I_4 JOFOC_5000134615 052322_9-1-2022 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:

Requiring Activity: Internal Revenue Service (IRS), Large Business and International (LB&I) Division, Treaty and Transfer Pricing Operations Contracting Activity: Office of Business Solutions Acquisitions (OBSA), Support Services Branch, Studies & Analysis Section

2. NATURE/DESCRIPTION OF THE ACTION BEING APPROVED:

The purpose of this sole source justification is to obtain approval to award a firm fixed price contract to S&P Global Market Intelligence, LLC, for a Financial Data subscription as described in section 3. The current contract No. 2032H8-20-C-00055 will expire on September 29, 2022.

The anticipated period of performance will be for a 12-month base period from September 30, 2022 � September 29, 2023, and four 12-month options.

3. DESCRIPTION OF SUPPLIES OR SERVICES:

The Internal Revenue Service has a continuing need to have online access to financial data that has been standardized and modified for year-to-year research. The data includes US and Foreign company financials, business descriptions, SEC filings, Non-Public filings from the banking industry, Foreign Government Filings, Press Releases, Analysts Reports, company organization charts, ratio analysis, and financial charts. The purpose of these products is to examine corporate financial records and transactions.

4. SHOPPING CART

NUMBER:

5000134615

5. NAME OF PROPOSED SOURCE(S):

S&P Global Market Intelligence, LLC (S&P) 33356 Collection Center Drive Chicago, IL 60693

6. COST ESTIMATE:

BY: $3,740,000

OY1: $3,850,000

OY2: $3,960,000

OY3: $4,080,000

OY4: $$4,200,000

Total: $19,830,000

7. CERTIFICATION OF TECHNICAL OR REQUIREMENTS PERSONNEL

taxpayers to support the preparation of their tax returns. For examination and litigation purposes, the IRS needs to recreate taxpayers� analyses by using the same method and standardized data that is utilized by the taxpayers. The use of the same data is essential to making examination decisions regarding the accuracy of the tax data filed on the return. The use of a different vendor�s data service would result in incomparable analyses or the need for extensive time-consuming adjustment to increase comparability.

If a new vendor were selected, then IRS would need to build new infrastructure and Access Control Lists to allow agents access to the new vendor�s data. The new firewall setting changes would take substantial time and investment to complete. Based on prior experience, firewall settings related matters have taken months to resolve with IT Cybersecurity.

Access to extensive and varied public and private financial data as provided by S&P is distinctly unique. Other vendors do provide similar products, however S&P�s is the only source based on prior research and experience that is capable of meeting all LB&I�s requirements for detailed and standardized/adjusted historical information on global business entities and the technology to allow LB&I agents to build and maintain models from their existing platform. The data requirements include access to detailed historical financial data; data standardization so comparisons between companies, industries and geographic location are possible; and adjusted data to correct for accounting classification errors. S&P has the technology that would allow the IRS to pull data into our critical analytical models. For Examination and Litigation purposes, the IRS needs to recreate taxpayers' analyses by using the same method and standardized/adjusted data that the taxpayers use. S&P is the industry standard for economic and financial data and analyses that is used by taxpayers to support the preparation of their tax returns. The use of the same data is essential to making examination decisions regarding the accuracy of the tax data filed on the return.

There are significant negative consequences related to productivity that must be considered when transitioning to another vendor. For example:

• Extensive user learning curve- It took LB&I six months of initial classroom training by S&P to get all 2,000 initial LB&I end users �up to speed� on the use of S&P Financial Databases; and

• Compatibility with IRS Systems and Network- S&P had to configure their product lines to be compatible with LB&I�s computer network and accessible to examiners� laptop computer.

However, maintaining ongoing access to S&P�s systems and services via IRS IT systems has the following significant intangible/going concern value for the IRS:

• No added ramp-up time will be necessary to meet IT Cybersecurity requirements;

• Minimizing start-up activities will limit down time on the examinations and minimize the loss of significant tax revenue potential; and

• There will be no learning curve issue as existing users have years of experience utilizing the product.

The highly technical nature of the S&P�s based applications created for and utilized by LB&I requires that employees responsible for maintaining these applications understand the coding, functionality, and interoperability of the S&P data feed and LB&I�s applications. It takes years for IRS employees to acquire these skills. One application, a valuation and transfer pricing analysis platform utilized by both TPP and APMA, required hundreds of man months to develop and refine.

