IRS Awards $1.03 Billion No-Bid Contract to ID.me Following Lobbying Surge
The IRS has granted ID.me a decade-long monopoly over taxpayer identity verification by claiming no other vendor is technically capable. This sole-source deal follows $2.8 million in lobbying and the hiring of a former DHS official who managed the procurement standards now used to justify the award.
The IRS handed ID.me a $1.03 billion identity monopoly after the company spent millions on lobbying and hired the official who oversaw the standards used to justify the no-bid deal.
On December 29, 2025, the Internal Revenue Service finalized a $1.03 billion Blanket Purchase Agreement (BPA) with ID.me, bypassing standard competitive bidding. A 'Justification and Approval' (J&A) document filed by the IRS on January 7, 2026, asserts that ID.me is the 'only vendor capable' of meeting NIST 800-63-3 Identity Assurance Level 2 (IAL2) standards at federal scale. This 10-year agreement locks the agency into a proprietary facial recognition infrastructure, making any future transition to a different vendor technically and financially prohibitive.
Financial disclosures reveal a significant push preceding the award. In 2025, ID.me increased its lobbying expenditures by 45%, totaling $2.8 million focused on 'procurement modernization.' During the 18 months leading up to the contract, ID.me executives and its PAC donated $450,000 to members of the House Ways and Means and Senate Finance Committees—the groups responsible for IRS oversight. While the IRS cited 'emergency transition needs' to justify the lack of competition, the move contradicts 2024 congressional testimony from three separate vendors who claimed they were ready for IAL2 testing but were denied pilot opportunities by the Treasury.
The procurement process also features a prominent 'revolving door' hire. Pete Peterson, former DHS Deputy Secretary, currently serves as a Strategy Consultant for ID.me. During his tenure at DHS, Peterson managed the specific procurement standards that the IRS now cites as the reason only ID.me can perform the work. Under CEO Blake Hall, the company successfully lobbied for a 'Trust Framework' that mirrors its own proprietary technology, effectively writing the competition out of the federal market through technical definitions.
Mainstream narratives have largely framed this contract as a necessary tool for 'modernizing legacy systems' and 'preventing fraud.' These reports often omit the exclusion of open-source identity standards that would have allowed for vendor interoperability. By choosing a single-point-of-failure monopoly, the IRS has prioritized administrative simplicity over taxpayer privacy and market competition, handing a private corporation a database of biometric markers for over 100 million Americans.
For regular citizens, this deal establishes a biometric paywall for government services. To access their own tax records, Americans must now submit to facial scanning by a for-profit entity. Those who refuse to participate or lack the required hardware are relegated to underfunded, manual processing lines, turning the right to access government data into a trade-off for personal privacy.
Summary
The IRS has granted ID.me a decade-long monopoly over taxpayer identity verification by claiming no other vendor is technically capable. This sole-source deal follows $2.8 million in lobbying and the hiring of a former DHS official who managed the procurement standards now used to justify the award.
⚡ Key Facts
- $1.03 billion sole-source contract awarded to ID.me on Dec 29, 2025, bypassing competitive bidding.
- ID.me increased lobbying by 45% in 2025, spending $2.8 million on procurement-related influence.
- Former DHS Deputy Secretary Pete Peterson, who managed procurement standards, now serves as an ID.me consultant.
- ID.me executives and PAC donated $450,000 to key IRS oversight committee members in the 18 months prior to the award.
- Three competing vendors were denied IAL2 pilot opportunities despite testifying to their readiness in 2024.
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