Treasury's IRS awards $3.66M for Active Directory support, highlighting ongoing IT infrastructure needs

Contract Overview

Contract Amount: $3,658,980 ($3.7M)

Contractor: RED River Technology LLC

Awarding Agency: Department of the Treasury

Start Date: 2025-03-18

End Date: 2027-03-17

Contract Duration: 729 days

Daily Burn Rate: $5.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ACTIVE DIRECTORY SUPPORT SERVICES SOFTWARE MAINTENANCE OR EQUIVALENT PRODUCT

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $3.7 million to RED RIVER TECHNOLOGY LLC for work described as: ACTIVE DIRECTORY SUPPORT SERVICES SOFTWARE MAINTENANCE OR EQUIVALENT PRODUCT Key points: 1. Contract value appears reasonable for specialized IT support services. 2. Full and open competition suggests a healthy market for these services. 3. Potential risks include vendor lock-in and the need for continuous service delivery. 4. This contract supports critical IT infrastructure for tax administration. 5. The IT services sector is characterized by rapid technological change and specialized expertise. 6. Spending aligns with broader government efforts to modernize IT systems.

Value Assessment

Rating: good

The contract value of approximately $3.66 million over two years for Active Directory support services appears to be within a reasonable range for specialized IT maintenance and software. Benchmarking against similar contracts for enterprise-level IT support and software licensing would provide a more precise value-for-money assessment. The firm-fixed-price structure helps manage cost certainty for the government, but the overall value is contingent on the quality and effectiveness of the services delivered.

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 presence of four bidders suggests a competitive market for these Active Directory support services. A competitive bidding process generally leads to better price discovery and potentially more favorable terms for the government, as vendors strive to offer their best proposals.

Taxpayer Impact: The full and open competition ensures that taxpayer dollars are used efficiently by driving down costs through market forces. It also promotes innovation by allowing a wide range of qualified vendors to participate.

Public Impact

Federal employees and contractors will benefit from reliable IT infrastructure, enabling efficient tax administration. Essential IT support services for Active Directory will be maintained, ensuring the security and functionality of IRS systems. The geographic impact is primarily within the IRS's operational centers, supporting national tax functions. Workforce implications include the potential for continued employment for IT specialists within the contracting company and indirectly supporting IRS IT staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Dependence on a single vendor for critical IT support could lead to future price increases or service disruptions if not managed proactively.
The rapid evolution of cybersecurity threats necessitates constant vigilance and adaptation of support services to maintain system integrity.
Ensuring seamless integration with existing and future IRS IT systems requires careful planning and execution by the vendor.

Positive Signals

The firm-fixed-price contract provides cost predictability for the IRS, mitigating budget uncertainty.
Full and open competition suggests a robust market, potentially leading to high-quality service delivery.
The contract duration of two years allows for stable support while providing opportunities for re-evaluation and potential future competition.

Sector Analysis

The IT services sector, particularly within government contracting, is highly competitive and dynamic. This contract falls under the 'Other Computer Related Services' NAICS code (541519), which encompasses a broad range of IT support, consulting, and integration services. The market for Active Directory support is substantial, driven by the widespread use of Microsoft's identity and access management solutions across federal agencies. Comparable spending benchmarks for similar enterprise-level IT support contracts can vary significantly based on scope, duration, and specific service level agreements.

Small Business Impact

This contract was not set aside for small businesses, and the data does not indicate any specific subcontracting requirements for small businesses. The award to Red River Technology LLC, a large business, suggests that the primary focus was on meeting the technical requirements and competitive pricing offered by established IT service providers. Further analysis would be needed to determine if opportunities exist for small businesses to participate as subcontractors.

Oversight & Accountability

Oversight for this contract will likely be managed by the IRS's contracting officers and program managers, who are responsible for ensuring compliance with the contract terms and performance standards. Accountability measures are embedded within the firm-fixed-price structure and the defined delivery order schedule. Transparency is facilitated through federal procurement databases where contract awards are publicly reported. Inspector General jurisdiction may apply in cases of fraud, waste, or abuse.

