Treasury's IRS awards $74.8M contract for IT services to INSYSCO, Inc. under full and open competition

Contract Overview

Contract Amount: $74,786,115 ($74.8M)

Contractor: Insysco, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2014-05-01

End Date: 2017-11-30

Contract Duration: 1,309 days

Daily Burn Rate: $57.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF BASE AWARD OF DDS TO AGAINST TIPSS 4 CONTRACT. CLIN 1 - ORIENTATION BRIEFING CLIN 2 - PROGRAM AND PROJECT MGMT SUPPORT CLIN 3 - SCRUM MASTER AND SCRUM DEVELOPMENT SUPPORT (OPTIONAL) CLIN 4 - WORK REQUESTS CLIN 5 - TRAVEL (CAP) CLIN 6 - DOMAIN ARCHITECTURE SUPPORT (MS 2)(OPTIONAL) CLIN 7 - PRELIMINARY DESIGN SUPPORT (MS 3) CLIN 8 - DETAILED DESIGN SUPPORT (MS 4A)(OPTIONAL) CLIN 9 - SYSTEM DEVELOPMENT SUPPORT (MS 4B)(OPTIONAL) CLIN 10 - SYSTEM DEPLOYMENT SUPPORT (MS 5)(OPTIONAL) CLIN 11 - ORGANIZATIONAL READINESS (OPTIONAL) CLIN 12 - DISASTER AND BACKUP RECOVERY SUPPORT(OPTIONAL) CLIN 13 - PRODUCTION SUPPORT (O&M) CLIN 14 - DBA SUPPORT CLIN 15 - DATA CERTIFICATION AND BALANCE AND CONTROL SUPPORT(OPTIONAL) CLIN 16 - DATA RECOVERY SUPPORT (OPTIONAL) CLIN 17 - METADATA SERVICES SUPPORT (OPTIONAL) CLIN 18 EVM REPORTING

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $74.8 million to INSYSCO, INC. for work described as: IGF::OT::IGF BASE AWARD OF DDS TO AGAINST TIPSS 4 CONTRACT. CLIN 1 - ORIENTATION BRIEFING CLIN 2 - PROGRAM AND PROJECT MGMT SUPPORT CLIN 3 - SCRUM MASTER AND SCRUM DEVELOPMENT SUPPORT (OPTIONAL) CLIN 4 - WORK REQUESTS CLIN 5 - TRAVEL (CAP) CLIN 6 - DOMAIN ARCHITECTURE SUPPORT (MS… Key points: 1. Contract awarded for a broad range of IT services including project management, development, and production support. 2. The contract was competed under full and open competition, suggesting a competitive bidding process. 3. The contract duration of 1309 days indicates a significant, long-term IT support requirement. 4. The award type is a Delivery Order, implying it's part of a larger Indefinite Delivery/Indefinite Quantity (IDIQ) contract. 5. The primary contractor, INSYSCO, Inc., is based in Maryland. 6. The North American Industry Classification System (NAICS) code 541519 points to 'Other Computer Related Services'.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without knowing the specific services rendered under each CLIN and comparing it to similar task orders under the parent IDIQ. The Cost Plus Fixed Fee (CPFF) pricing structure can sometimes lead to higher costs if not carefully managed, as contractor costs are reimbursed plus a fixed fee. However, CPFF can also be appropriate for research and development or when the scope is not fully defined at the outset. Further analysis would require detailed breakdowns of labor categories, hours, and rates to assess true value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. This suggests a robust competitive environment, which typically drives better pricing and service quality. The number of bidders is not specified, but the designation implies multiple proposals were likely received and evaluated.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive market that can lead to more cost-effective solutions and prevent price gouging.

Public Impact

The Internal Revenue Service (IRS) benefits from enhanced IT support services. Services delivered include program management, system development, deployment, and ongoing production support. The geographic impact is primarily within the IRS's operational centers, likely concentrated in Maryland where the contractor is based. Workforce implications include potential employment opportunities for IT professionals within INSYSCO, Inc. and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee (CPFF) contract type requires diligent oversight to ensure costs remain reasonable and the fixed fee is justified.
Lack of specific performance metrics or Service Level Agreements (SLAs) in the provided data makes it difficult to assess contractor performance objectively.
The broad scope of services across multiple CLINs could lead to scope creep if not managed tightly.

Positive Signals

Awarded under full and open competition, indicating a potentially competitive and cost-effective procurement.
The contract covers a comprehensive suite of IT services essential for IRS operations.
The contractor, INSYSCO, Inc., has secured a significant award, suggesting a level of established capability.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer-related services. The IT services market is highly competitive and dynamic, with significant government spending allocated to software development, system integration, and IT support. Comparable spending benchmarks would involve analyzing other large IT service contracts awarded by federal agencies for similar scope and duration, considering factors like pricing models and contractor experience.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a small business set-aside. However, the prime contractor, INSYSCO, Inc., may still engage small businesses as subcontractors, depending on their own subcontracting plans and the nature of the services required.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the IRS. Accountability measures would be defined in the contract terms and conditions, including performance standards and payment schedules. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

IRS IT Modernization Efforts
Federal Civilian IT Services
Custom Computer Programming Services
IT Management Consulting Services
Enterprise Resource Planning (ERP) Support

