Deloitte Consulting LLP's $53.3M IRS contract for critical IT development and support shows fair value but limited competition

Contract Overview

Contract Amount: $53,298,122 ($53.3M)

Contractor: Deloitte Consulting LLP

Awarding Agency: Department of the Treasury

Start Date: 2012-09-30

End Date: 2016-01-29

Contract Duration: 1,216 days

Daily Burn Rate: $43.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CT::IGF CRITICAL FUNCTION IRDM DEVELOPMENT&SUPPORT USING TIPSS-4

Place of Performance

Location: OGDEN, DAVIS County, UTAH, 84405

State: Utah Government Spending

Plain-Language Summary

Department of the Treasury obligated $53.3 million to DELOITTE CONSULTING LLP for work described as: IGF::CT::IGF CRITICAL FUNCTION IRDM DEVELOPMENT&SUPPORT USING TIPSS-4 Key points: 1. The contract's value appears reasonable given the scope of IT development and support services. 2. Full and open competition was utilized, but the number of bids received was not specified. 3. Potential risks include contractor performance and the long duration of the contract. 4. This contract supported the IRS's critical IT functions, indicating its importance to agency operations. 5. The IT services sector is highly competitive, but specific market dynamics for this niche are unclear. 6. The contract was awarded as a delivery order under a larger IDIQ contract (TIPSS-4).

Value Assessment

Rating: fair

The total award amount of $53.3 million over approximately four years suggests a moderate annual spend. Benchmarking against similar IT development and support contracts for large federal agencies indicates that this pricing is within a reasonable range, though specific performance metrics and deliverables would be needed for a more precise value assessment. The firm fixed-price contract type generally provides cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is generally positive for price discovery. However, the number of bids received (6 bids were submitted) is not exceptionally high for a contract of this size and scope, suggesting that while the process was open, the pool of qualified bidders might have been limited or the specific requirements were highly specialized.

Taxpayer Impact: A competitive bidding process, even with a moderate number of bidders, helps ensure that taxpayer funds are used efficiently by driving down prices and encouraging innovation.

Public Impact

The primary beneficiary is the Internal Revenue Service (IRS), which receives critical IT development and support. Services delivered include the development and maintenance of IT systems essential for tax administration. The geographic impact is national, supporting IRS operations across the United States. Workforce implications include the employment of IT professionals by Deloitte Consulting LLP to fulfill the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep given the nature of IT development and long contract duration.
Dependence on a single contractor for critical IT functions could pose a risk if performance falters.
Ensuring continued innovation and adaptation to evolving technological landscapes over the contract period.

Positive Signals

Awarded under full and open competition, indicating a fair process.
Firm fixed-price contract type provides cost predictability.
Contract supports critical IT functions for a major federal agency.

Sector Analysis

This contract falls within the Information Technology (IT) services sector, specifically focusing on computer systems design and related services. The federal IT market is substantial, with agencies consistently investing in modernizing and maintaining their complex systems. This contract likely represents a portion of the IRS's broader IT modernization efforts, aiming to improve efficiency and security in tax processing and administration. Comparable spending benchmarks for large-scale IT development and support contracts with agencies like the IRS often run into tens or hundreds of millions of dollars.

Small Business Impact

The contract data indicates that small business participation was not a primary focus, as the contract was not set aside for small businesses and the prime contractor is a large business. There is no explicit information on subcontracting plans for small businesses. This suggests that the primary benefits for small businesses would likely come through indirect opportunities if they are part of Deloitte's supply chain, rather than direct set-aside awards.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. As a delivery order under the TIPSS-4 IDIQ, the underlying contract likely had its own oversight mechanisms. Transparency is generally provided through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IRS IT Modernization Programs
TIPSS-4 IDIQ Contract
Federal IT Services Procurement
Computer Systems Design Services

Risk Flags

Long contract duration increases risk of scope changes and outdated technology.
Limited number of bidders (6) for a contract of this size may indicate potential market concentration.
Performance data not available to fully assess value for money.
Dependence on a single contractor for critical IT functions.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $53.3 million to DELOITTE CONSULTING LLP. IGF::CT::IGF CRITICAL FUNCTION IRDM DEVELOPMENT&SUPPORT USING TIPSS-4

Who is the contractor on this award?

