Treasury's IRS awards $39.3M hardware order to FCN, Inc. under full and open competition

Contract Overview

Contract Amount: $39,346,140 ($39.3M)

Contractor: FCN, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2023-09-30

End Date: 2024-09-29

Contract Duration: 365 days

Daily Burn Rate: $107.8K/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: REF: 2032H5-23-F-00492 CISCO CATALOG CLIN 0002 HARDWARE ORDER BASE YR

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $39.3 million to FCN, INC. for work described as: REF: 2032H5-23-F-00492 CISCO CATALOG CLIN 0002 HARDWARE ORDER BASE YR Key points: 1. The contract value represents a significant investment in IT infrastructure for the IRS. 2. FCN, Inc. secured this order through a competitive process, suggesting potential for favorable pricing. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. This hardware order is part of the IRS's ongoing efforts to modernize its technological capabilities. 5. The contract's duration of one year indicates a need for timely hardware delivery and support. 6. The specific IT services category (541519) points to a focus on computer-related services beyond simple hardware procurement.

Value Assessment

Rating: good

The contract's base year value of $39.3 million for hardware is substantial. Benchmarking against similar IT hardware procurements for federal agencies is crucial for a precise value assessment. However, the firm-fixed-price nature of the contract provides a degree of cost certainty. The award to FCN, Inc. through full and open competition suggests that the pricing was likely vetted against market rates and competitive offers, implying a reasonable value proposition for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that the solicitation was broadly advertised and all responsible sources were permitted to submit offers. While the specific number of bidders is not provided, this procurement method generally fosters robust competition, which is expected to drive down prices and encourage innovation. The competitive nature of the award suggests that FCN, Inc. presented the most advantageous offer based on the evaluation criteria.

Taxpayer Impact: A full and open competition ensures that taxpayer dollars are used efficiently by leveraging market forces to secure the best possible pricing and terms for essential IT hardware.

Public Impact

Taxpayers benefit from improved IRS operational efficiency and data security through modernized hardware. The IRS gains access to necessary hardware to support its tax administration and enforcement functions. The geographic impact is primarily national, supporting IRS operations across various locations. The contract supports the IT workforce involved in the deployment, maintenance, and support of this hardware.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if this hardware becomes proprietary or difficult to integrate with other systems.
Dependence on a single vendor for hardware could lead to future price increases if competition diminishes.
The effectiveness of the hardware in meeting evolving IRS technological needs over its lifecycle.
Ensuring adequate cybersecurity measures are integrated with the new hardware to protect sensitive data.

Positive Signals

Awarded through full and open competition, indicating a competitive pricing environment.
Firm-fixed-price contract type limits the government's exposure to cost overruns.
The contract supports critical IRS functions, ensuring operational continuity.
FCN, Inc. is a known entity in federal IT contracting, suggesting a degree of reliability.

Sector Analysis

The federal IT hardware market is vast and highly competitive, with numerous vendors vying for government contracts. This contract falls within the broader IT services and hardware procurement sector, which is a significant portion of federal spending. The IRS, as a major federal agency, requires substantial investments in IT infrastructure to manage complex tax systems and vast amounts of data. Comparable spending benchmarks would involve analyzing other large-scale hardware procurements by agencies like the Department of Defense or the Social Security Administration to gauge the relative cost-effectiveness of this award.

Small Business Impact

The provided data does not indicate if this contract included small business set-asides or subcontracting goals. As a large hardware order, it is possible that FCN, Inc. may engage small businesses for specific components or services. However, without explicit information on set-asides or subcontracting plans, the direct impact on the small business ecosystem remains unclear. Further analysis would be needed to determine if opportunities for small business participation were incorporated into the procurement strategy.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. The firm-fixed-price contract type simplifies financial oversight by establishing a set cost. Accountability measures are inherent in the contract terms, requiring FCN, Inc. to deliver specified hardware by the deadline. Transparency is facilitated by the public nature of federal contract awards, though detailed performance metrics may not be publicly disclosed. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to this contract.

