ESUS JOFOC Redacted.pdf

IRS Form (Rev. 6/21)

IRSAP 1006.3

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

(JOFOC)

FAR SUBPART 6.3.

I recommend the use of other than full and open competition for the acquisition of the following supplies or services. If this acquisition is to be made with only one source or a limited number of sources, negotiations will be conducted with the indicated proposed supplier(s).

1. IDENTIFICATION OF THE AGENCY AND CONTRACTING ACTIVITY:

Internal Revenue Service (IRS) Office Information Technology Acquisition (OITA)

2. NATURE/DESCRIPTION OF THE ACTION BEING APPROVED:

The purpose of this justification is to obtain approval to award a sole source contract to Science Applications International Corp (SAIC) for the IRS Tier 1, mainframe environment. The requirement to maintain, reengineer, and operate the mainframe enterprise compute infrastructure environment is known as Enterprise Systems – Unisys Support (ESUS). ESUS includes Unisys ClearPath software, hardware, and services.

3. DESCRIPTION OF SUPPLIES OR SERVICES:

The IRS intends to award a sole source, Indefinite Delivery/Indefinite Quantity (IDIQ) contract for Enterprise Systems – Unisys Support (ESUS). Science Applications International Corp (SAIC) is the intended sole source awardee. SAIC is the only company capable of providing services for Unisys ClearPath hardware, software, maintenance, and services. When SAIC acquired Unisys in 2020 both parties entered into an exclusive five-year agreement that identified SAIC as the sole provider of Unisys ClearPath hardware, software, and services to the federal government. The specific Unisys ClearPath hardware, software, and services are exactly what ESUS requires. The agreement between Unisys and SAIC was established on March 13, 2020 and expires on March 13, 2025. The agreement is likely to be renewed in 2025. In the event the exclusivity agreement is not renewed in 2025 the requirement will be competed. Due to the exclusive agreement between both parties, SAIC is the sole provider of Unisys ClearPath support to the federal government therefor no other acquisition alternative exist.

The IRS requires flexible ordering ability via IDIQ to timely issue task orders in response to new legislation for the tax system, congressional initiatives, modernization efforts, predictable and unpredictable maintenance requirements, implementation efforts, and development and design solutions.

ESUS includes Unisys ClearPath software, hardware, and services. The IDIQ will serve as a robust, single source, centrally managed ordering vehicle for enterprise life cycle processes for the Tier 1 mainframe environment. Additionally, improved processes will be initiated to increase efficiency, effectiveness, quality, and process maturity to satisfy growing demands for secure, reliable, timely, and responsive infrastructure. ESUS will also support the new Enterprise Mainframe Infrastructure Modernization and Enhancement (EMIME) and Operations & Maintenance (O&M) support for the Tier 1 mainframe operating environment.

Additionally, the IRS tax collection and compliance is dependent upon the continued integrity of its Unisys mainframe (Tier 1) processing environment. The IRS requires ongoing support for this environment, whose components and functions include: (1) integrated computer systems and databases; (2) nationwide, online access to taxpayer information; (3) online updates to taxpayer information; (4) integrated tracking and control of ongoing case information; (5) well maintained and supported computer systems throughout their systems life; and (6) continued enhancement of the capabilities and cost effectiveness of provided systems in response to evolving IRS processing requirements and the availability of new technology. The IRS must maintain a fault tolerant mainframe processing environment to limit catastrophic information technology outages causing disruptions to process taxes timely. The IRS Tier 1 Unisys mainframe is vital to the mission of the agency. The IRS mainframe is a Unisys system, and the IRS has used a Unisys Mainframe for over 30 years. Using anything other than a Unisys mainframe jeopardizes IRS’s legacy taxpayer mainframe system.

4. SHOPPING CART NUMBER:

5. NAME OF PROPOSED SOURCE(S):

X

41 U.S.C. § 3304(a)(1), FAR 6.302-1– Only one responsible source; or brand name specification

41 U.S.C. § 3304(a)(2), FAR 6.302-2 – Unusual and compelling urgency

41 U.S.C. § 3304(a)(3), FAR 6.302-3 – Industrial mobilization, engineering, developmental, or research capability; or expert services

41 U.S.C. § 3304(a)(4), FAR 6.302-4 – International agreement

41 U.S.C. § 3304(a)(5), FAR 6.302-5 – Authorized or required by statute

41 U.S.C. § 3304(a)(6), FAR 6.302-6 – National Security

41 U.S.C. § 3304(a)(7), FAR 6.302-7 – Public Interest

10. JUSTIFICATION

(add pages if needed)

A. DEMONSTRATION THAT THE PROPOSED CONTRACTOR’S UNIQUE QUALIFICATIONS OR

THE NATURE OF THE ACQUISITION REQUIRES USE OF THE AUTHORITY CITED.