Related Government Programs

IRS IT Infrastructure Modernization
Federal Civilian IT Services
Microsoft Software Maintenance Contracts
Active Directory Management Services
Cybersecurity Support Services

Risk Flags

Potential for vendor lock-in
Cybersecurity risks associated with third-party IT support
Dependence on specific software versions or updates
Service continuity and disaster recovery planning

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $3.7 million to RED RIVER TECHNOLOGY LLC. ACTIVE DIRECTORY SUPPORT SERVICES SOFTWARE MAINTENANCE OR EQUIVALENT PRODUCT

Who is the contractor on this award?

The obligated recipient is RED RIVER TECHNOLOGY 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 $3.7 million.

What is the period of performance?

Start: 2025-03-18. End: 2027-03-17.

What is the track record of Red River Technology LLC in providing similar IT support services to federal agencies, particularly the IRS?

Red River Technology LLC has a significant history of contracting with the federal government, including the IRS. They have been awarded numerous contracts across various agencies for IT hardware, software, and services. Their experience often includes network infrastructure, cybersecurity solutions, and managed IT services. For Active Directory support specifically, their past performance would need to be reviewed against the requirements of this contract. Agencies typically evaluate past performance as a key factor in award decisions, looking at factors like on-time delivery, quality of service, and adherence to budget. A detailed review of their performance on prior, similar contracts would indicate their capability to meet the demands of this specific award.

How does the awarded amount of $3.66 million compare to the estimated value or budget for this Active Directory support service?

The awarded amount of $3.66 million represents the total ceiling value for this delivery order, which is expected to be executed over a period of approximately two years (729 days). Without access to the government's independent government cost estimate (IGCE) or the specific budget allocated for this service, a direct comparison is challenging. However, the fact that it was awarded under full and open competition with four bidders suggests that the price achieved was competitive. If the government's estimate was significantly higher, it indicates strong value for money. Conversely, if the bids were much lower than anticipated, it might suggest an overestimation of the required effort or a highly competitive market driving prices down. The firm-fixed-price nature means the government is obligated to pay up to this ceiling, but actual spending will depend on the services utilized.

What are the primary risks associated with relying on Red River Technology LLC for Active Directory support, and how are they mitigated?

Key risks include potential vendor lock-in, where the IRS becomes overly dependent on Red River's specific expertise and solutions, making future transitions difficult or costly. There's also the risk of service degradation or failure, which could disrupt critical IRS operations. Cybersecurity vulnerabilities introduced or not adequately addressed by the vendor represent another significant risk. Mitigation strategies typically involve clearly defined Service Level Agreements (SLAs) with performance metrics and penalties, regular performance reviews, maintaining strong government oversight, and ensuring the contract includes provisions for knowledge transfer and transition support. The competitive nature of the award also serves as a partial mitigation, as the IRS can leverage future competition to ensure continued good performance.

How effective is the 'full and open competition' approach in ensuring value for money for this specific IT support contract?

The 'full and open competition' approach is generally considered the most effective method for ensuring value for money in federal contracting, especially for IT services where the market is often robust. By allowing all responsible sources to submit bids, the government maximizes the potential for receiving competitive pricing and innovative solutions. In this case, with four bidders vying for the contract, it indicates a healthy level of competition. This competitive pressure incentivizes vendors to offer their best pricing and technical approaches to win the award. The firm-fixed-price contract type further enhances value by shifting performance risk to the contractor and providing cost certainty to the government, assuming the scope is well-defined.

What is the historical spending pattern for Active Directory support services at the IRS or Treasury, and how does this award fit within that trend?

Historical spending on IT infrastructure and support services, including identity and access management solutions like Active Directory, has been a consistent and significant expenditure for the IRS and the broader Treasury Department. Agencies continually invest in maintaining and upgrading these foundational IT systems to ensure operational continuity, security, and compliance with evolving technology standards. This $3.66 million award appears to be part of this ongoing investment. Without specific historical data for this exact service, it's difficult to say if this represents an increase, decrease, or stable spending trend. However, it aligns with the general government-wide push for IT modernization and robust cybersecurity.

Industry Classification

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

Product/Service Code: IT AND TELECOM - COMPUTE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 14111 PARK MEADOW DR STE 120, CHANTILLY, VA, 20151

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

Financial Breakdown

Contract Ceiling: $6,583,780

Exercised Options: $3,658,980

Current Obligation: $3,658,980

Actual Outlays: $2,196,580

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC46B

IDV Type: GWAC

Timeline