Treasury's $65.9M IT contract with General Dynamics saw a modification to sweep old funds

Contract Overview

Contract Amount: $65,927,538 ($65.9M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of the Treasury

Start Date: 2014-08-01

End Date: 2015-02-27

Contract Duration: 210 days

Daily Burn Rate: $313.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: THIS WAS A SYSTEM GENERATED MODIFICATION SWEEPING OLD FUNDS FROM THE CONTRACT.

Place of Performance

Location: LANHAM, PRINCE GEORGES County, MARYLAND, 20706

State: Maryland Government Spending

Plain-Language Summary

Department of the Treasury obligated $65.9 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: THIS WAS A SYSTEM GENERATED MODIFICATION SWEEPING OLD FUNDS FROM THE CONTRACT. Key points: 1. The contract modification involved sweeping old funds, indicating potential budget management adjustments or reallocation of resources. 2. The award was made under full and open competition, suggesting a competitive process for selecting the contractor. 3. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not carefully managed. 4. The duration of 210 days for this delivery order suggests a focused, short-term task. 5. The base contract value of $313,941 is significantly lower than the modification amount, highlighting the scale of the fund sweep. 6. The contractor, General Dynamics Information Technology, is a large, established player in the federal IT space.

Value Assessment

Rating: fair

The modification amount of $65.9 million is substantial, but its purpose as a fund sweep makes direct value-for-money assessment difficult without further context on the original funds' intended use. Comparing this to similar IT system design services contracts, the cost per day for the delivery order period (if the modification amount were spread across it) would be high, but this is not a typical cost assessment for a fund sweep. The fixed fee component of the contract type provides some cost control, but the overall value is tied to the efficiency of the original project and the necessity of the fund sweep.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete for the contract. The specific number of bidders is not provided, but the designation suggests a robust competitive environment. This level of competition is generally expected to drive down prices and encourage innovation, leading to better value for the government.

Taxpayer Impact: A full and open competition process helps ensure that taxpayer dollars are used efficiently by fostering a competitive marketplace for government services.

Public Impact

The primary beneficiary is the Department of the Treasury, specifically the Internal Revenue Service, which receives computer systems design services. The services delivered are related to IT system design, crucial for the operational efficiency of tax administration. The geographic impact is likely concentrated within the IRS's operational centers, primarily in Maryland where the contract was issued. The workforce implications are indirect, potentially affecting IT professionals involved in system design and maintenance within the contractor's organization and the IRS.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The substantial modification amount for a fund sweep raises questions about initial budget planning and fund utilization.
The Cost Plus Fixed Fee contract type carries inherent risks of cost escalation if not meticulously managed.
Lack of specific details on the original purpose of the swept funds hinders a full understanding of the contract's financial lifecycle.

Positive Signals

Awarded under full and open competition, suggesting a competitive and potentially cost-effective procurement process.
The contractor, General Dynamics Information Technology, has a significant track record in delivering IT services to the federal government.
The contract was awarded to a specific delivery order, indicating a defined scope of work within a larger framework.

Sector Analysis

The contract falls within the Computer Systems Design Services sector (NAICS 541512), a critical component of the broader Information Technology industry. This sector involves designing, developing, and implementing IT solutions for organizations. The federal government is a major consumer of these services, with significant spending allocated to modernizing legacy systems, enhancing cybersecurity, and improving data management. Comparable spending benchmarks for IT services contracts of this nature can vary widely based on scope, duration, and complexity, but large-scale system design and modification projects often represent multi-million dollar investments.

Small Business Impact

The contract indicates that small business participation was not a primary set-aside consideration (SB: false, SS: false). This suggests the primary contract vehicle was not specifically targeted towards small businesses. However, as a large prime contractor, General Dynamics may engage small businesses for subcontracting opportunities to fulfill specific needs or meet broader federal small business subcontracting goals. The impact on the small business ecosystem would depend on whether such subcontracting opportunities arise and are actively pursued by small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Treasury's contracting officers and program managers. The Inspector General for Tax Administration (TIGTA) may also have jurisdiction to audit or investigate the contract's performance and financial management, particularly given its connection to IRS operations. Transparency is facilitated through contract databases like FPDS, which provide basic award information, but detailed oversight reports or specific performance metrics are not publicly available through this data.

