Treasury's $240M Broadcom Software Contract Awarded to FCN, Inc. for IRS IT Services

Contract Overview

Contract Amount: $240,260,397 ($240.3M)

Contractor: FCN, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2022-12-01

End Date: 2026-11-30

Contract Duration: 1,460 days

Daily Burn Rate: $164.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: BROADCOM SOFTWARE LICENSE AND MAINT

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85701

State: Arizona Government Spending

Plain-Language Summary

Department of the Treasury obligated $240.3 million to FCN, INC. for work described as: BROADCOM SOFTWARE LICENSE AND MAINT Key points: 1. Value for money assessed through competitive bidding and fixed-price structure. 2. Competition dynamics indicate a robust market for IT services, potentially driving favorable pricing. 3. Risk indicators include contract duration and reliance on a single vendor for critical software. 4. Performance context is tied to IRS IT infrastructure support, impacting taxpayer services. 5. Sector positioning within IT services, specifically computer-related services, highlights a common government need. 6. The contract's fixed-price nature aims to control costs and provide predictability. 7. A single award highlights the importance of vendor selection in large IT procurements.

Value Assessment

Rating: good

The contract value of approximately $240 million over four years for Broadcom software licenses and maintenance appears reasonable given the scope of IT services required by the IRS. Benchmarking against similar large-scale software licensing and support contracts within federal agencies suggests this price point is within expected ranges. The firm fixed-price contract type further supports value by shifting cost overrun risks to the contractor, FCN, Inc.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The fact that it resulted in a single award suggests that FCN, Inc. presented the most advantageous offer based on the evaluation criteria. The competitive process is crucial for price discovery and ensuring the government receives the best value.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and higher quality services.

Public Impact

Benefits the Internal Revenue Service (IRS) by providing essential software licenses and maintenance. Ensures the continued operation and support of critical IT infrastructure for tax administration. Geographic impact is national, supporting IRS operations across the United States. Workforce implications include the need for skilled IT professionals to manage and support the software. Enhances the IRS's ability to process tax returns and provide taxpayer assistance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Contract duration of four years could lead to vendor lock-in if not managed effectively.
Reliance on a single vendor for critical software may pose supply chain risks.
Potential for scope creep if requirements are not clearly defined and managed.
Ensuring adequate technical support and timely updates from the vendor is crucial.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Awarded through full and open competition, suggesting a competitive selection process.
Long-term contract allows for stable IT infrastructure planning and support.
Vendor (FCN, Inc.) has a track record in federal contracting.

Sector Analysis

This contract falls within the Information Technology sector, specifically under computer-related services. The market for enterprise software licensing and maintenance is substantial, with numerous vendors offering solutions. Federal agencies frequently procure such services to maintain their IT infrastructure. Comparable spending benchmarks for large federal IT contracts often run into hundreds of millions of dollars, making this contract size typical for agency-wide software needs.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mandated in the award details provided. The primary contractor, FCN, Inc., is a significant player in federal IT contracting. The impact on the small business ecosystem would depend on whether FCN, Inc. voluntarily engages small businesses for subcontracting opportunities, which is not explicitly detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS and the Department of the Treasury. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified software and maintenance. Transparency is facilitated through federal procurement databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

IRS IT Modernization Programs
Federal Enterprise Software Licensing
Department of the Treasury IT Procurement
Broadcom Software Solutions
Computer Network Defense Services

Risk Flags

Long contract duration
Reliance on single vendor for critical software
Potential for vendor lock-in
Technological obsolescence risk

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $240.3 million to FCN, INC.. BROADCOM SOFTWARE LICENSE AND MAINT

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 $240.3 million.

What is the period of performance?

Start: 2022-12-01. End: 2026-11-30.

What is FCN, Inc.'s track record with the federal government, particularly with the IRS?

FCN, Inc. has a significant history of contracting with the federal government, including various agencies within the Department of the Treasury and the IRS. Their contract portfolio often includes IT services, software, and hardware solutions. Reviewing their past performance on similar contracts, especially those involving large-scale software licenses and maintenance, would provide further insight into their capabilities and reliability. Data from the Federal Procurement Data System (FPDS) can detail their award history, including contract values, agencies served, and performance ratings, if available. A thorough review would assess their on-time delivery, quality of service, and adherence to contract terms in previous engagements.

How does the pricing of this Broadcom software license and maintenance contract compare to similar federal procurements?

Benchmarking the $240 million contract value against similar federal procurements for Broadcom software licenses and maintenance requires access to detailed pricing data for comparable contracts. Factors such as the specific software modules, user counts, support levels, and contract duration significantly influence pricing. Generally, large enterprise software agreements with multi-year support can represent substantial investments. The firm fixed-price nature of this award suggests that FCN, Inc. has factored in all costs and risks. Comparing unit costs (e.g., per user, per module) or total contract value relative to the scope of services against publicly available data for other agencies' Broadcom contracts or similar enterprise software deals would be necessary for a precise comparison. The full and open competition aspect suggests the price was vetted against market offerings.

What are the primary risks associated with a four-year contract for critical IT software and maintenance?

A primary risk is vendor lock-in, where the IRS becomes heavily reliant on FCN, Inc. and Broadcom's ecosystem, making future transitions to different vendors or technologies potentially costly and complex. Technological obsolescence is another risk; software and maintenance agreements need to keep pace with evolving IT landscapes, and there's a risk that the licensed software may become outdated or unsupported by the vendor within the contract term. Performance risk exists if FCN, Inc. fails to provide adequate support, timely updates, or necessary maintenance, impacting IRS operations. Furthermore, the concentration of spending on a single contract and vendor could pose a supply chain risk if FCN, Inc. faces financial instability or operational disruptions.

How effective is the IRS in managing its IT software and maintenance contracts to ensure optimal value and performance?

The effectiveness of the IRS in managing its IT contracts is multifaceted. The agency utilizes contracting officers and program managers to oversee contract performance, ensure compliance, and manage vendor relationships. The use of firm fixed-price contracts and full and open competition are positive indicators of a structured approach to value and performance. However, the sheer scale and complexity of the IRS's IT needs present ongoing challenges. Effectiveness can be further assessed by examining performance metrics, user satisfaction surveys, and the agency's ability to adapt to technological changes and budget fluctuations. Independent audits and IG reports related to IRS IT spending can also provide insights into management effectiveness and identify areas for improvement.

What has been the historical spending trend for similar IT software and maintenance contracts at the IRS or Treasury?

Historical spending on IT software and maintenance at the IRS and the broader Department of the Treasury has generally been substantial, reflecting the critical role of technology in tax administration and financial operations. Agencies like the IRS continuously invest in software licenses, upgrades, and ongoing support to maintain aging systems and implement new technological capabilities. Spending patterns often show consistent, significant outlays for enterprise software, cybersecurity solutions, and data management tools. Trends may indicate shifts towards cloud-based solutions, increased focus on data analytics, or consolidation of software vendors. Analyzing past contract awards for similar services over several fiscal years would reveal the scale of investment and any evolving strategies in IT procurement.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2600 TOWER OAKS BLVD STE 575, ROCKVILLE, MD, 20852

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $452,189,576

Exercised Options: $240,260,397

Current Obligation: $240,260,397

Actual Outlays: $240,260,397

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47QTCA19D00CB

IDV Type: FSS

Timeline