Treasury's $40.9M Deloitte contract for EDCMO program support shows fair value with limited competition

Contract Overview

Contract Amount: $40,915,635 ($40.9M)

Contractor: Deloitte & Touche LLP

Awarding Agency: Department of the Treasury

Start Date: 2021-09-30

End Date: 2025-03-29

Contract Duration: 1,276 days

Daily Burn Rate: $32.1K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ENTERPRISE DIGITALIZATION AND CASE MANAGEMENT OFFICE (EDCMO) PROGRAM MANAGEMENT SUPPORT

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $40.9 million to DELOITTE & TOUCHE LLP for work described as: ENTERPRISE DIGITALIZATION AND CASE MANAGEMENT OFFICE (EDCMO) PROGRAM MANAGEMENT SUPPORT Key points: 1. The contract's value appears reasonable when benchmarked against similar IT program management support services. 2. Full and open competition was utilized, but only one bid was received, raising questions about price discovery. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. Performance is being tracked under a Best Practices Agreement (BPA) Call, suggesting an existing relationship and established performance metrics. 5. The contract supports the IRS's critical Enterprise Digitalization and Case Management Office (EDCMO) modernization efforts. 6. Deloitte's extensive experience in government IT services positions them well for this type of complex program management.

Value Assessment

Rating: fair

The contract's total value of approximately $40.9 million over its period of performance appears to be within a reasonable range for comprehensive program management support services for a large federal agency like the IRS. Benchmarking against similar IT program management contracts awarded by other agencies suggests that the overall price is not excessively high, especially considering the scope and duration. However, the lack of multiple bids in a full and open competition limits the ability to definitively assess if the best possible price was achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive indicator for taxpayer value. However, only one bid was received. While this could indicate that Deloitte was the only qualified bidder or that the solicitation was structured in a way that deterred other potential bidders, it significantly limits the competitive pressure that typically drives down prices and fosters innovation. The lack of multiple proposals means the IRS did not benefit from a range of pricing options or technical approaches.

Taxpayer Impact: A single bid in a full and open competition means taxpayers may not have received the most competitive pricing. The government missed an opportunity to leverage multiple offers to secure a better deal.

Public Impact

Taxpayers benefit from improved efficiency and modernization of the IRS's case management and digitalization processes. The contract delivers essential program management support to the Enterprise Digitalization and Case Management Office (EDCMO). Services are primarily delivered in Virginia, impacting the local IT professional workforce. Modernized systems are expected to enhance the IRS's ability to serve taxpayers and manage tax administration effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition with only one bid received under full and open solicitation.
Potential for vendor lock-in due to the single-bidder scenario.
Reliance on a single contractor for critical program management functions.

Positive Signals

Contract awarded under full and open competition, adhering to federal procurement principles.
Firm Fixed Price contract type helps control costs and mitigate financial risk.
Deloitte is a well-established contractor with a strong track record in federal IT services.
Contract supports a critical IRS modernization initiative (EDCMO).

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on program management and IT consulting for government agencies. The market for these services is highly competitive, with numerous large and small businesses offering specialized expertise. The IRS, as a major federal agency, represents a significant client within this sector. Spending on IT modernization and program support by agencies like the IRS is substantial, reflecting the ongoing need to update legacy systems and improve digital service delivery. Comparable spending benchmarks for similar program management support contracts can vary widely based on scope, duration, and agency size.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. The award to a large firm like Deloitte suggests that the primary focus was on specialized expertise and capacity rather than small business participation. This contract's structure does not appear to directly benefit the small business ecosystem, although Deloitte may engage small businesses as subcontractors if deemed necessary for specific tasks.

Oversight & Accountability

Oversight for this contract is likely managed by the contracting officers and program managers within the IRS's Enterprise Digitalization and Case Management Office (EDCMO). As a firm-fixed-price contract awarded under full and open competition, it implies adherence to standard federal procurement regulations. Transparency is generally maintained through contract award databases like FPDS. Accountability measures would be tied to performance metrics outlined in the contract and the BPA Call. The Inspector General for the Treasury Department would have jurisdiction for audits and investigations if any concerns regarding waste, fraud, or abuse arise.

Related Government Programs

IRS IT Modernization Programs
Federal Case Management Systems
Digital Government Initiatives
Enterprise Resource Planning (ERP) Support
IT Program Management Support Services

Risk Flags

Limited competition (single bid)
Potential for higher costs due to lack of competition
Reliance on incumbent contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $40.9 million to DELOITTE & TOUCHE LLP. ENTERPRISE DIGITALIZATION AND CASE MANAGEMENT OFFICE (EDCMO) PROGRAM MANAGEMENT SUPPORT

Who is the contractor on this award?

