Recovery.gov - Track the Money

The Department of the Treasury plays a critical role in the implementation of the American Recovery and Reinvestment Act (ARRA). Being in a position to quickly provide targeted investments and implement important tax provisions to benefit both businesses and individuals, the Department provides a key financial link for enabling economic recovery. The Department’s initiatives involve implementing tax provisions that will affect almost all Americans, with specific measures providing direct relief to low-income and vulnerable households. Other provisions administered by the Department include one-time payments intended to help retirees and individuals with disabilities meet living expenses, grants and tax credit exchange designed to get Americans back to work, provide affordable housing, and make available alternative energy sources. The goal of these programs is to provide a stimulus to the U.S. economy that will help create and sustain jobs and build the foundation for long-term economic growth.

The Department of the Treasury strongly advocates use of competition in all of its acquisitions. The Department competed an average of 76% of contracting dollars obligated during FY 06-08, higher than the corresponding federal average of 64%.

Treasury currently projects a competition rate of 83% for its ARRA procurements. It is noted that ARRA actions include a single competitive transaction of $70M, representing approximately 33% of total ARRA procurement funds. The transaction is an increase to an existing Task Order under the Treasury Information Processing Support Services (TIPSS) contract, which was competitively awarded to provide Treasury-wide support services to the Department’s information systems.

• Treasury Average Competition FY 2006-2008: 76%
• Projected Treasury ARRA Competition: 83%

Note: The Department has established and deployed Treasury-wide ARRA procurement transparency, planning, control and reporting models. The models focus on driving competition, firm fixed pricing and socio-economic participation as well as efficiency and effective management of contract performance.

The projections and other information provided herein are based on data currently available to the Department. Treasury continues to refine its ARRA procurement data and anticipates only minimal changes, if any, to competition and fixed price usage rates.

The Department of Treasury promotes maximum use of fixed price contracts. The Department executed firm fixed price (FFP) actions for an average of 52% of contracting dollars obligated during FY 06-08. This average includes only FFP actions and excludes FFP derivatives, such as FFP with EPA Adjustment, to ensure consistency with ARRA reporting. No FFP derivative actions are projected for ARRA contract obligations. The Department projects 10% of aggregate ARRA contracting dollars will be obligated on FFP actions.

It should be noted that ARRA actions include a single transaction of $70M, representing approximately 33% of total ARRA procurement funds. The transaction is an increase to an existing Task Order under the Treasury Information Processing Support Services (TIPSS) contract, which provides Treasury-wide support services to the Department’s information systems. This transaction will be a hybrid of firm fixed pricing and cost plus fixed fee (CPFF).

Excluding that action, the Department anticipates 43% of dollars to be firm fixed price. Of a total of 46 projected actions, 25 (or 54%) will be FFP:

• Treasury overall Average FFP Obligated dollars FY 2006-2008: 52%
• Projected Treasury ARRA FFP Obligated Dollars FY 2009*: 10% (includes one-time projected Treasury ARRA CPFF obligation of $70 million)

Designated $70M action will be FFP/CPFF hybrid. FFP dollar value is not known at this time; total action is designated as non-FFP for the purpose of this report.

An estimated 95.5% of ARRA dollars will be placed against existing contracts, with only 4.5% going to new actions. It is projected that at least 92% of total ARRA dollars will be spent on one-time actions supporting the Act.

Approximately 5% of ARRA dollars will support issuance of taxpayer checks in accordance with the timelines specified by the Act; most of these procurements will be against existing contracts.

More than 87% of total ARRA dollars will be used to support updates of automated systems to implement ARRA changes to the tax code. Most of this work will be procured against existing cost-type contracts that were structured and awarded for the specific purpose of system implementation of legislative changes, such as those required by ARRA. Typically, this type work cannot be defined in a way to enable use of a fixed price contract vehicle. The $70M non-FFP action referenced above is included in this category.

The tax code changes will require two, one-time system updates, one for the 2008 filing season and a second for the 2009 season. Procurement has already begun for the 2008 season system update; timeliness is critical to the government’s ability to meet both ARRA mandated timelines and those established for tax filing actions. Updates for the 2009 season will be procured at a later date.

Plan to Increase Use of Fixed Price Contracts

Treasury is limited in its ability to increase use of fixed pricing given the nature and timelines for ARRA requirements. Most of the ARRA funding will support one-time actions subject to short, mandatory deadlines and not conducive to fixed pricing. Establishment and execution of a quarterly strategy to increase usage is not feasible at this time.

Treasury will review longer-term ARRA procurements and those actions to be awarded at a later date, such as 2009 tax system updates, for potential use or transition to FFP. Fixed pricing will be used to the maximum extent possible. On receipt of complete procurement planning data, the Department will relook strategy to increase use of FFP and will establish a quarterly or phased plan, if potential for improvement is identified. With the exception of the $70M transaction identified above, Treasury does not anticipate significant change to the FFP rates as projected.

Treasury will monitor and review several items including percent on-time performance for project activities, obligations and outlays versus plan, acquisition competition and contract types, performance measure actual values versus targets, and accountability metrics monthly with bureau and Senior-accountable officials. Corrective and/or preventive actions that are established as a result of the reviews will be tracked for implementation. Risk factors will be reviewed and mitigation strategies will be implemented to minimize the probability of fraud and abuse. Each program will be assessed for the level of risk associated with its activities, and the impact of those factors should they occur. The department will keep the public informed through both agency and bureau websites and press releases, and will monitor timely submissions to both Recovery.gov and Treasury.gov Recovery Act web page.

Additionally, the Department will monitor and/or estimate recipient benefit information to determine the extent to which Recovery Act benefits are reaching the American people. Recipient information will be treated as outcome indicators as opposed to performance measures with set targets since many of these benefits are voluntary.