Leidos Management Systems Designers, Inc. awarded over $85M for IT services to the IRS over 11 years

Contract Overview

Contract Amount: $85,479,606 ($85.5M)

Contractor: Leidos Management Systems Designers, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2006-09-30

End Date: 2017-09-25

Contract Duration: 4,013 days

Daily Burn Rate: $21.3K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 6

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: CONTRACTOR - TIPSS - 3

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $85.5 million to LEIDOS MANAGEMENT SYSTEMS DESIGNERS, INC. for work described as: CONTRACTOR - TIPSS - 3 Key points: 1. Contract awarded via competitive delivery order, suggesting a degree of market vetting. 2. The contract duration of over 11 years indicates a long-term need for these services. 3. The Cost Plus Fixed Fee (CPFF) pricing structure can incentivize cost control but requires careful oversight. 4. The contract was not set aside for small businesses, suggesting larger prime contractors were involved. 5. The services provided fall under Computer Systems Design, a critical area for government operations. 6. The significant dollar value points to a substantial investment in IT infrastructure or support.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific service details and comparable market rates for Computer Systems Design Services. The CPFF structure, while common, can lead to cost overruns if not managed tightly. The total award amount of over $85 million spread across more than a decade suggests a moderate annual spend, but the true value for money depends on the efficiency and effectiveness of the services delivered and the outcomes achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order, indicating that it was competed under a broader contract vehicle. The presence of 6 bidders suggests a reasonably competitive environment for this specific order. The level of competition is generally positive for price discovery, as multiple vendors vied for the work, potentially driving down costs compared to a sole-source award.

Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers, as it likely resulted in a more favorable price than if the contract had been awarded without competition.

Public Impact

The Internal Revenue Service (IRS) benefits from enhanced computer systems design services, crucial for tax administration. Taxpayers indirectly benefit from improved IT infrastructure that supports efficient tax processing and services. The contract supports IT professionals and potentially other roles within the contractor's organization. The geographic impact is primarily within Maryland, where the contractor is located, but the services support a national agency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep under the CPFF contract type if not rigorously monitored.
Long contract duration may lead to vendor lock-in or reduced agility in adopting new technologies.
Lack of specific performance metrics makes it difficult to assess the true effectiveness of the services.

Positive Signals

Awarded through a competitive process, indicating market interest and potential for good pricing.
The significant investment suggests a commitment to modernizing or maintaining critical IRS IT systems.
The contractor, Leidos, is a large and established entity with a track record in government IT services.

Sector Analysis

Computer Systems Design Services is a significant segment within the broader IT services sector. This contract falls under professional services, where government agencies rely on specialized firms to design, develop, and maintain complex IT systems. The market is characterized by a mix of large prime contractors and specialized subcontractors. Spending in this area is consistently high across federal agencies due to the ongoing need for IT modernization and support.

Small Business Impact

This contract was not specifically set aside for small businesses, and the prime contractor is a large business. While there is no explicit information on subcontracting plans, large contracts often involve small business participation as subcontractors. The absence of a small business set-aside means opportunities for direct prime contracting were likely limited for smaller firms in this instance.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. The CPFF contract type necessitates close monitoring of costs and performance to ensure value for money. Transparency is generally provided through contract award databases, but detailed operational oversight information is usually internal to the agency.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian IT Services
Computer Systems Design Contracts
Department of the Treasury IT Spending

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost overruns.
Long contract duration may present risks related to technological obsolescence or vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $85.5 million to LEIDOS MANAGEMENT SYSTEMS DESIGNERS, INC.. CONTRACTOR - TIPSS - 3

Who is the contractor on this award?

The obligated recipient is LEIDOS MANAGEMENT SYSTEMS DESIGNERS, 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 $85.5 million.

What is the period of performance?

Start: 2006-09-30. End: 2017-09-25.

What specific computer systems design services were provided under this contract?

The provided data indicates the contract was for 'Computer Systems Design Services' (NAICS 541512). However, the specific nature of these services is not detailed. Typically, this category encompasses a wide range of activities including IT consulting, systems integration, network design, software development lifecycle support, and IT infrastructure planning. For the IRS, these services could have been related to tax processing systems, taxpayer databases, internal IT infrastructure, cybersecurity enhancements, or data analytics platforms. Without more granular information, it's difficult to pinpoint the exact deliverables.

How does the $85.4 million award compare to other IRS IT contracts?

Comparing this $85.4 million award requires context regarding the IRS's overall IT budget and the duration of the contract. Awarded over approximately 11 years (from 2006 to 2017), the average annual spend was roughly $7.7 million. The IRS manages a substantial IT budget, often in the billions of dollars annually, to support its vast operations. Therefore, this contract, while significant, represents a portion of the IRS's IT investment. To provide a precise comparison, one would need to analyze the IRS's IT spending portfolio for the period 2006-2017, identifying other contracts of similar scope and duration within the Computer Systems Design Services category or related IT functional areas.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract for IT services?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. While the contractor is incentivized to control costs to protect their fixed fee, the government bears the risk of allowable costs exceeding initial estimates. This structure can lead to less price transparency compared to fixed-price contracts. For IT services, where requirements can evolve rapidly, CPFF can be beneficial for flexibility but requires robust government oversight to ensure costs remain reasonable and that the contractor is not incentivized to incur unnecessary expenses. Effective management of scope, regular audits, and clear performance metrics are crucial to mitigate these risks.

What was the contractor's track record with the IRS prior to or during this contract?

Leidos Management Systems Designers, Inc. (part of Leidos) is a large, established government contractor with extensive experience in IT services. While specific performance details for this particular contract are not provided in the summary data, Leidos has a long history of serving federal agencies, including the IRS. Their track record generally involves complex IT solutions, systems integration, and support services. For a contract of this duration and value, it is likely that Leidos had demonstrated capabilities and prior successful engagements with the government to be awarded such a significant delivery order.

How did the competition level (6 bidders) impact the final price for taxpayers?

Having six bidders for this delivery order suggests a healthy level of competition. In a competitive bidding process, multiple vendors submit proposals, often leading to more aggressive pricing as they vie for the contract. This competition helps ensure that the government is obtaining services at or near market rates, preventing potential overpayment that could occur with a sole-source or limited-competition award. The presence of multiple bidders provides a basis for price negotiation and comparison, ultimately benefiting taxpayers by driving down costs and encouraging efficiency from the winning contractor.

What is the significance of the contract being a 'Delivery Order'?

The term 'Delivery Order' indicates that this contract was likely awarded under a larger, pre-existing Indefinite Delivery/Indefinite Quantity (IDIQ) contract or a similar multiple-award framework. This means that the initial competition likely occurred when the parent IDIQ contract was awarded. This specific delivery order represents a task or a specific quantity of goods/services ordered against that larger contract. For taxpayers, this approach can streamline procurement by having pre-vetted contractors and established terms, potentially reducing administrative costs and time for individual task orders.

Industry Classification

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

Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 6

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leidos Holdings, Inc. (UEI: 611641312)

Address: 2677 PROSPERITY AVE., SUITE 700, FAIRFAX, VA, 22031

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $104,884,670

Exercised Options: $99,817,171

Current Obligation: $85,479,606

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: TIRNO06D00013

IDV Type: IDC

Timeline