The obligated recipient is DELOITTE & TOUCHE LLP.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $40.9 million.

What is the period of performance?

Start: 2021-09-30. End: 2025-03-29.

What is Deloitte's track record with the IRS and other federal agencies for similar program management contracts?

Deloitte & Touche LLP has a substantial track record of performing IT and program management support services for the IRS and other federal agencies. They are a major government contractor frequently awarded large-scale IT modernization and transformation projects. Their experience typically includes areas like enterprise architecture, system integration, cybersecurity, and business process re-engineering. For the IRS specifically, Deloitte has been involved in various initiatives aimed at modernizing tax administration systems and improving taxpayer services. Their past performance on similar contracts would be a key factor in the IRS's decision-making process, although the limited competition here means this track record was assessed against a single proposal.

How does the value of this contract compare to other federal IT program management support contracts of similar scope and duration?

The total contract value of approximately $40.9 million over roughly 2.5 years (from September 2021 to March 2025) places this contract in the mid-to-large tier for federal IT program management support. Benchmarking against similar contracts requires detailed analysis of scope, deliverables, and agency size. However, preliminary comparisons suggest that the per-year cost is within a reasonable range for the level of support required by a major agency like the IRS for a critical initiative like EDCMO. Contracts for similar services can range from tens to hundreds of millions of dollars depending on complexity and duration. The firm-fixed-price nature helps control overall expenditure compared to cost-plus contracts.

What are the primary risks associated with awarding a contract with only one bid under full and open competition?

The primary risk associated with a single bid under full and open competition is the lack of robust price competition. This can lead to the government paying a higher price than might be achieved in a multi-bid scenario. It also reduces the government's leverage in negotiating terms and conditions. Furthermore, it raises questions about the effectiveness of the solicitation process – was it too restrictive, poorly advertised, or did market conditions genuinely limit the number of capable bidders? This situation can also signal potential vendor lock-in, making future procurements more challenging and potentially more expensive if the incumbent contractor is the only viable option.

How effective is the Best Practices Agreement (BPA) Call mechanism for managing performance on this contract?

A Best Practices Agreement (BPA) Call, often referred to as a task order against a BPA, is generally an effective mechanism for managing performance when there's an established relationship and pre-negotiated terms. It allows the government to quickly procure services from a pre-vetted vendor. For performance management, the effectiveness hinges on the clarity of the Statement of Work (SOW) within the BPA Call, the defined metrics and Key Performance Indicators (KPIs), and the diligence of the government's project managers in monitoring progress and deliverables. If the BPA Call includes specific performance standards and remedies for non-performance, it provides a solid framework for oversight.

What is the historical spending trend for IT program management support at the IRS?

Historical spending trends for IT program management support at the IRS have generally been significant and increasing over the past decade, driven by the need to modernize aging infrastructure and systems, enhance cybersecurity, and improve taxpayer services through digital transformation. Agencies like the IRS often allocate substantial portions of their IT budgets to program management, system integration, and consulting services to navigate complex technological changes. While specific figures for 'program management support' can be aggregated differently across reports, the overall IT spending at the IRS reflects a continuous investment in upgrading capabilities, including digitalization efforts like those managed under EDCMO.

What are the potential implications of this contract on the IRS's long-term IT strategy and vendor landscape?

This contract, supporting the EDCMO, is likely a component of the IRS's broader long-term IT strategy focused on digitalization and modernization. Awarding significant program management support to a large incumbent like Deloitte can streamline execution but also risks creating a dependency. The IRS's strategy may involve leveraging fewer, larger prime contractors for major initiatives, or it could be part of a phased approach where specific capabilities are outsourced. The vendor landscape implication is that established players with deep federal IT experience are well-positioned for such large-scale contracts, potentially making it harder for newer or smaller firms to break into these specific high-value program management roles within the IRS.

Industry Classification

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

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

Parent Company: Deloitte Consulting LLP

Address: 1919 N LYNN ST, ARLINGTON, VA, 22209

Business Categories: Category Business, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $53,194,257

Exercised Options: $40,915,635

Current Obligation: $40,915,635

Actual Outlays: $38,525,825

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $1,032,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 2032H821A00015

IDV Type: BPA

Timeline