Treasury's IRS spent $24.6M on critical IT functions with Insysco, Inc. over 4 years

Contract Overview

Contract Amount: $24,565,794 ($24.6M)

Contractor: Insysco, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2017-10-27

End Date: 2022-02-22

Contract Duration: 1,579 days

Daily Burn Rate: $15.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CT::IGF FOR CRITICAL FUNCTIONS - ACA IRIS

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $24.6 million to INSYSCO, INC. for work described as: IGF::CT::IGF FOR CRITICAL FUNCTIONS - ACA IRIS Key points: 1. The contract focused on IT services for critical functions, indicating a reliance on external support for essential operations. 2. A firm-fixed-price structure suggests predictable costs, but requires careful monitoring to ensure value. 3. The contract was awarded through full and open competition, implying a robust bidding process. 4. The duration of nearly 4.5 years suggests a long-term need for these IT services. 5. The North American Industry Classification System (NAICS) code 541519 points to a broad range of computer-related services. 6. The contract's value of $24.6 million places it in the mid-tier range for federal IT procurements.

Value Assessment

Rating: good

The contract's value of $24.6 million for nearly 4.5 years of IT services for critical functions appears reasonable, especially given the firm-fixed-price structure which limits cost overruns. Benchmarking against similar IT support contracts for critical infrastructure within federal agencies would provide a more precise value-for-money assessment. However, the absence of specific performance metrics or detailed service descriptions in the provided data makes a definitive value judgment challenging.

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 competitive environment that should theoretically drive down prices and encourage innovation. The presence of two bids (no: 2) is on the lower side for full and open competition, which might warrant further investigation into potential barriers to entry or market concentration for these specific IT services.

Taxpayer Impact: A competitive bidding process generally benefits taxpayers by fostering price discovery and ensuring the government receives services at market-competitive rates, reducing the risk of overpayment.

Public Impact

The primary beneficiaries are the Internal Revenue Service (IRS) and its operational continuity, ensuring critical IT functions are maintained. The services delivered likely include IT support, maintenance, and potentially development related to the ACA IRIS system. The geographic impact is primarily within the IRS's operational footprint, likely concentrated where its IT infrastructure is managed. Workforce implications may include the direct employment of IT professionals by Insysco, Inc., and the indirect impact on IRS IT staff who collaborate with or manage the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (2) in a full and open competition could indicate potential market limitations or high barriers to entry for this specialized IT service.
The long contract duration (nearly 4.5 years) could lead to vendor lock-in if not managed carefully, potentially reducing future competition.
Lack of detailed performance metrics in the provided data makes it difficult to assess the quality and effectiveness of the services rendered.
The specific nature of 'critical functions' is not detailed, making it hard to gauge the true criticality and associated risks if services were interrupted.

Positive Signals

Awarded through full and open competition, suggesting a fair and transparent procurement process.
Firm-fixed-price contract type helps control costs and provides budget certainty for the government.
The contract addresses critical IT functions, indicating a focus on essential government operations.
The contractor, Insysco, Inc., has secured a significant federal contract, suggesting a level of established capability.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on IT services. The federal IT services market is vast and highly competitive, with agencies increasingly relying on contractors for specialized support, system integration, and maintenance. The NAICS code 541519 covers a broad spectrum of IT services beyond just software development, including IT consulting and infrastructure management. Comparable spending benchmarks for similar IT support contracts can vary widely based on scope, duration, and criticality, but multi-million dollar contracts are common for essential government functions.

Small Business Impact

The provided data indicates that small business set-asides (sb: false) were not utilized for this contract, nor does it appear to have specific subcontracting requirements mentioned (st: MD, which is a state, not a subcontracting indicator). This suggests the contract was awarded based on best value or lowest price technically acceptable to the prime contractor, Insysco, Inc., without a specific focus on engaging small businesses directly through set-asides. The impact on the small business ecosystem would be indirect, potentially through Insysco's own subcontracting choices if any, rather than through direct set-aside opportunities.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the IRS's program management office responsible for IT services. The firm-fixed-price nature of the contract provides a degree of cost control. Transparency is facilitated by the contract's existence and award details being publicly available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected or reported.

