Accenture's $25.2M IRS contract for IT services saw 2 bids, raising questions about value and competition

Contract Overview

Contract Amount: $25,228,400 ($25.2M)

Contractor: Accenture LLP

Awarding Agency: Department of the Treasury

Start Date: 2012-08-28

End Date: 2017-03-25

Contract Duration: 1,670 days

Daily Burn Rate: $15.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF - OTHER/TIPSS4 AMS O&M RECOMPETE RTCP 4027

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22203

State: Virginia Government Spending

Plain-Language Summary

Department of the Treasury obligated $25.2 million to ACCENTURE LLP for work described as: IGF::OT::IGF - OTHER/TIPSS4 AMS O&M RECOMPETE RTCP 4027 Key points: 1. The contract's value appears reasonable given the duration and scope of IT services. 2. Limited competition (2 bidders) may have impacted price discovery and potentially inflated costs. 3. The firm fixed-price contract type mitigates cost overrun risks for the government. 4. Performance was rated 'Successful' (ST), indicating satisfactory delivery of services. 5. This contract falls within the 'Other Computer Related Services' NAICS code, a common area for federal IT spending. 6. The contract was a recompete, suggesting a need for continuity in services.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without specific service details. However, with a total value of approximately $25.2 million over roughly 4.6 years, the average annual spend was around $5.5 million. This figure seems within a reasonable range for comprehensive IT operations and maintenance support for a large agency like the IRS. The limited number of bidders, however, introduces uncertainty regarding whether the government secured the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is the preferred method. However, only two bids were received. While this indicates some level of competition, a lower number of bidders can sometimes suggest barriers to entry, lack of market interest, or insufficient outreach. This limited competition might have reduced the government's leverage in negotiating the most favorable terms and pricing.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the most competitive pricing that a broader field of bidders could have generated.

Public Impact

The Internal Revenue Service (IRS) benefits from continued IT support, crucial for tax administration. Services delivered likely include operations, maintenance, and potentially upgrades for critical IRS systems. The geographic impact is primarily within the IRS's operational footprint, likely concentrated in areas with significant IRS presence. The contract supports IT professionals, potentially including system administrators, network engineers, and software developers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have led to higher costs than a more robust bidding process.
The specific details of the services provided and their effectiveness are not fully detailed in the available data.
Reliance on a single contractor for recompetes can sometimes lead to complacency or reduced innovation.

Positive Signals

Awarded under full and open competition, adhering to federal procurement principles.
Firm fixed-price contract type helps control costs and manage budget predictability.
Performance was rated 'Successful', indicating the contractor met contractual obligations.
The contract was a recompete, suggesting a need for established services and potentially a known quantity.

Sector Analysis

This contract falls under the 'Other Computer Related Services' category (NAICS 541519), a significant segment of the federal IT market. The total federal spending on IT services is in the tens of billions annually. This contract represents a portion of the IRS's investment in maintaining its complex technological infrastructure, which is essential for its mission. Comparable contracts often involve IT operations, maintenance, and modernization efforts across various civilian agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses (SB=false). There is no information provided on subcontracting plans or actual performance related to small business participation. Therefore, the direct impact on the small business ecosystem from this specific contract is likely minimal, unless the prime contractor voluntarily engaged small businesses for subcontracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. The 'Successful' performance rating suggests that oversight mechanisms were in place and functioning adequately. Transparency is generally facilitated through contract databases like FPDS, where basic award information is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian Agency IT Operations & Maintenance
Taxpayer Systems Support Contracts
IT Services for Financial Management Agencies

Risk Flags

Limited competition may have impacted price realization.
Lack of detailed performance metrics makes full value assessment difficult.
Potential for vendor lock-in due to recompete nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $25.2 million to ACCENTURE LLP. IGF::OT::IGF - OTHER/TIPSS4 AMS O&M RECOMPETE RTCP 4027

Who is the contractor on this award?

The obligated recipient is ACCENTURE 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 $25.2 million.

What is the period of performance?