SAIC is the only company capable of providing services for ESUS ClearPath hardware, software, and services. When SAIC acquired Unisys in 2020 both parties entered into an exclusive five-year agreement that identified SAIC as the sole provider of Unisys ClearPath hardware, software, and services to the federal government. SAIC has market exclusivity. The specific Unisys ClearPath hardware, software, and services are exactly what ESUS requires. The agreement between Unisys and SAIC was established on March 13, 2020 and expires on March 13, 2025. The agreement is likely to be renewed in 2025. In the event the exclusivity agreement is not renewed in 2025 the requirement will be competed. Due to the exclusive agreement between both parties, SAIC is the sole provider of Unisys ClearPath support to the federal government therefor no other acquisition alternative exist.

B. DESCRIBE THE EFFORTS TAKEN TO ENSURE OFFERS WERE SOLICITED FROM AS MANY

POTENTIAL SOURCES AS IS PRACTICABLE, INCLUDING WHETHER A NOTICE WAS OR

WILL BE PUBLISHED AS REQUIRED BY FAR SUBPART 5.2 AND, IF NOT, WHICH

EXCEPTION UNDER FAR 5.202 APPLIES.

ESUS market research involved reviewing various acquisition alternatives to determine if any available contract vehicles could fulfill the ESUS requirement. The first review involved Treasury mandatory contracts and department wide contracts. Department wide contracts and Treasury mandatory sources do not have appropriate scope to cover ESUS mainframe requirements. More, specifically none of the departmentwide contracts or Treasury mandatory contracts include Unisys specific mainframe hardware, software, or services to support the nation’s tax system.

In addition to the Department’s contracts, a review of Federal Supply Schedules (FSS), Government-wide Acquisition Contracts (GWACS), multi-agency contracts, and any other procurement instruments intended for use by multiple agencies, including Blanket Purchase Agreements (BPAs) under Federal Supply Schedule contracts were considered. No other contract exists to provide Unisys mainframe hardware, software, and services to support the nation’s tax system. Specifically, SAICS

IRSAP 1006.3

GSA MAS does not include Unisys specific technology necessary to support the mainframe and according to SAIC those technologies will not be added to their MAS.

Further, an ESUS Request for Information (RFI) was published to Sam.gov in March 2022. Four responses were received and reviewed from Amazon Web Services (AWS), Voltage Technology, GOVCIO, and SAIC. SAIC was the only capable company to provide the Unisys ClearPath hardware, software, and service requirement because they presented the exclusive agreement provided by Unisys that indicates they are the only company authorized to sell such requirements to the government. The other three respondents were not capable of delivering the requirement because they don’t have authority to sell Unisys products to the government. To satisfy FAR 5.203(a), the RFI was posted for 24 days, which exceeds the 15 days required

C. DETERMINATION THAT THE ANTICIPATED COST TO THE GOVERNMENT WILL BE FAIR

AND REASONABLE.

This Independent Government Cost Estimate (IGCE) is based upon comprehensive market research.

The IGCE includes a cost breakdown of all cost factors required for an offeror to complete the performance work statement. The metrics used were:

- Inflation Percentage = 3%. Based on a combination of market forecasts, contractor rate trends, and realistic escalation rates

- Not To Exceed (NTE) values for software, hardware, and travel are based on historical trends and market forecasts

- Labor Categories (LCATS) and Fulltime Employees (FTE) are based on historical and current research of the overall scope of work which encompasses the integrated management and maintenance of mainframe Unisys and other Original Equipment Manufacturer (OEM) hardware, specified associated mainframe peripherals, hardware purchase, hardware relocation/installation/de-installation, OEM and third party software maintenance and licensing, software purchase/installation/de-installation, communications, support services, disaster recovery support and training. This contract includes technology enhancement and technology renewal.

- General Service Administration (GSA) Multiple Award Schedule (MAS) pricing was reviewed and factored into the price blend for labor rates.

Based on the above details the government did due diligence in developing the IGCE, therefore the IGCE is a reasonable tool to use to assess the fairness and reasonableness of the contractor’s price proposal.

IRSAP 1006.3

D. DESCRIBE THE MARKET RESEARCH THAT WAS CONDUCTED AND THE RESULTS OF

THAT SURVEY. IF ACTIONS WERE TAKEN BY PROCUREMENT PERSONNEL TO SATISFY

THIS REQUIREMENT (SUCH AS A GPE SOURCES SOUGHT SYNOPSIS), PLEASE SPECIFY.

As mentioned in Section 10. (B) of this justification, ESUS market research involved reviewing various acquisition alternatives to determine if any available contract vehicles could fulfill the Unisys ClearPath requirement. The first review involved Treasury mandatory contracts and department wide contracts. Department wide contracts and Treasury mandatory sources do not have appropriate scope to cover ESUS ClearPath mainframe requirements. More specifically, none of the departmentwide contracts or Treasury mandatory contracts include Unisys ClearPath specific mainframe hardware, software, or services to support the nation’s tax system.