Risk Flags

Potential for cost overruns in CPFF contracts.
Need for strong government oversight to manage contractor costs.
Risk of technology obsolescence over the contract duration.
Ensuring adequate performance metrics are defined and monitored.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $74.8 million to INSYSCO, INC.. IGF::OT::IGF BASE AWARD OF DDS TO AGAINST TIPSS 4 CONTRACT. CLIN 1 - ORIENTATION BRIEFING CLIN 2 - PROGRAM AND PROJECT MGMT SUPPORT CLIN 3 - SCRUM MASTER AND SCRUM DEVELOPMENT SUPPORT (OPTIONAL) CLIN 4 - WORK REQUESTS CLIN 5 - TRAVEL (CAP) CLIN 6 - DOMAIN ARCHITECTURE SUPPORT (MS 2)(OPTIONAL) CLIN 7 - PRELIMINARY DESIGN SUPPORT (MS 3) CLIN 8 - DETAILED DESIGN SUPPORT (MS 4A)(OPTIONAL) CLIN 9 - SYSTEM DEVELOPMENT SUPPORT (MS 4B)(OPTIONAL) CLIN 10 - SYSTEM DEPLOYMENT SUPPORT (MS 5)(OPTIONAL) CLIN

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 $74.8 million.

What is the period of performance?

Start: 2014-05-01. End: 2017-11-30.

What is the track record of INSYSCO, Inc. in performing similar government IT contracts?

Assessing INSYSCO, Inc.'s track record requires a deeper dive into their contract history beyond this single award. Publicly available data often includes past performance evaluations, but these are not always detailed. Key indicators to look for would include successful completion of contracts with similar scope (e.g., system development, production support), performance ratings from previous agencies, and any history of contract disputes or terminations. Without specific past performance data for INSYSCO, Inc., it's difficult to definitively assess their capability for this particular IRS contract. However, securing a multi-year, multi-million dollar award suggests they have met certain pre-qualification criteria and demonstrated some level of competence to the awarding agency.

How does the total award amount of $74.8 million compare to similar IT service contracts for tax administration agencies?

The $74.8 million award for IT services to INSYSCO, Inc. by the IRS is substantial but falls within the typical range for large-scale IT support contracts within federal agencies, particularly those with complex operational needs like tax administration. For context, agencies like the Social Security Administration or the Department of Defense often award IT contracts in the tens or hundreds of millions of dollars for system development, maintenance, and modernization. The IRS itself has a history of significant IT investments. To provide a precise comparison, one would need to analyze contracts with similar service scopes (e.g., custom software development, IT project management, infrastructure support) and durations (over three years) awarded to other federal agencies over the past few fiscal years. Factors like the specific technologies used and the complexity of the agency's mission would also influence comparability.

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

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this magnitude, such as the $74.8 million award to INSYSCO, Inc., revolve around cost control and contractor performance. For the government, the risk is that the contractor's costs could escalate beyond initial projections, even though the fee is fixed. This necessitates robust government oversight to ensure that all claimed costs are reasonable, allocable, and allowable. Contractors may have less incentive to control costs compared to fixed-price contracts, as their costs are reimbursed. For the contractor, the risk lies in accurately estimating the costs to perform the work to earn their fixed fee. If costs are underestimated, their profit margin shrinks. Effective risk mitigation involves detailed cost proposals, regular audits, clear performance metrics, and strong contract administration by the government.

How does the duration of the contract (1309 days) impact the IRS's ability to adapt to evolving IT needs?

A contract duration of 1309 days (approximately 3.5 years) provides the IRS with a degree of stability and continuity for essential IT services. This extended period allows the contractor to develop deep institutional knowledge and potentially achieve economies of scale. However, the rapid pace of technological change in the IT sector presents a challenge. Over 3.5 years, new technologies, security threats, and user requirements can emerge. The IRS's ability to adapt will depend heavily on the contract's flexibility, particularly the inclusion of mechanisms for scope adjustments, technology refreshes, and the incorporation of new requirements, potentially through contract modifications or task orders. The presence of optional CLINs suggests some flexibility, but the core contract structure needs to accommodate evolving needs.

What is the significance of the NAICS code 541519 ('Other Computer Related Services') in understanding the scope of this contract?

The NAICS code 541519, 'Other Computer Related Services,' indicates that this contract is broad and encompasses a wide array of IT services that do not fit into more specific categories like custom programming or IT system design. This suggests the contract is designed to be flexible, potentially covering services such as IT consulting, data processing, computer disaster recovery, and IT support services. For the IRS, this code allows for a comprehensive procurement that can address diverse and evolving IT needs without being overly restrictive. It implies that the services could range from strategic IT planning and advice to hands-on technical support and troubleshooting, making it a versatile vehicle for acquiring a spectrum of IT expertise.

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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Maximus Inc (UEI: 082347477)

Address: 3130 FAIRVIEW PARK DR STE 800, FALLS CHURCH, VA, 22042

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

Financial Breakdown

Contract Ceiling: $82,737,607

Exercised Options: $82,737,607

Current Obligation: $74,786,115

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00023

IDV Type: IDC

Timeline