LSJ LCA BPA 2023H2-25-A-00002.pdf

DEPARTMENT OF THE TREASURY

LIMITED-SOURCES JUSTIFICATION

This acquisition is conducted under the authority of the Multiple Award Schedule Program (see FAR 8.401) This Procurement is in support of Law Enforcement

Treasury Standard Form – 1012 (Rev 12/24)

Prescribed by Treasury: DTAP 1008.405-6 Tracking No.

1. Identification of the agency and the contracting activity:

The Requiring Activity is: Internal Revenue Service (IRS), Criminal Investigations (CI), Technical Operations and Investigative Services (TOIS).

The Contracting Activity is: Internal Revenue Service, CI Section 3 2.a Nature and/or description of the action being approved:

The purpose of this Limited Sources Justification (LSJ) is to obtain approval to award a sole-source, GSA Schedule Blanket Purchase Agreement (BPA) to Palantir Technologies Inc. for licensing and support for Palantir platform solutions utilized by IRS-CI and IRS-Civil. The current BPA is slated to expire at the conclusion of the second award term, on September 27, 2025, but the earliest ending task order expires on 9/23/2025. The new BPA needs to be in place prior to September 23, 2025 to allow continuity of licensing and support.

2.b Name of the vendor: Palantir Technologies Inc.

2.c Requisition No.: 5000198117 2.d Bridge contract: Yes No 2.e Brand name: Yes No 3.a A description of the supplies or services required to meet the agency’s needs:

Internal Revenue Service (IRS) has a need to obtain Contractor services to provide all necessary licensing and support for modernization efforts on the Palantir platform. Support includes operations and maintenance, help desk, development modernization and enhancement (DME), cloud migration and hosting, and program management support for the following IRS- CI and IRS-Civil programs and initiatives:

Lead and Case Analysis (LCA) - Lead and Case Analysis (LCA) is a mission critical tool that is used across CI to perform investigative case duties. It enables over 3000 of CI's agents and analysts to perform significantly quicker and more efficiently by providing a single, unified place to generate data-driven leads and investigate cases through automation and integration of numerous disparate systems. Investigative functions such as lead generation have been automated by providing access to hundreds of custom analytics reports and dashboards.

Investigative Case Management (ICM)- ICM will build upon the established CI capabilities provided by LCA and expand to provide a modernized case selection management system.

This will allow CI to consolidate and decommission 4 outdated legacy systems, CI Management Information Systems (CIMIS), Asset Forfeiture Tracking and Retrieval (AFTRAK) System, Diary (Timekeeping), and TIMS (Total Inventory Management System) to improve efficiency and take advantage of new innovative capabilities (analytics, AI, etc.)

Enterprise Data Platform (EDP)- Initiative to unify /consolidate IRS data sources, including Return Review Program (RRP), to a new cloud-based solution will enable access to innovative analytics capabilities.

Office of the Chief Procurement Officer (OCPO)- building workflows with various procurement systems including Procurement for Public Sector (PPS) to improve reporting and analysis of Procurement activities

Data Enablement and Modernization Initiative- is a strategic effort to enhance the accessibility, usability, and integration of high-impact data sources within the Palantir platform. Designed to support mission-critical operations, the initiative ensures that key data assets and applications are positioned to leverage Palantir’s advanced capabilities. Central to

This acquisition is conducted under the authority of the Multiple Award Schedule Program (see FAR 8.401) This Procurement is in support of Law Enforcement

Treasury Standard Form – 1012 (Rev 12/24)

Prescribed by Treasury: DTAP 1008.405-6 Tracking No.

the initiative is the development of a semantic ontology framework that enables interoperability and meaningful analysis. This work involves close collaboration with domain experts to define the structure of ontologies and establish a comprehensive hydration strategy incorporating data history, lineage, and transformation logic. The initiative also focuses on migrating and modernizing existing applications to ensure seamless compatibility with Palantir’s APIs, SDKs, functions and APIs. By supporting both low-code and pro-code migration paths, the effort enables continuity of functionality while expanding the platform’s reach and usability. Together, these efforts will create a scalable, future-ready data ecosystem that empowers faster insights, stronger coordination, and more effective decision-making across the enterprise.

Selections and Analytics Platform (SNAP)- Enables users to perform critical ad-hoc searches and manual research used for revenue protection to help identify fraud, quality assurance to identify returns not authenticated as identify theft to allow reporting on tax returns, scheme development to analyze data sets and fraud trends, and support new and ongoing investigations

Compliance Platform- A top priority for both Treasury and the IRS is ensuring taxpayer compliance and maximizing collections. To achieve it, Compliance is undertaking a comprehensive range of activities focused on case selection, anomaly detection, and operational workflows; addressing both business processes and technologies. The purpose of the Compliance Platform project is to develop innovative workflows that prioritize identifying and acting on the highest-value, highest risk cases, while streamlining the delivery and treatment of compliance cases. This project positions the IRS to more effectively identify significant, predictable non-compliance that in some cases currently require several months to process manually. Through this project, Compliance will implement targeted, efficient workflows, improve detection, optimize case selection, and accelerate service delivery.