Related Government Programs

Federal IT Services
IRS IT Modernization Efforts
Government IT Support Contracts
Critical Infrastructure IT
ACA IT Systems Support

Risk Flags

Limited Competition (2 bidders)
Long Contract Duration
Critical Function Reliance
Broad NAICS Code Scope

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $24.6 million to INSYSCO, INC.. IGF::CT::IGF FOR CRITICAL FUNCTIONS - ACA IRIS

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 $24.6 million.

What is the period of performance?

Start: 2017-10-27. End: 2022-02-22.

What specific IT functions were covered under this contract for the IRS's critical functions?

The provided data indicates the contract (IGF::CT::IGF FOR CRITICAL FUNCTIONS - ACA IRIS) was for 'Other Computer Related Services' under NAICS code 541519, awarded to Insysco, Inc. by the Department of the Treasury's Internal Revenue Service. While the contract title mentions 'Critical Functions' and 'ACA IRIS', the specific IT services are not detailed. These could range from system maintenance, network support, cybersecurity, data management, to application development and support for the Affordable Care Act Information Returns (ACA IRIS) system, which is crucial for tax administration. The broad NAICS code suggests a wide scope of potential IT support activities necessary to ensure the uninterrupted operation of these critical IRS functions.

How does the $24.6 million contract value compare to similar federal IT support contracts?

The $24.6 million contract value over approximately 4.5 years (from Oct 2017 to Feb 2022) averages around $5.5 million per year. This falls within a common range for federal IT support contracts, particularly those addressing critical functions for large agencies like the IRS. For context, federal IT spending is in the tens of billions annually. Contracts for specialized IT services, system integration, or comprehensive support for mission-critical systems often reach multi-million dollar figures. Without knowing the exact scope and deliverables, a precise comparison is difficult, but it appears to be a substantial, yet not exceptionally outlier, investment for essential IT operations.

What are the key risks associated with a contract of this nature and duration?

Key risks include potential vendor lock-in due to the long duration (nearly 4.5 years), which could limit future competition and flexibility. There's also the risk of service degradation or obsolescence if the contractor does not keep pace with technological advancements or if the IRS's needs evolve significantly beyond the contract's scope. Given the focus on 'critical functions', any disruption in service delivery by Insysco, Inc. could have severe operational impacts on the IRS. Furthermore, the limited number of bidders (2) in a full and open competition might suggest underlying market risks or specialized requirements that could be difficult for new vendors to meet, potentially impacting future sourcing options.

What does the 'firm fixed price' contract type imply for the IRS and Insysco, Inc.?

A Firm Fixed Price (FFP) contract type means that the price is set and not subject to adjustment based on the contractor's cost experience in performing the work. For the IRS, this provides budget certainty and protects against cost overruns, making financial planning more predictable. The contractor, Insysco, Inc., assumes the primary risk for cost overruns; if their costs exceed the agreed-upon price, their profit margin decreases. Conversely, if they can perform the work more efficiently than anticipated, their profit increases. This structure incentivizes the contractor to manage costs effectively and deliver the required services within the agreed budget.

What is the significance of the NAICS code 541519 for this contract?

The North American Industry Classification System (NAICS) code 541519, 'Other Computer Related Services,' is a broad category that encompasses a wide array of IT services not specifically classified under other codes. This includes services like IT consulting, systems integration design, computer facilities management, and IT support services. For this IRS contract, it signifies that the scope of work likely extended beyond simple software development or hardware maintenance, potentially involving a combination of IT planning, implementation, and ongoing operational support for critical systems like the ACA IRIS. The breadth of this code means the specific services rendered could be diverse, requiring careful contract management to ensure alignment with IRS needs.

How does the award to Insysco, Inc. reflect on their track record in the federal contracting space?

Securing a nearly $25 million contract for critical IT functions with the IRS indicates that Insysco, Inc. possesses the capabilities and experience necessary to handle complex government IT requirements. The award, especially under full and open competition, suggests they were deemed a competitive and capable bidder. While this single data point doesn't provide a full picture of their track record, it signifies a successful engagement with a major federal agency. Further analysis of their past performance, other contract awards, and client feedback would be needed for a comprehensive assessment of their overall track record and reliability.

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

Solicitation ID: TTN 4295

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Maximus Inc

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: $851,752,226

Exercised Options: $327,224,135

Current Obligation: $24,565,794

Actual Outlays: $10,166,659

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: TIRNO11D00023

IDV Type: IDC

Timeline