Treasury's $14M TIPPS-3 contract for IT services awarded to INSYSCO, INC. shows fair value

Contract Overview

Contract Amount: $13,983,093 ($14.0M)

Contractor: Insysco, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2006-04-11

End Date: 2014-08-01

Contract Duration: 3,034 days

Daily Burn Rate: $4.6K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 21

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: TIPPS-3

Place of Performance

Location: HYATTSVILLE, PRINCE GEORGE'S County, MARYLAND, 20784

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $14.0 million to INSYSCO, INC. for work described as: TIPPS-3 Key points: 1. The contract demonstrates a reasonable cost for IT services over its duration. 2. Competition was robust, with 21 bids received, suggesting competitive pricing. 3. The contract's duration and cost indicate a significant investment in IT infrastructure. 4. Performance context is limited without specific task order details. 5. This contract falls within the IT services sector, a common area for federal spending.

Value Assessment

Rating: fair

The total award amount of approximately $14 million over roughly 8 years suggests a moderate annual spend. Benchmarking against similar IT system design contracts is challenging without specific task order details and performance metrics. However, the cost-plus-fixed-fee structure implies that while the contractor's fee was fixed, the direct costs were subject to change, which can sometimes lead to cost overruns if not managed tightly. The overall value appears fair given the extended period of performance and the nature of IT services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order under the TIPPS-3 vehicle, indicating a full and open competition. The solicitation attracted 21 bids, which is a strong indicator of a healthy competitive environment. A high number of bidders generally allows the government to select the offer that provides the best value, balancing cost and technical capabilities. This level of competition likely contributed to achieving a fair price for the services rendered.

Taxpayer Impact: The robust competition for this contract suggests that taxpayer dollars were likely used efficiently, as multiple vendors vied to offer their best pricing and technical solutions.

Public Impact

The Internal Revenue Service (IRS) is the primary beneficiary, receiving IT system design services. These services likely supported the modernization or maintenance of critical IRS IT systems. The contract's performance was based in Maryland, potentially impacting the local IT workforce. The duration of the contract suggests a long-term need for these IT capabilities within the Treasury.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize contractors to incur costs without direct financial penalty, potentially leading to higher overall expenditures if not closely monitored.
The extended duration of the contract (over 8 years) increases the risk of scope creep or evolving technological needs not being adequately addressed within the original contract framework.
Lack of specific performance metrics or task order details makes a precise assessment of value for money difficult.

Positive Signals

The contract was awarded through full and open competition, attracting a significant number of bidders (21), which typically leads to better pricing and selection.
The use of a competitive delivery order suggests adherence to established procurement processes designed to ensure value.
The contractor, INSYSCO, INC., was selected, implying they met the technical and cost requirements evaluated during the competitive process.

Sector Analysis

The Information Technology (IT) services sector is a substantial component of federal spending, encompassing a wide range of services from system design and development to maintenance and support. Contracts like this, focused on computer systems design, are crucial for government agencies to maintain and upgrade their complex technological infrastructures. The federal government is a major consumer of IT services, with spending often benchmarked against industry standards for similar services, though specific contract types and durations can influence pricing.

Small Business Impact

This contract does not indicate any specific small business set-aside provisions (ss: false, sb: false). As a competitive delivery order, the primary focus was on selecting the best overall value offer. There is no explicit information provided regarding subcontracting plans or their impact on the small business ecosystem. Without set-aside goals, the direct impact on small businesses is likely limited unless they were part of a larger team or subcontracted by the prime.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury and the Internal Revenue Service's contracting and program management offices. The cost-plus-fixed-fee structure necessitates diligent oversight to ensure that costs incurred are reasonable and allocable to the contract. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

TIPPS-3 (Treasury Information Processing and Professional Services)
IT System Design Services
Computer Systems Design Services
Federal IT Procurement
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Cost-plus-fixed-fee contract type may lead to higher costs if not managed properly.
Extended contract duration increases risk of scope changes and technological obsolescence.
Lack of detailed performance metrics hinders precise value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $14.0 million to INSYSCO, INC.. TIPPS-3

Who is the contractor on this award?

The obligated recipient is INSYSCO, 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 $14.0 million.

What is the period of performance?

Start: 2006-04-11. End: 2014-08-01.

What was the specific performance history of INSYSCO, INC. on this contract?

Detailed performance history for INSYSCO, INC. on the TIPPS-3 contract is not publicly available in the provided data. Performance is typically assessed through contract close-out reports or performance evaluations, which are not included here. However, the contract was awarded and completed, suggesting that the contractor met the minimum requirements. Without specific task orders or performance metrics, it's impossible to gauge the quality of service beyond the fact that the contract ran its course. Further investigation into agency performance records or contract close-out documentation would be necessary for a comprehensive understanding of their track record on this specific award.

How does the total award value of $14 million compare to similar IT system design contracts?

Comparing the total award value of $14 million for this contract requires context regarding the scope, duration, and specific services rendered. The contract spanned approximately 8 years (3034 days), making the average annual value around $1.75 million. This figure needs to be benchmarked against IT system design contracts of similar complexity, duration, and agency (e.g., other large federal agencies with significant IT needs). The provided data indicates the North American Industry Classification System (NAICS) code is 541512 (Computer Systems Design Services), which is broad. Without knowing the specific systems designed or the level of complexity, a direct comparison is difficult. However, for large-scale, multi-year IT system design projects within the federal government, $1.75 million annually can be considered a moderate investment.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this nature?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to INSYSCO, INC., revolve around cost control and potential for contractor inefficiency. While the fixed fee provides the contractor with a predictable profit margin, the government bears the risk of cost overruns. If the contractor's actual costs exceed estimates, the government pays those costs, plus the agreed-upon fixed fee. This structure can reduce the incentive for the contractor to control costs aggressively, as their fee remains constant regardless of the actual expenses incurred. Effective government oversight is crucial to ensure that costs are reasonable, allocable, and allowable, and that the contractor exercises due diligence in managing project expenses to prevent unnecessary expenditure of taxpayer funds.

How effective was the competition in ensuring value for money for this contract?

The competition for this contract appears to have been highly effective in ensuring value for money. With 21 bids received under a full and open competition, the government had a wide range of options to evaluate. A large number of bidders typically drives down prices as companies compete to win the contract. The selection of a competitive delivery order suggests that the evaluation process likely considered both technical merit and cost. While the specific pricing details and the winning bid are not provided, the sheer volume of competition strongly indicates that the government was positioned to secure a favorable price and a technically sound solution, thereby maximizing the value of taxpayer investment.

What is the historical spending pattern for Computer Systems Design Services (NAICS 541512) within the Department of the Treasury?

Historical spending patterns for Computer Systems Design Services (NAICS 541512) within the Department of the Treasury are generally substantial, reflecting the agency's critical need for robust IT infrastructure and support. The Treasury, like many large federal departments, relies heavily on IT for financial management, tax administration (via the IRS), and various other operational functions. While the specific total annual spend for NAICS 541512 by Treasury fluctuates based on agency priorities, modernization efforts, and specific project needs, it consistently represents a significant portion of the department's overall contracting budget. This particular $14 million contract awarded to INSYSCO, INC. over approximately 8 years is one component within this broader spending category, indicating a sustained investment in IT system design capabilities.

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: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 21

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Maximus Federal Systems, LLC (UEI: 831503482)

Address: 40 WINSOME LN, FREDERICKSBURG, VA, 07

Business Categories: Category Business, Small Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $14,662,762

Exercised Options: $14,662,762

Current Obligation: $13,983,093

Parent Contract

Parent Award PIID: TIRNO06D00024

IDV Type: IDC

Timeline