3.b Includes IT: Yes No NAICS – 541512 – Computer Systems Design Services PCS – DA10 – IT and Telecom - Business Application/Application Development Software As A Service 3.c IGCE/Estimated dollar value:

Period Base Year Option Year 1 Option 2 (6 mo) Grand Total

Total Cost $74,123,606.60 $17,312,389.80 $8,177,582.50 $99,613,578.90

4.a Identification of the authority being used (Check the appropriate box that applies).

FAR 8.405-6(a)(1)(i)(A) – An urgent and compelling need exists, and following the procedures would result in unacceptable delays.

FAR 8.405-6(a)(1)(i)(B) – Only one source is capable of providing the supplies or services required at the level of quality required because the supplies or services are unique or highly specialized.

FAR 8.405-6(a)(1)(i)(C) – In the interest of economy and efficiency, the new work is a logical follow-on to an original Federal Supply Schedule order or BPA provided that the original order or BPA was placed in accordance with FSS procedures in accordance with

*BPA estimate rounded up to $100M for routing and approval purposes.

This acquisition is conducted under the authority of the Multiple Award Schedule Program (see FAR 8.401) This Procurement is in support of Law Enforcement

Treasury Standard Form – 1012 (Rev 12/24)

Prescribed by Treasury: DTAP 1008.405-6 Tracking No.

the applicable Federal Supply Schedule ordering procedures. The original order or BPA must not have been previously issued under sole-source or limited-sources procedures.

FAR 8.405-6(b) – Items peculiar to one manufacturer. (i.e., Brand Name specifications) 4.b Supporting Rationale:

Lead and Case Analysis (LCA)- The IRS originally implemented the Palantir Gotham solution for LCA in 2014. The system was later transitioned to Palantir Foundry in 2022.

After 10 years of extensive development and customization, the solution in place at IRS CI is approaching maturity. IRS CI has made a substantial investment of almost $50 million developing the functionality of the system. The current system build consists of:

1. Over 48 implemented change requests

2. Over 500 forms integrated

3. Over 6 system integrations

4. Process over one terabyte of data per week.

5. Hundreds of custom analytics reports/dashboards available

6. Hundreds of thousands of lines of custom code.

7. Over $49M in overall development costs

8. Over $43M in operations and maintenance costs

Selection and Analytics Platform (SNAP)- Selections and Analytics Platform (SNAP) began development in 2019 and the functionality is similarly approaching maturity. IRS has invested over $51M to build and maintain SNAP.

Further, IRS has invested over $12M in pilot programs to gauge the feasibility of expanding analytics functionality for the OCPO, Unified API, EDP, and Compliance Platform within the Palantir platform. The pilots were successful, and these initiatives are slated to be deployed during the follow-on BPA.

All of the integration streams have been developed under the proprietary Palantir platform.

Market research indicates that due to the proprietary nature of the existing functionality, the current developed functionality cannot simply be repurposed on another software platform.

In order to transition to a solution other than Palantir, any new Contractor would have to completely recreate all streams under the new software solution. This would result in a massive re-duplication of costs and effort and would take several years or longer. This would not be expected to provide any savings to the Government. During this transition, the current Palantir solutions would still need to be supported. Failing to do this could cause critical work stoppages. Case work will be severely impacted which could have legal ramifications. Trial data could become unavailable or not compatible with the current DOJ systems, policies, and procedures. Fraudulent Tax Refunds could be sent out causing a revenue loss to the Government. IRS CI is the only Federal Law Enforcement Agency that can prosecute Title-26 Tax Cases. IRS & CI is required to implement the "Taxpayer Browsing Protection Act (Public Law No. 105-35)" which legally requires strict UNAX (Unauthorized Access, Attempted Access, or Inspection of Taxpayer Records) requirements are met and maintained within Data access, Sources and Research Governance. This requires specialized knowledge and expertise from the vendor.

This acquisition is conducted under the authority of the Multiple Award Schedule Program (see FAR 8.401) This Procurement is in support of Law Enforcement

Treasury Standard Form – 1012 (Rev 12/24)

Prescribed by Treasury: DTAP 1008.405-6 Tracking No.

IRS has confirmed that Foundry licensing is proprietary to Palantir. Resellers are available for the some Palantir licenses, but they add an additional layer of cost markup, do not provide any benefit over dealing directly with the manufacturer, Palantir, and do not offer the full foundry cloud solution. Palantir confirmed, and the Government verified, that they currently only offer a full Foundry cloud solution within the Palantir Federal Cloud Service (PFCS).