Additionally, thousands of trainer and student hours were spent training new TPP and experienced CBA agents on the use of this model. Moreover, changing vendors would require a redesign all of our core training that uses S&P�s for primary/secondary learning purposes. Retaining S&P�s allows the IRS to maintain continuity of operations in support of LB&I�s international tax and domestic tax compliance initiatives.

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.

The LB&I Office and OBSA solicited available capabilities from industry for financial data access and analysis by issuing a Sources Sought sam.BETA.gov and GSA on March 1, 2022. A total of two (2) responses were received, one of which was the incumbent. After review of the received capabilities, the LB&I office determined that adequate competition to provide the financial data access and analysis was not available. The 2nd responders cannot meet all the tasks of the PWS.

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

AND REASONABLE.

The differentiating factors include the detailed review, discussion with company officers, and restatement of financial data and standardization that S&P performs. The costs of taking the raw data provided by other firms and then performing internally the same cleaning and database standardization services provided by S&P would run into millions of dollars each year. Costs for on-line access to financial and market transaction information generally are provided via the purchase of licenses that grant individual user access.

The Contracting Officer determines that the anticipated price(s) will be fair and reasonable based on applicable price analysis techniques. Prior to award of the proposed contract, price information shall be obtained from the contractor and a price analysis will be performed and documented to sufficiently determine that the cost to the proposed acquisition will be fair and reasonable

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.

Market research was conducted by the LB&I office and the Contracting Officer to identify available sources and to evaluate the availability of the marketplace to meet the requirement as follows:

• Reviewed the Acquisition Gateway for Treasury Mandatory Sources

No Best in Class (BIC) vehicles were available for this requirement

• Reviewed prior acquisition history

The quality, extent, standardization adjustments, and delivery capability of the data from the other sources does not meet the requirement.

• Published Sources Sought on GSA No vendors response was received.

• Published Sources Sought on sam.gov S&P was the only vendor out of two (2) responders that could meet all the tasks of the PWS.

Based on the results of market research, the government determined that a limited number of vendors are available, but none possessed the capability to meet all of the requirements of the PWS.

E. DESCRIBE ANY OTHER FACTS TO SUPPORT THE JOFOC.

S&P data is standardized and optimized for year-to-year comparisons. Audits and evaluations of tax issues are based upon specific points in time with the knowledge available at that time. We rely on this tool to evaluate transfers of IP (cost sharing issues for example) in order to identify comparables from which we determine the return to routine activities. We also rely on the database to work transfer pricing issues involving the CPM, which by far the most often used method to resolve transfer pricing issues. Failure to renew this contract with S&P would cause IRS to lose access to this historic library impacting potential tax revenues of $8.2 billion. This rough estimate is based on IBMIS reports for the �Adjustment amount per 5701� for cases opened after 1/1/2018 that are still opened as of March 31, 2022 that have UILs of 9411/9422. Please note this estimate does not include tax revenue from APMA as they do not use IMS in excess of $20 billion.

The information required encompasses many different data sources to which S&P has access and can provide in one contract. Not awarding one contract to S&P�s would require awarding of multiple contracts to various vendors to obtain the total encompassing data, and of which would still require adjustments for comparability. This would result in increased administrative costs, require separate types of training from each vendor, and make it complicated for IRS agents to perform analyses.

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

ACQUISITION.

A Sources Sought Notice (2032H8-22-N-00003) was posted to sam.gov as well as GSA on March 1, 2022, in which two (2) vendors responded, one of which was the incumbent. The 2nd vendor did not appear to be capable of performing the required service. See detailed information below:

Cambio Consulting Group is not capable of meeting the IRS�s financial database requirements.

Cambio provides consulting services in the analytics, cybersecurity, financial management, IT, program management and risk management space. Cambio is not a content provider. The LB&I requires access to commercial off the shelf (COTS) financial data that has been cleaned and standardized.

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.

The Government will continue to conduct thorough market research to gauge the marketplace capabilities for future requirements. LB&I will continue to search for and analyze services and types of information provided by other potential sources and recommend limited competition for future solicitations, if warranted.

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

THE EXPIRATION OF FUNDS.

This requirement does not result from a lack of planning or the expiration of funds.

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E. SENIOR

PROCUREMENT

EXECUTIVE (Name & Title)

[ ] APPROVE

[ ] DISAPPROVE

(Signature) (Phone No.)

(Date)

NOTE: Each review must be preceded by lower level approval(s). For example, actions over $75 million require all approvals.

IN NO CASE WILL AN INDIVIDUAL SIGN MORE THAN ONE APPROVAL LEVEL.