- Key insight: Find out how the IRS managed $192 million in noncompetitive IT bridge contracts.
- What's at stake: Whether the federal government overpays for IT services due to reduced contract competition.
- Expert quote: "While bridge contracts can be necessary tools, they place the government at risk..." — TIGTA
The Internal Revenue Service doesn't adequately track its use of bridge contracts, a type of noncompetitive contract, even though it's spending close to $200 million on information technology through 19 such contracts, according to a new report.
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The official definition is somewhat murky, but bridge contracts are generally considered to be temporary short-term agreements for providing critical services between when an existing contract ends and a new one begins. The Trump administration has come under fire for its reliance on no-bid contracts, including during its recent efforts to renovate the Reflecting Pool on the National Mall in Washington, D.C., hiring President Trump's swimming pool contractor.
"Federal agencies are generally required to award contracts competitively," said the report. "However, they are permitted to award noncompetitive contracts under certain circumstances. Bridge contracts are one type of noncompetitive contract. While bridge contracts can be necessary tools, they place the government at risk of overpaying by reducing competition."
For the report, TIGTA reviewed the use of 19 bridge contracts totaling $192 million for Information Technology products and services. It found the IRS did not consistently comply with Treasury Department policy. Treasury Department policy requires that a bridge contract shall not exceed 12 months, except under unusual circumstances. The policy also requires that bridge contracts exceeding 12 months be approved by the next-level approving authority. However, TIGTA found that six of the 19 bridge contracts it reviewed (32%) exceeded 12 months, and the same was true for the number of bridge contract justifications that were signed and maintained in the contract file, as required, as well as the number that were not approved by the next-level authority.
In fiscal year 2025, out of the IRS's $16.5 billion in contract obligations, over $8.2 billion related to IT products or services. "If controls over noncompetitive bridge contracts are not adequate, the IRS runs the risk of overpaying for Information Technology goods or services," said the report.
TIGTA made five recommendations in the report to improve the IRS's ability to identify and support the use of bridge contracts. They included developing a process to identify and notify procurement officials when a justification has not been included in the official contract file; mandatory training for contracting officers; ensuring that bridge contracts are clearly identifiable; developing a process to ensure that bridge contracts that are extended can be easily identified; and ensuring that bridge contracts exceeding 12 months have the signature of the next level approving authority.
The IRS agreed with all five recommendations and said it has either implemented or plans to implement corrective actions.
"The IRS recognizes the importance of tracking bridge contracts and maintaining effective controls to identify them and enforce Treasury policies governing their use," wrote IRS CFO Todd Newnam in response to the report. "We are committed to ensuring accountability and policy compliance when acquiring information technology assets and services."
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