Start: 2012-08-28. End: 2017-03-25.

What was Accenture's track record with the IRS prior to this contract?

Prior to this specific $25.2 million contract (2012-2017), Accenture likely had a history of working with the IRS and other federal agencies, given their size and market position. Without access to detailed historical contract data for Accenture specifically with the IRS, it's difficult to provide a precise track record. However, the fact that this contract was a 'recompete' suggests that Accenture (or a predecessor entity) had previously held a similar contract for these services. Agencies often prefer to re-award to incumbent contractors they have a working relationship with, provided performance has been satisfactory. The 'Successful' performance rating on this contract indicates a generally positive relationship during its term.

How does the value of this contract compare to similar IT services contracts for tax agencies?

Comparing this contract's value requires benchmarking against similar IT services contracts awarded to other tax agencies or large civilian departments with comparable IT needs. The total value of approximately $25.2 million over roughly 4.6 years equates to an average annual spend of about $5.5 million. This figure appears moderate for comprehensive IT operations and maintenance support for an agency of the IRS's scale. For instance, contracts supporting the IT infrastructure of agencies like the Social Security Administration or the Department of Justice often run into the tens or hundreds of millions annually, depending on scope. The limited competition (2 bidders) makes a direct value-for-money assessment difficult, as the price might have been higher than if more bidders had participated.

What were the primary risks associated with this contract, and how were they managed?

Key risks for this contract likely included performance risk (ensuring Accenture delivered the required IT services effectively), schedule risk (completing tasks on time), and cost risk (though mitigated by the firm fixed-price structure). Given the 'Successful' performance rating, it suggests these risks were managed adequately. The firm fixed-price (FFP) contract type was a primary mechanism for managing cost risk, shifting much of that burden to the contractor. Performance standards and regular reporting requirements would have been used to monitor and manage performance and schedule risks. The recompete nature also implies a degree of familiarity, potentially reducing risks associated with onboarding a new vendor.

How effective was the competition for this contract in ensuring a fair price for taxpayers?

The effectiveness of the competition for this contract in ensuring a fair price for taxpayers is questionable due to the low number of bids received (only two). While the contract was competed under 'full and open' procedures, attracting only two bidders suggests potential issues. These could include a lack of market awareness, high barriers to entry for potential competitors, or the specific requirements favoring only a few large firms. A more robust competition with multiple bidders typically leads to greater price discovery and downward pressure on costs, benefiting taxpayers. The limited competition here means it's less certain that the government secured the most economical price available in the market.

What was the historical spending trend for similar IT services at the IRS before this contract?

To assess historical spending trends for similar IT services at the IRS before this contract, one would need to examine prior contract awards for IT operations, maintenance, and support. This contract (2012-2017) was a recompete, implying prior spending on similar services. Federal procurement data (like FPDS) would show if the IRS consistently awarded large contracts in this category, whether to the same incumbent or through different competitions. Analyzing spending patterns over several years would reveal if the IRS's IT service needs were growing, stable, or decreasing, and how the agency's investment in IT has evolved. Without specific prior contract data, we can infer that the IRS has a continuous need for such services, reflected in ongoing procurement actions.

Did the 'Successful' performance rating indicate exceptional service delivery or just meeting minimum requirements?

A 'Successful' performance rating typically indicates that the contractor met or exceeded the minimum requirements of the contract, fulfilling their obligations in a satisfactory manner. It generally does not imply 'Exceptional' performance, which is a higher tier reserved for contractors who significantly surpass contract expectations and provide outstanding value. 'Successful' suggests that the IRS received the services it paid for, within the agreed-upon terms, and without major issues. It implies that the contractor's performance was adequate and met the government's needs, but likely did not involve extraordinary achievements or innovations beyond the scope of the SOW.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Accenture Public Limited Company (UEI: 985015354)

Address: 11951 FREEDOM DR STE 1000, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $26,116,175

Exercised Options: $25,975,121

Current Obligation: $25,228,400

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $1,286,445

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00007

IDV Type: IDC

Timeline