Treasury's IRS awards $39.6M to Verizon for Toll Free Contact Center services, a non-competed sole-source contract

Contract Overview

Contract Amount: $39,623,395 ($39.6M)

Contractor: Verizon Business Network Services LLC

Awarding Agency: Department of the Treasury

Start Date: 2012-01-17

End Date: 2023-05-31

Contract Duration: 4,152 days

Daily Burn Rate: $9.5K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: IT

Official Description: TOLL FREE CONTACT CENTER (TFCC) CLOSELY ASSOCIATED: ADMINISTRATIVE MOD.

Place of Performance

Location: ATLANTA, FULTON County, GEORGIA, 30308

State: Georgia Government Spending

Plain-Language Summary

Department of the Treasury obligated $39.6 million to VERIZON BUSINESS NETWORK SERVICES LLC for work described as: TOLL FREE CONTACT CENTER (TFCC) CLOSELY ASSOCIATED: ADMINISTRATIVE MOD. Key points: 1. High contract value ($39.6M) for administrative modifications to a contact center. 2. Sole-source award to Verizon Business Network Services LLC raises competition concerns. 3. Long contract duration (over 11 years) with fixed-price adjustments warrants scrutiny. 4. Lack of competition may lead to suboptimal pricing and reduced innovation.

Value Assessment

Rating: questionable

The contract value of $39.6M for administrative modifications appears high, especially given the lack of competition. Benchmarking against similar administrative support contracts for contact centers is difficult without more detail, but the price seems potentially inflated due to sole-source status.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating no competition was sought. This method limits price discovery and potentially allows for higher costs than a competitive process would yield.

Taxpayer Impact: Taxpayers may be overpaying for administrative modifications due to the absence of competitive bidding.

Public Impact

Citizens relying on toll-free contact services may experience service continuity, but at a potentially higher cost. The IRS's reliance on a single vendor for extended periods could impact service responsiveness and adaptability. Government spending on administrative services without competition raises questions about fiscal responsibility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Long contract duration
Administrative modifications

Positive Signals

Established vendor relationship
Potential for service continuity

Sector Analysis

The IT services sector, particularly computer related services, often sees significant government spending. However, administrative modifications to contact centers, especially on a sole-source basis, are less common and warrant closer examination for efficiency.

Small Business Impact

This contract was awarded to a large business (Verizon Business Network Services LLC) and does not indicate any subcontracting opportunities for small businesses. The lack of competition further limits potential small business involvement.

Oversight & Accountability

The sole-source nature of this award suggests potential weaknesses in procurement oversight. Further review is needed to understand why competition was not pursued for these administrative modifications.

Related Government Programs

Other Computer Related Services
Department of the Treasury Contracting
Internal Revenue Service Programs

Risk Flags

Sole-source award lacks competition
Potential for overpayment due to lack of price discovery
Long contract duration may lead to vendor lock-in
Limited transparency on specific services provided
No indication of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $39.6 million to VERIZON BUSINESS NETWORK SERVICES LLC. TOLL FREE CONTACT CENTER (TFCC) CLOSELY ASSOCIATED: ADMINISTRATIVE MOD.

Who is the contractor on this award?

The obligated recipient is VERIZON BUSINESS NETWORK SERVICES 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 $39.6 million.

What is the period of performance?

Start: 2012-01-17. End: 2023-05-31.

What specific administrative modifications were made under this contract, and do they justify the $39.6M expenditure without competition?

The provided data does not detail the specific administrative modifications. However, a $39.6M expenditure over 11 years for modifications alone, especially without competition, raises significant value concerns. A thorough review of the modification scope and necessity is crucial to determine if the cost aligns with market rates for similar services or if it represents an overpayment.

What are the risks associated with a sole-source award for essential contact center services, particularly regarding long-term cost and service quality?

Sole-source awards eliminate competitive pressure, potentially leading to inflated prices and reduced incentives for the vendor to innovate or improve service quality. Over an 11-year period, the IRS risks being locked into a potentially suboptimal contract, facing higher costs and potentially stagnant service levels compared to what could be achieved through competitive procurement.

How effective has this contract been in ensuring the IRS's toll-free contact center operations remain efficient and cost-effective?

Effectiveness is questionable given the sole-source nature and lack of competition. While the contract has been in place for a long duration, suggesting operational continuity, the absence of competitive benchmarking makes it difficult to assess cost-effectiveness. Without competitive pressure, there's a risk that efficiency gains have been missed, and costs may be higher than necessary.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Verizon Maryland LLC

Address: 22001 LOUDOUN COUNTY PKWY, ASHBURN, VA, 20147

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

Financial Breakdown

Contract Ceiling: $71,289,809

Exercised Options: $71,289,809

Current Obligation: $39,623,395

Actual Outlays: $12,318,799

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: TIRNO10S00001

IDV Type: BPA

Timeline