In addition to the Department’s contracts, a review of Federal Supply Schedules (FSS), Government-wide Acquisition Contracts (GWACS), multi-agency contracts, and any other procurement instruments intended for use by multiple agencies, including Blanket Purchase Agreements (BPAs) under Federal Supply Schedule contracts were considered. No other contract exists to provide Unisys ClearPath mainframe hardware, software, and services to support the nation’s tax system.

Specifically, SAICS GSA MAS does not include Unisys ClearPath specific technology necessary to support the mainframe and according to SAIC those technologies will not be added to their MAS.

Further, an ESUS Request for Information (RFI) was published to Sam.gov in March 2022. Four responses were received and reviewed from Amazon Web Services (AWS), Voltage Technology, GOVCIO, and SAIC. SAIC was the only capable company to provide the Unisys ClearPath hardware, software, and service requirement. SAIC presented an exclusive Value-Added Reseller (VAR) agreement that indicates they are the only company authorized to sell Unisys ClearPath requirements to the government. The other three respondents were not capable of delivering the requirement because they don’t have authority to sell Unisys products to the government. The other three companies also did not convey that they were key service providers for Unisys ClearPath hardware, software, and services, and focused on future state transformation to a solution that they could support. Additionally, Unisys mainframes operating system, applications, and databases have been specifically customized to fit the IRS Mission, and in the near term other non-customized systems cannot be utilized. To satisfy FAR 5.203(a), the RFI was posted for 24 days, which exceeds the 15 days required.

In addition to SAIC having market exclusivity to sell Unisys ClearPath and the other RFI respondents being incapable of successfully delivering the requirement, the IRS faces significant cost and risk implications in order to transition away from Unisys ClearPath for the mainframes. Specifically, the IRS seeks to minimize negative impacts and disruptions to the IRS mission, day to day operations, and security. The IRS is not able to transition from the Unisys ClearPath mainframe platforms in the near term due to significant cost and risk implications. Cost estimates project it will cost between $200 to $300 million over a five-to-seven-year timeframe to transition from the Unisys mainframe.

Over the past decades, the Unisys mainframes operating system, applications, and databases have been heavily customized to fit the IRS Mission, in the near term other non-customized systems cannot be used. Moving existing Unisys mainframe applications / workloads to other platforms is no simple exercise. Data structures in modern systems are very different from those found on Unisys mainframes, as the COBOL (legacy programming language) code that is written for the Unisys mainframe hierarchical databases is not natively suited for modern relational databases.

The IRS spent many years developing and modifying the business logic that drives core tax processing applications on mainframe systems. The IRS will continue to explore feasible solutions for

IRSAP 1006.3

modernizing critical business systems that run on the Unisys mainframes that establish a holistic mainframe migration process that improves organizational performance while minimizing risk.

E. DESCRIBE ANY OTHER FACTS TO SUPPORT THE JOFOC.

The market exclusivity agreement provides SAIC with exclusive VAR rights to the US Federal Government for Unisys ClearPath related work for hardware, software, and services from March 2020 to March 2025. No other acquisition alternatives exist as SAIC is the sole source provider of ESUS services.

F. LIST SOURCES, IF ANY, THAT EXPRESSED, IN WRITING, AN INTEREST IN THE

ACQUISITION.

The contractors listed below expressed written interest in the RFI that was published to Sam.gov.

The contractor’s capabilities were reviewed and SAIC was the only contractor that proved to have market exclusivity via a VAR to sell Unisys ClearPath software, hardware, and services to the federal government. The other three companies also did not convey that they were key service providers for Unisys ClearPath hardware, software, and services, and focused on future state transformation to a solution that they could support. The other companies also did not show capability to support a heavily customized environment designed to satisfy the IRS mission. The Unisys mainframes operating system, applications, and databases have been specifically customized to fit the IRS Mission, and in the near term other non-customized systems cannot be utilized.

- Voltage Technology

- SAIC

- GOVCIO

- AWS

G. LIST THE ACTIONS THE BUREAU WILL TAKE TO REMOVE OR OVERCOME ANY BARRIERS

TO PROMOTE THE COMPETITION ON ANY SUBSEQUENT ACQUISITIONS FOR SIMILAR

SUPPLIES OR SERVICES.

In the event SAIC no longer has market exclusivity to sell ClearPath software, hardware, and services to the federal government, the IRS will reassess within a reasonable timeframe, continued use of Unisys ClearPath mainframes and explore other solutions to promote increased competition. The assessment of the Unisys mainframes will include all databases, applications, security, modernization, and enhancement efforts. IRS will engage industry in order to determine accessibility to Unisys ClearPath, transition solutions, and future state plans to support mainframe software, hardware, and services as part of market research.

H. STATEMENT THAT REQUIREMENT DOES NOT RESULT FROM A LACK OF PLANNING OR

THE EXPIRATION OF FUNDS.

This requirement is a known requirement and this JOFOC is not a result from a lack of planning or the expiration of funds.