Related Government Programs

IRS IT Modernization Programs
Federal Civilian IT Services Contracts
General Dynamics IT Contracts
Cost Plus Fixed Fee Contracts
Delivery Orders

Risk Flags

Potential for cost overruns due to CPFF structure
Lack of transparency regarding the purpose of the fund sweep
Substantial modification amount relative to base contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $65.9 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. THIS WAS A SYSTEM GENERATED MODIFICATION SWEEPING OLD FUNDS FROM THE CONTRACT.

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $65.9 million.

What is the period of performance?

Start: 2014-08-01. End: 2015-02-27.

What was the original purpose of the funds that were swept via this modification?

The provided data indicates that the modification was a 'SYSTEM GENERATED MODIFICATION SWEEPING OLD FUNDS FROM THE CONTRACT.' This suggests that funds allocated under this contract, or potentially from another related contract or appropriation, were consolidated or moved. Without access to the specific contract file or further details from the agency, the precise original purpose of these 'old funds' remains unclear. It could relate to unexpended funds from a previous period, funds allocated for a specific task that was completed under budget, or a strategic reallocation of resources by the Department of the Treasury to optimize budget utilization or address emerging priorities. Understanding the original intent is crucial for a complete financial audit trail.

How does the $65.9 million modification compare to the original contract value and subsequent spending?

The modification amount of $65,927,537.63 is significantly larger than the original contract's base value of $313,941. This stark contrast highlights that the modification was not a typical increase in scope or funding for ongoing work but rather a substantial financial transaction, specifically a fund sweep. It implies that either the original contract was a placeholder or a smaller component of a larger financial strategy, or that this modification represents a significant reallocation of funds from elsewhere into this contract vehicle for administrative purposes. Direct comparison of this modification to the original base value is misleading; it's more akin to a large-scale financial adjustment rather than a proportional increase in service cost.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract type in this context?

The Cost Plus Fixed Fee (CPFF) contract type, while providing the contractor with a guaranteed profit margin (the fixed fee), carries inherent risks for the government. The primary risk is that the contractor may have less incentive to control costs rigorously, as the government ultimately bears the cost of performance. If the contractor's actual costs exceed estimates, the government pays those costs plus the pre-determined fee. For this specific contract, especially with a large modification, effective oversight is critical to ensure that all costs claimed are reasonable, allocable, and necessary. Without stringent monitoring, there's a risk of cost overruns and potential inefficiencies, even if the fixed fee itself remains constant.

What does the 'SYSTEM GENERATED MODIFICATION' designation imply about the process?

The designation 'SYSTEM GENERATED MODIFICATION' suggests that the change to the contract was initiated or processed through an automated system, likely an enterprise resource planning (ERP) or financial management system within the Department of the Treasury. This often occurs for administrative actions like fund sweeps, budget realignments, or the closing out of old financial accounts. While the system generates the modification document, the underlying decision to sweep funds and the justification for it would have originated from program or finance officials. It implies a procedural efficiency in executing the financial transaction but does not negate the need for proper authorization and documentation of the business reasons behind the fund movement.

Given the contractor is General Dynamics Information Technology, what is their general track record with federal IT contracts?

General Dynamics Information Technology (GDIT) is a major federal IT contractor with a long history of supporting various government agencies across numerous sectors, including defense, intelligence, and civilian services. They have a substantial portfolio of contracts involving IT modernization, cloud migration, cybersecurity, and enterprise IT operations. While specific performance details for individual contracts vary, GDIT is generally considered an experienced and capable provider. However, like any large contractor, they have been involved in contracts that have faced scrutiny or challenges. Their extensive experience suggests a deep understanding of federal procurement processes and technical requirements, but rigorous oversight remains essential for all their government engagements.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Csra LLC (UEI: 080011988)

Address: MARYLAND TECHNOLOGY CENTER, LANHAM, MD, 20706

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $87,323,695

Exercised Options: $86,334,415

Current Obligation: $65,927,538

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: TIRNO99D00001

IDV Type: IDC

Timeline