IBM contract for IRS Return Review Program support awarded $49.3M under full and open competition

Contract Overview

Contract Amount: $49,273,947 ($49.3M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of the Treasury

Start Date: 2013-04-27

End Date: 2017-06-19

Contract Duration: 1,514 days

Daily Burn Rate: $32.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF SUPPORT FOR THE RETURN REVIEW PROGRAM (RRP)

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $49.3 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: IGF::OT::IGF SUPPORT FOR THE RETURN REVIEW PROGRAM (RRP) Key points: 1. Contract value of $49.3M over approximately 4 years indicates significant investment in IT support services. 2. Awarded under full and open competition, suggesting a competitive bidding process. 3. The fixed-price contract type aims to control costs and provide predictability. 4. The 'Other Computer Related Services' NAICS code points to a focus on specialized IT functions. 5. The contract's duration and value suggest a critical role in supporting the IRS's Return Review Program. 6. The absence of small business set-asides may limit opportunities for smaller firms in this specific award.

Value Assessment

Rating: fair

The contract value of $49.3M over roughly four years for IT support services appears within a reasonable range for large-scale government IT projects. Benchmarking against similar contracts for 'Other Computer Related Services' would provide a clearer picture of value for money. The firm fixed-price structure suggests an attempt to manage costs, but the ultimate value depends on the efficiency and effectiveness of the services delivered by IBM.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The fact that it was competed suggests that the IRS sought to leverage market competition to obtain the best value. Without knowing the number of bids received, it's difficult to definitively assess the intensity of the competition, but the 'full and open' designation is a positive indicator for price discovery.

Taxpayer Impact: A competitive bidding process generally benefits taxpayers by driving down prices and encouraging innovation from contractors seeking to win the award.

Public Impact

The primary beneficiary is the Internal Revenue Service (IRS), which receives critical IT support for its Return Review Program. The services delivered likely enhance the efficiency and effectiveness of tax processing and review operations. The contract's impact is primarily national, supporting federal tax administration. Workforce implications may include specialized IT roles within IBM and potentially indirect impacts on IRS personnel managing the program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if services are highly specialized and integrated.
Reliance on a single large contractor for critical IT functions carries inherent risks.
The effectiveness of the Return Review Program itself is a key factor in the contract's overall success.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
Firm fixed-price contract type helps manage cost overruns.
IBM is a large, established contractor with significant experience in government IT services.

Sector Analysis

This contract falls within the broader Information Technology (IT) services sector, specifically under 'Other Computer Related Services.' The IT services market for government is substantial, with agencies constantly seeking support for complex systems and data management. This contract likely represents a component of the IRS's larger IT modernization or operational support efforts, fitting into a landscape where specialized IT providers compete for significant federal contracts.

Small Business Impact

The contract was not awarded as a small business set-aside, and the data indicates no explicit subcontracting goals for small businesses were mandated for this specific award. This means that opportunities for small businesses to participate in this contract are likely limited to those that might be engaged by IBM as a subcontractor, rather than through direct set-aside awards. The impact on the small business ecosystem for this particular contract is therefore minimal.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the IRS. The firm fixed-price nature of the contract provides a degree of accountability for IBM to deliver services within the agreed-upon budget. Transparency is generally maintained through contract award databases, but detailed performance metrics and oversight reports are often internal to the agency.

Related Government Programs

IRS IT Modernization Programs
Federal Tax Administration IT Support
Government IT Services Contracts
Large-Scale IT Service Delivery

Risk Flags

Potential for scope creep in IT services contracts.
Reliance on a single large vendor for critical functions.
Effectiveness of the supported program (RRP) is key to contract value.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $49.3 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. IGF::OT::IGF SUPPORT FOR THE RETURN REVIEW PROGRAM (RRP)

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Internal Revenue Service).

What is the total obligated amount?

The obligated amount is $49.3 million.

What is the period of performance?

Start: 2013-04-27. End: 2017-06-19.

What is the track record of International Business Machines Corporation (IBM) in delivering similar IT support services to federal agencies, particularly the IRS?

IBM has a long and extensive history of providing a wide range of IT services to federal agencies, including the IRS. Their experience spans infrastructure management, software development, cloud services, and cybersecurity. For the IRS specifically, IBM has been involved in various projects over the years, often related to tax processing systems and data management. While specific performance details for this particular contract are not publicly detailed, IBM's general track record suggests a capacity to handle large, complex IT support requirements. However, like any large contractor, past performance can vary across different contracts and agencies, necessitating a review of specific contract performance metrics where available.

How does the awarded amount of $49.3 million compare to similar IT support contracts for 'Other Computer Related Services' awarded by the IRS or other large federal agencies?

The $49.3 million awarded to IBM over approximately four years for 'Other Computer Related Services' places it as a significant, but not exceptionally large, federal IT contract. Comparable contracts for specialized IT support, system integration, or managed IT services for agencies like the IRS, Treasury, or even larger departments like Defense or HHS, can range from tens of millions to hundreds of millions of dollars. The value is influenced by the scope of services, duration, and the specific technical requirements. Without a direct comparison of the detailed Statement of Work (SOW) for this IBM contract against others, it's challenging to make a precise value-for-money assessment, but the amount is consistent with substantial IT support engagements for a major federal agency.

What are the primary risks associated with a firm fixed-price contract of this magnitude for IT support services?

The primary risks associated with a firm fixed-price contract of this magnitude for IT support services revolve around scope creep, contractor performance, and potential for cost inefficiencies if not managed tightly. For the government, the risk is paying a fixed price for services that may not be delivered optimally or may become outdated quickly in the fast-evolving IT landscape. If the scope of work is not clearly defined, the contractor may be incentivized to cut corners to maintain profitability, or conversely, the government may be overpaying if the contractor's actual costs are significantly lower than anticipated. Effective contract management, clear performance metrics, and robust oversight are crucial to mitigate these risks and ensure value is realized.

How effective is the 'Return Review Program (RRP)' and what is the anticipated impact of this IT support contract on its success?

Information regarding the specific effectiveness metrics of the IRS's 'Return Review Program (RRP)' is not readily available in the public domain. However, IT support contracts of this nature are typically awarded to ensure the operational continuity, efficiency, and potential enhancement of the program they support. This contract with IBM likely provides the necessary technological infrastructure, software maintenance, data processing capabilities, or analytical tools required for the RRP to function effectively. The success of the RRP, and by extension the value of this IT support contract, hinges on the program's ability to achieve its objectives, such as improving compliance, detecting fraud, or streamlining tax return processing, facilitated by the IT services provided.

What has been the historical spending pattern for IT support services by the IRS, and how does this contract fit within that trend?

The IRS, like most large federal agencies, has consistently allocated significant portions of its budget to IT services to manage its vast operations, process tax returns, and maintain taxpayer data security. Historical spending patterns show a continuous need for IT support, encompassing everything from infrastructure upgrades and cybersecurity to software development and data analytics. This $49.3 million contract for the Return Review Program fits within this trend as a specific investment in IT capabilities for a critical IRS function. It represents a component of the agency's ongoing efforts to modernize and maintain its technological backbone, reflecting a sustained commitment to leveraging IT for tax administration.

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

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

Financial Breakdown

Contract Ceiling: $51,538,607

Exercised Options: $51,538,607

Current Obligation: $49,273,947

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00022

IDV Type: IDC

Timeline