Related Government Programs

IRS IT Modernization Initiatives
Federal Civilian Agency IT Hardware Procurement
GSA Schedule IT Hardware Contracts
Department of the Treasury IT Spending

Risk Flags

Potential for hardware obsolescence
Integration complexity with existing IRS IT infrastructure
Cybersecurity risks associated with new hardware deployment
Supply chain vulnerabilities impacting delivery timelines

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $39.3 million to FCN, INC.. REF: 2032H5-23-F-00492 CISCO CATALOG CLIN 0002 HARDWARE ORDER BASE YR

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 $39.3 million.

What is the period of performance?

Start: 2023-09-30. End: 2024-09-29.

What is FCN, Inc.'s track record with the IRS and other federal agencies for similar hardware procurements?

FCN, Inc. has a history of providing IT hardware and services to various federal agencies, including the IRS. Their track record typically involves fulfilling orders through established procurement vehicles like GSA Schedules. For the IRS specifically, FCN has likely participated in multiple hardware refresh cycles and IT infrastructure projects. A detailed review of past performance evaluations and contract histories would reveal their consistency in meeting delivery timelines, product specifications, and service level agreements. Analyzing their performance on similar-sized contracts can provide insights into their reliability and ability to manage complex hardware deployments within the federal environment.

How does the per-unit cost of the hardware awarded in this contract compare to market rates or similar federal contracts?

Without specific details on the exact hardware components (e.g., servers, routers, workstations) and their quantities, a precise per-unit cost comparison is challenging. However, the contract's 'full and open competition' designation suggests that pricing was evaluated against competitive offers and potentially benchmarked against market rates. Agencies often use data from sources like the General Services Administration (GSA) Advantage or other contract vehicles to establish fair market prices. If the IRS utilized a competitive solicitation process, the awarded price is presumed to be advantageous. Further analysis would require deconstructing the CLINs (Contract Line Item Numbers) to identify specific items and comparing their prices to publicly available data or similar federal awards.

What are the primary risks associated with this hardware procurement, and what mitigation strategies are in place?

Key risks include potential hardware obsolescence if technology evolves rapidly, integration challenges with existing IRS systems, cybersecurity vulnerabilities, and supply chain disruptions. Mitigation strategies often involve robust technical specifications that anticipate future needs, thorough testing and validation before full deployment, adherence to strict cybersecurity protocols, and contingency planning for supply chain issues. The firm-fixed-price nature of the contract helps mitigate financial risks related to cost overruns. Furthermore, the competitive award process itself acts as a risk-reduction mechanism by selecting a vendor likely capable of meeting requirements effectively.

How does this contract contribute to the IRS's overall IT modernization goals?

This hardware order is a foundational element for the IRS's IT modernization efforts. Modern, reliable hardware is essential for supporting advanced software applications, improving data processing capabilities, enhancing cybersecurity defenses, and enabling new digital services for taxpayers. By acquiring up-to-date equipment, the IRS can phase out aging infrastructure that may be costly to maintain, prone to failure, or unable to support the latest technological advancements. This investment directly impacts the agency's ability to process tax returns efficiently, manage taxpayer data securely, and adapt to evolving regulatory and technological landscapes.

What has been the historical spending pattern for IT hardware by the IRS in recent years?

The IRS has consistently allocated significant portions of its budget to IT modernization and infrastructure. Historical spending patterns reveal a trend of substantial investments in hardware refreshes, network upgrades, and data center enhancements to support its vast and complex operations. Annual IT spending often runs into the hundreds of millions or even billions of dollars, with hardware procurement being a recurring and critical component. Analyzing past contract awards for similar hardware, software, and IT services can provide context for the $39.3 million awarded in this specific contract, indicating whether it represents a typical expenditure or a deviation based on specific project needs or market conditions.

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: $39,409,146

Exercised Options: $39,346,140

Current Obligation: $39,346,140

Actual Outlays: $39,346,140

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC71B

IDV Type: GWAC

Timeline