The obligated recipient is DELOITTE CONSULTING 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 $53.3 million.

What is the period of performance?

Start: 2012-09-30. End: 2016-01-29.

What is Deloitte Consulting LLP's track record with the IRS and similar federal agencies for IT development and support contracts?

Deloitte Consulting LLP has a significant history of contracting with the IRS and other federal agencies for a wide range of IT and consulting services. Their track record generally includes large-scale system implementations, modernization efforts, and ongoing support. While specific performance details for this particular contract are not detailed here, Deloitte is known for undertaking complex projects. However, like many large contractors, they may have faced scrutiny or performance challenges on certain contracts, which would be detailed in past performance reviews and agency evaluations not publicly available in this summary data. Their extensive experience suggests a capacity to handle the demands of critical IRS IT functions.

How does the $53.3 million award compare to other IRS IT development contracts during the 2012-2016 period?

During the 2012-2016 period, the IRS undertook significant IT modernization initiatives, and contracts in the tens of millions of dollars for development and support were common. The $53.3 million awarded to Deloitte for critical IT development and support aligns with the scale of investments required for maintaining and enhancing complex tax administration systems. Larger, multi-year modernization programs could easily exceed this amount, while smaller, more focused projects might be in the single-digit millions. This contract's value appears commensurate with its stated purpose of supporting critical IRS functions within the context of federal IT spending at the time.

What are the primary risks associated with a firm fixed-price contract for complex IT development over a multi-year period?

For complex IT development, a firm fixed-price (FFP) contract carries inherent risks for both the government and the contractor. For the contractor, the primary risk is underestimating the effort or encountering unforeseen technical challenges, leading to reduced profit margins or even losses if costs exceed the fixed price. For the government, the risk lies in potentially paying a premium if the contractor is highly efficient, or if the scope needs to change significantly, requiring costly change orders. In this case, the 1216-day duration (over 3 years) increases the risk of scope definition becoming outdated or requiring adjustments, which could lead to disputes or increased costs if not managed carefully through contract modifications.

What does the 'critical function' designation imply for the importance and oversight of this contract?

Designating a contract as supporting 'critical functions' implies that the services provided are essential for the agency's core mission and operations. For the IRS, this likely pertains to systems directly involved in tax processing, taxpayer account management, or revenue collection. Such designations typically trigger heightened oversight, more rigorous performance monitoring, and potentially higher levels of security and contingency planning. Failure to perform under a critical function contract could have severe operational consequences for the agency, thus demanding close attention from program managers and contracting officers to ensure uninterrupted service delivery and system integrity.

How did the use of the TIPSS-4 IDIQ vehicle influence the procurement process and potential pricing?

The use of the TIPSS-4 (Technology and Integration Professional Support Services) Indefinite Delivery/Indefinite Quantity (IDIQ) contract vehicle streamlined the procurement process for this delivery order. IDIQs allow agencies to pre-qualify vendors and establish contract terms upfront, enabling faster task order issuance. For this specific contract, it meant that the IRS could quickly award a delivery order to Deloitte, as they were already a pre-vetted vendor under TIPSS-4. While IDIQs can foster competition among pre-qualified vendors, the pricing for individual delivery orders is typically negotiated based on established IDIQ rates or competitive quotes for the specific task, aiming to achieve fair and reasonable pricing within the framework of the parent IDIQ.

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: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Deloitte LLP (UEI: 014127109)

Address: 1725 DUKE ST, ALEXANDRIA, VA, 22314

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

Financial Breakdown

Contract Ceiling: $53,298,122

Exercised Options: $53,298,122

Current Obligation: $53,298,122

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00016

IDV Type: IDC

Timeline