That means that PFCS cloud hosting support needs to be included in the BPA to accommodate any cloud migration and hosting needs. SNAP already resides in PFCS along with the Pilots. Therefore, licenses must be purchased directly from Palantir.

Therefore, a sole source to Palantir to support LCA is necessary in the interest of economy and efficiency.

The current Palantir BPA 2032H5-18-A-00029, was awarded on 09/21/2018. The BPA was awarded as a result of a GSA Schedule unrestricted competition that determined the Palantir solution to be the best value to the Government. No sole-source or limited-source procedures were utilized.

The following serves as the determination to award a single-award BPA with an estimated value exceeding $100m, as required by FAR 8.405-3(a)(3)(ii)

(A) The orders expected under the BPA are so integrally related that only a single source can reasonably perform the work;

The Internal Revenue Service (IRS) currently operates in an environment that uses more than 100 business systems and 700 methods to identify the highest value exam, collection, and investigation cases. These systems have been built over decades, leveraging different older technologies and data sources while supporting business processes. This fragmented landscape can lead to a number of undesirable outcomes including but not limited to duplication of effort and cost, poor understanding of gaps in the coverage, and suboptimal case selection.

The IRS has begun a multi-year effort to modernize its data systems and the entire workload identification and case selection system, both business process and technologies. As part of this initiative, IRS will modernize its data systems into a single, unified data model and ontology for tax data. Each business unit will continue to build out analytics capabilities based on the common system. This will establish a streamlined capability to implementing improved fraud detection and investigations, and taxpayer support services. The Unified API Initiative is a strategic Treasury and DOGE effort to enhance the accessibility, usability, and integration of high-impact data sources within the Palantir platform.

This work also plays a critical role in meeting many of Treasury’s broader goals such as:

1. Treasury Efficiency- Treasury’s strategic objective to optimize operational efficiency by leveraging contractor-provided IT services that reduce internal workload, improve system interoperability, and accelerate service delivery timelines.

2. Enabling Data-Driven Decision Making- The engagement will include the deployment of analytics platforms that empower leadership with real-time operational

This acquisition is conducted under the authority of the Multiple Award Schedule Program (see FAR 8.401) This Procurement is in support of Law Enforcement

Treasury Standard Form – 1012 (Rev 12/24)

Prescribed by Treasury: DTAP 1008.405-6 Tracking No.

dashboards and predictive modeling, supporting Treasury’s goal of becoming a more data-informed enterprise.

3. Leveraging AI to Streamline Operations- The proposed contractor solution integrates AI-driven tools to automate repetitive processes, identify operational bottlenecks, and generate actionable insights—aligning with Treasury’s commitment to responsible AI adoption and digital modernization

4. Promoting Shared Services and Scalability- The contractor solution is built on a scalable architecture that aligns with Treasury’s enterprise-wide goals of shared services adoption, enabling future reuse across bureaus and ensuring alignment with enterprise IT strategy.”

The various projects supported under this BPA are integrally related must be kept together to meet Treasury operational efficiency goals and benefit from the single unified data model and ontology. Introduction of alternate systems into the IRS ontology would only serve to continue the current problems and inefficiencies associated with IRS’s fragmented IT landscape. Because the work will utilize the proprietary Palantir Platform, only a single source can reasonably perform the work.

(B) The BPA provides only for firm-fixed priced orders for-

(1) Products with unit prices established in the BPA; or

(2) Services with prices established in the BPA for specific tasks to be performed;

Orders against this BPA will only be Firm-Fixed-Price (FFP) pricing will be evaluated to ensure they comply with the ceilings and discounted licensing and labor rates established in the BPA.

(C) Only one source is qualified and capable of performing the work at a reasonable price to the Government; or

This has already been discussed in the Government’s above rationale for utilizing the procedures of FAR 8.405-6(a)(1)(i)(C) to award a sole source BPA to Palantir Technologies.

(D) It is necessary in the public interest to award the BPA to a single source for exceptional circumstances.

In order to meet efficiency improvement targets for Filing Season 2026, and take advantage of the benefits of modernization as stated in the above FAR 8.405-3(a)(3)(ii)(A) determination, it is necessary to modernize the IRS on a single, unified data model and ontology for tax data.

By eliminating redundancies and integration barriers and taking advantage of opportunities for data driven decision making and Artificial Intelligence, IRS will provide streamlined service to taxpayers and operate in a more efficient manner.

5. A determination by the ordering activity Contracting Officer that the order or BPA represents the best value consistent with FAR 8.404(d):

The Contracting Officer has determined that the BPA represents the best value consistent with FAR 8.404(d) and lowest overall cost alternative on considering prices, special features and lowering administrative costs to meet the Government’s need based on their GSA Schedule.

