IRS PRIME MODERNIZATION Contract Awarded to General Dynamics for $48.5M for IT Services

Contract Overview

Contract Amount: $48,545,342 ($48.5M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2002-08-15

End Date: 2011-12-31

Contract Duration: 3,425 days

Daily Burn Rate: $14.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IRS PRIME MODERNIZATION CONTRACT

Place of Performance

Location: LANHAM, PRINCE GEORGE'S County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $48.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: IRS PRIME MODERNIZATION CONTRACT Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract duration of over 9 years indicates a long-term commitment to IT modernization. 3. The Cost Plus Fixed Fee (CPFF) pricing structure can present cost control challenges if not closely managed. 4. The contract falls under Computer Systems Design Services, a common category for IT modernization efforts. 5. The award was made by the Department of the Treasury for the Internal Revenue Service. 6. The contract was awarded in August 2002 and ended in December 2011.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more granular data on the specific services rendered and the IT environment at the time. However, an award of $48.5 million over approximately 9.5 years for a large-scale modernization effort like the IRS PRIME MODERNIZATION Contract suggests a moderate annual spend. The CPFF structure requires careful oversight to ensure costs remain reasonable and aligned with the fixed fee objectives. Without comparable contract data for similar IRS modernization projects during that period, a precise value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a 'full and open competition' procurement method. This indicates that the solicitation was made available to all responsible sources, and all responsible sources were permitted to submit a bid. The presence of two bidders (no: 2) suggests some level of competition, but the exact number of proposals received and the evaluation criteria would provide a clearer picture of the competitive intensity. A limited number of bidders can sometimes lead to less competitive pricing.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and encourage innovation. However, the ultimate benefit depends on the number of bids received and the effectiveness of the evaluation process.

Public Impact

The primary beneficiary of this contract is the Internal Revenue Service (IRS), which aimed to modernize its IT systems. The services delivered were focused on computer systems design, crucial for updating the agency's technological infrastructure. The geographic impact is national, as the IRS serves taxpayers across the United States. Workforce implications would include IT professionals and contractors involved in the design and implementation of new systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) pricing can lead to cost overruns if not managed diligently.
Limited competition (2 bidders) may have resulted in a higher price than a more robust bidding process.
The long duration of the contract could mean that the technology implemented became outdated before the contract ended.

Positive Signals

Awarded through full and open competition, indicating an effort to maximize available sources.
The contract addressed a critical need for IT modernization within a major federal agency.
The contract was awarded to a well-established IT services provider.

Sector Analysis

The IT services sector is a vast and critical component of federal spending, encompassing a wide range of services from software development to systems integration and maintenance. Federal agencies rely heavily on IT contractors to maintain and upgrade their complex technological infrastructures. The IRS PRIME MODERNIZATION Contract fits within the 'Computer Systems Design Services' NAICS code (541512), a segment characterized by significant government investment. Comparable spending benchmarks would involve looking at other large-scale IT modernization contracts awarded to major federal IT vendors during the early 2000s.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The prime contractor, General Dynamics Information Technology, Inc., is a large business, and any subcontracting would likely be with other large or specialized firms, rather than small businesses specifically targeted by set-aside programs.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of the Treasury and the Internal Revenue Service. As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring would be expected to ensure that costs were reasonable and that the fixed fee was earned through satisfactory performance. Transparency would be facilitated through contract reporting mechanisms, though specific details on public access to performance reports are not provided. Inspector General jurisdiction would typically apply to ensure the integrity of the contracting process and prevent fraud, waste, and abuse.

Related Government Programs

IRS IT Modernization Programs
Treasury Department IT Contracts
General Dynamics IT Contracts
Computer Systems Design Services Contracts
Cost Plus Fixed Fee Contracts

Risk Flags

Cost Overruns Risk (CPFF)
Technological Obsolescence Risk
Limited Competition Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $48.5 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. IRS PRIME MODERNIZATION CONTRACT

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $48.5 million.

What is the period of performance?

Start: 2002-08-15. End: 2011-12-31.

What was the specific scope of work for the IRS PRIME MODERNIZATION Contract?

The IRS PRIME MODERNIZATION Contract, awarded to General Dynamics Information Technology, Inc. under NAICS code 541512 (Computer Systems Design Services), was intended to support the modernization of the Internal Revenue Service's information technology infrastructure. While the provided data does not detail the specific projects undertaken, such contracts typically involve the design, development, integration, and implementation of new software systems, hardware upgrades, network enhancements, and data management solutions. The goal was likely to improve the efficiency, security, and capabilities of the IRS's IT systems to better serve taxpayers and manage tax administration.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for IT modernization?

The Cost Plus Fixed Fee (CPFF) structure, used in the IRS PRIME MODERNIZATION Contract, reimburses the contractor for allowable costs plus a predetermined fixed fee. This contrasts with Fixed Price contracts, where the price is set regardless of costs, and Cost Plus Incentive Fee (CPIF) contracts, which offer bonuses for meeting or exceeding performance targets. CPFF can be beneficial when the scope of work is not well-defined initially, allowing flexibility. However, it places a greater burden on the government to monitor costs to prevent overspending, as the contractor has less incentive to control expenses compared to fixed-price arrangements. For IT modernization, where requirements can evolve, CPFF offers flexibility but demands robust oversight.

What were the potential risks associated with a contract of this duration (over 9 years)?

A contract spanning over 9 years, like the IRS PRIME MODERNIZATION Contract (August 2002 - December 2011), carries inherent risks. Technological obsolescence is a primary concern; IT landscapes evolve rapidly, and systems implemented early in the contract could be outdated by its end. Scope creep is another risk, where the evolving needs of the IRS might lead to significant changes in the project's requirements, potentially increasing costs and delaying timelines, especially under a CPFF structure. Furthermore, maintaining contractor performance and engagement over such an extended period can be challenging, requiring consistent oversight and relationship management to ensure continued alignment with agency goals and effective delivery.

How did the 'full and open competition' with only two bidders impact the contract's value?

While 'full and open competition' is the preferred method for maximizing potential bidders, having only two bidders for the IRS PRIME MODERNIZATION Contract (awarded to General Dynamics) suggests a potentially limited competitive landscape. Ideally, a larger number of bids would drive prices down through market forces. With only two competitors, the pricing power might shift slightly towards the bidders, potentially resulting in a higher-than-optimal price compared to a scenario with multiple strong proposals. The actual value impact depends on the specific evaluation criteria, the quality of the proposals submitted, and the negotiation process that followed the bids.

What is the significance of the NAICS code 541512 (Computer Systems Design Services) for this contract?

The assignment of NAICS code 541512, 'Computer Systems Design Services,' to the IRS PRIME MODERNIZATION Contract signifies that the primary purpose of the contract was to provide services related to the analysis, design, development, and integration of computer systems. This category encompasses a broad range of IT activities, including custom software development, systems integration, IT consulting, and the design of IT infrastructure. For the IRS, this meant engaging a contractor to help architect and build the technological foundations necessary for modernizing its operations, improving data processing, taxpayer services, and internal management systems.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Computer Sciences Corporation (UEI: 009581091)

Address: MARYLAND TECHNOLOGY CENTER, LANHAM, MD, 04

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $57,080,555

Exercised Options: $48,545,342

Current Obligation: $48,545,342

Parent Contract

Parent Award PIID: TIRNO99D00001

IDV Type: IDC

Timeline