degree of certainty. However, the true measure of effectiveness will depend on the contractor's responsiveness, the quality of maintenance performed, and the actual uptime of the inserter equipment. Without competitive benchmarks, it's hard to quantify 'optimal' effectiveness, but the contract's existence aims to prevent disruptions.

How does this contract fit into the IRS's overall spending on operational equipment?

This $16.5 million contract represents a significant investment in maintaining essential operational equipment for the IRS. While it's focused on specific inserter hardware, it highlights the agency's reliance on specialized machinery for its large-scale mail processing functions. The IRS likely has a broader portfolio of spending on IT, facilities, and other operational equipment. This contract's value should be viewed in the context of the total budget allocated for maintaining such critical infrastructure. Understanding its proportion relative to other equipment maintenance contracts or capital investments would provide better insight into its strategic placement within the IRS's overall financial picture.

Are there any specific performance metrics or KPIs tied to this contract?

The provided data does not specify the exact performance metrics or Key Performance Indicators (KPIs) associated with this contract. Typically, hardware maintenance contracts include metrics related to response times for service calls, equipment uptime percentages, preventative maintenance schedules, and parts availability. Given the fixed-price nature, the IRS would likely have defined service level agreements (SLAs) that Bell and Howell, LLC must meet. The absence of explicit mention of KPIs in the summary data suggests that further review of the contract document itself would be necessary to ascertain these details and how performance is measured and enforced.

Industry Classification

NAICS: Other Services (except Public Administration) › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance

Product/Service Code: IT AND TELECOM - COMPUTE

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3791 S. ALSTON AVENUE, DURHAM, NC, 27713

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

Financial Breakdown

Contract Ceiling: $28,572,848

Exercised Options: $28,572,848

Current Obligation: $16,464,698

Actual Outlays: $14,588,767

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline