Summary

This correspondence responds to a request by the Senate Committee on Finance for our review of the Internal Revenue Service's (IRS) issuance of certain task orders under its Treasury Information Processing Support Services (TIPSS-2) multiple award task order contract. Specifically, the Committee asked whether the issuance of task orders for organizational modernization services placed under the TIPSS-2 contract complies with the "fair opportunity" requirement of the Federal Acquisition Streamlining Act (FASA) of 1994. FASA requires that all multiple award contractors must be provided a fair opportunity to be considered "for each task or delivery order" over $2,500 issued under a contract unless one of four statutory exceptions applies.

We conclude that IRS's selection of certain TIPPS-2 contractors to perform all task orders for organizational modification services, without giving other contractors a fair opportunity to be considered for the individual task orders, violates FASA. Since 1998, IRS has been engaged in efforts to reorganize its structure and modernize its technology. A key part of these efforts is organizational modernization ("OrgMod"), which includes changes to IRS's organizational structure, management roles and responsibilities, business practices, performance measures, and supporting technology. IRS obtains services for the OrgMod program through its TIPPS-2 contract. The TIPPS-2 contract is a multiple award task order contract that encompasses not only the OrgMod program, but also a variety of other services. There are 18 multiple award contractors eligible to receive individual task order awards in some or all of the TIPSS-2 service areas. In July 2002, IRS conducted a competitive procedure among the TIPPS-2 contractors to perform OrgMod services. It issued a master "Request for Information" (RFI) to all 18 TIPSS-2 contractors, inviting them to compete for four "task areas" of the OrgMod work. The master RFI stated that IRS would select a contractor to perform the services described within each task area, and that "(w)inning the competition will result in the award of any task order designated for that particular task area." The July 2002 RFI has resulted in the issuance of 37 task orders in the OrgMod task areas. The relevant provision in FASA states: "When multiple (task or delivery order) contracts are awarded...all contractors awarded such contracts shall be provided a fair opportunity to be considered, pursuant to procedures set forth in the contracts, for each task or delivery order in excess of $2,500 that is to be issued under any of the contracts." Here, there is no evidence that IRS gave any meaningful consideration to other contractors before issuing every one of the 37 OrgMod task orders to the pre-selected contractors. The fact that IRS gave all TIPPS-2 contractors an opportunity to be considered for the four OrgMod task areas does not satisfy FASA's fair opportunity requirement, which applies to individual task orders and which IRS disregarded with respect to the 37 OrgMod task orders resulting from the master RFI. Because IRS gave no consideration to any contractor other than the pre-selected contractor for any of the individual OrgMod orders, we do not view these task orders as competitively placed, but as unjustified exceptions to FASA's fair opportunity requirement.