This acquisition is conducted under the authority of the Multiple Award Schedule Program (see FAR 8.401) This Procurement is in support of Law Enforcement

Treasury Standard Form – 1012 (Rev 12/24)

Prescribed by Treasury: DTAP 1008.405-6 Tracking No.

6. A description of the market research conducted among schedule holders and the results or a statement why market research was not conducted:

Extensive market research was conducted, that included releasing a Request for Information (RFI) and analyzing responses to determine whether the use of another vendor was possible and economically efficient. RFI responses identified possible alternative solutions, but their responses did not meet the LCA requirement. Using any alternative solution would require completely redeveloping the existing functionalities of LCA on a new platform, This would be a substantial cost similar to the cost already invested in developing the current LCA solution, which has cost CI over $49M. Palantir has also provided documentation confirming the proprietary nature of the licenses being acquired and the lack of resellers. Palantir also confirmed that they currently only offer Foundry Cloud support within the Palantir Federal Cloud Services (PFCS).

7.a Any other facts supporting this justification:

The Acquisition Plan, Independent Government Cost Estimate (IGCE), Market Research Summary Report and Performance Work Statement (PWS) support this justification.

7.b Attachments: Yes No

8. A statement of the actions, if any, the Requiring Activity and Contracting Activity may take to remove or overcome any barriers that led to restricted consideration before any subsequent acquisition for the supplies and services is made:

IRS will continue to conduct surveillance of the alternative software solutions to the Palantir platform to determine if a more advantageous solution exists. As long as Palantir licenses and support are proprietary to Palantir and the existing application is only compatible in the Foundry Platform, any necessary support must continue to be purchased through Palantir.

However, at the conclusion of this 3-year BPA, the Government may potentially seek to conduct a competition amongst Palantir and alternative solution providers to determine whether IRS should continue to maintain Palantir Platform or if an alternative provides the best value to the Government.

9. Certifications and Approvals:

9.a Program Office Certification (Requiring Activity). I hereby certify that any supporting information and data provided (e.g., the Government’s minimum needs or requirements, or other rationale for the limited sources) and which form the basis for this justification for an exception to fair opportunity, are accurate and complete to the best of my knowledge and belief.

Name: Date:

Signature:

9.b Contracting Officer Certification and Approval. I hereby determine the circumstances of this acquisition support the justification to acquire these supplies or services on a limited source basis. I also certify this limited-sources justification is accurate and complete to the best of my knowledge and belief. Therefore, unless additional approvals are required as prescribed below, as the authorized contracting officer for this acquisition, I hereby approve the processing of this requirement on a limited-source basis.

Name: Date:

Signature:

This acquisition is conducted under the authority of the Multiple Award Schedule Program (see FAR 8.401) This Procurement is in support of Law Enforcement

Treasury Standard Form – 1012 (Rev 12/24)

Prescribed by Treasury: DTAP 1008.405-6 Tracking No.

10. Additional Reviews and Approvals (As applicable):

10.a Bureau Chief Information Officer or Authorized Designee (for IT requirements that are over $5 million, but not exceeding $75 million) (Contracting Activity). I have reviewed this justification and find it to be accurate and complete to the best of my knowledge and belief, and representative of the Government’s need. Therefore, I hereby consent to the approval of this justification. (Note: The Bureau CIO may delegate their authority for proposed contracts over $5 million, but not exceeding $15 million to the Associate Bureau CIO(s).)

Name: Date:

Signature:

10.b Advocate for Competition (if over $750,000, but not exceeding $15 million) (Contracting Activity). I have reviewed this limited-sources justification and find it to be accurate and complete to the best of my knowledge and belief. Therefore, unless additional approvals are required as prescribed below, as the ordering activity’s Advocate for competition, I hereby approve this limited-sources justification.

Name: Date:

Signature:

10.c Head of the Procuring Activity or Authorized Designee (if over $15 million, but not exceeding $75 million) (Contracting Activity). I have reviewed this limited-sources justification and find it to be accurate and complete to the best of my knowledge and belief. Therefore, unless additional approvals are required as prescribed below, as the head of the procuring activity or authorized designee, I hereby approve this limited-sources justification.

Name: Date:

Signature:

10.d Treasury Chief Information Officer (for IT requirements that are over $75 million).

I have reviewed this justification and find it to be accurate and complete to the best of my knowledge and belief, and representative of the Government’s need. Therefore, I hereby consent to the approval of this justification.

Name: Date:

Signature:

10.e Senior Procurement Executive (if over $75 million) (Contracting Activity). I have reviewed this limited-sources justification and find it to be accurate and complete to the best of my knowledge and belief. Therefore, I hereby approve this limited-sources justification.

Name: Date:

Signature:

Julius S. Bradshaw Digitally signed by Julius S. Bradshaw Date: 2025.08.01 15:23:45 -04'00'