DoD's $72M IT support contract with Netcetics Corporation shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $72,260,481 ($72.3M)

Contractor: Netcentrics Corporation

Awarding Agency: Department of Defense

Start Date: 2012-09-28

End Date: 2015-03-31

Contract Duration: 914 days

Daily Burn Rate: $79.1K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIXED PRICE LEVEL OF EFFORT

Sector: IT

Official Description: CUSTOMER SUPPORT

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22201

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $72.3 million to NETCENTRICS CORPORATION for work described as: CUSTOMER SUPPORT Key points: 1. The contract's fixed-price structure provides cost certainty for the government. 2. Competition was limited after excluding certain sources, potentially impacting price discovery. 3. The contract duration of 914 days suggests a need for sustained IT support. 4. Performance was rated 'satisfactory' (ST), indicating acceptable but not exceptional delivery. 5. The total award amount of $79M is within a reasonable range for similar IT support services. 6. The contract was awarded as a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.

Value Assessment

Rating: good

The total award of $72.3M over approximately 2.5 years for IT support services appears reasonable when benchmarked against similar contracts. The fixed-price level of effort (FPLE) pricing model helps control costs by establishing a set price for a defined scope of work. While specific cost breakdowns are not provided, the overall value seems fair given the duration and nature of the services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the initial solicitation may have been open, specific sources were later excluded, leading to a limited competitive environment for this particular delivery order. The exact number of bidders after exclusions is not specified, but the designation suggests fewer than ideal competition, which can sometimes lead to higher prices.

Taxpayer Impact: Limited competition can mean taxpayers may not have benefited from the lowest possible prices that a broader, more robust competition might have yielded.

Public Impact

Provides essential IT support services to the Department of Defense (DoD). Ensures the smooth operation of critical computer facilities management. Supports military and civilian personnel within the DoD. Geographic impact is primarily within Washington D.C. metro area where Washington Headquarters Services is located. Maintains the technological infrastructure necessary for national security operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in a higher price than a fully open bid.
Performance rating of 'satisfactory' suggests room for improvement in service delivery.
The exclusion of sources raises questions about the fairness and transparency of the initial bidding process.

Positive Signals

Fixed-price contract provides cost predictability for the government.
Contract successfully delivered IT support services for its duration.
Awarded under a larger IDIQ vehicle, suggesting a pre-vetted contracting mechanism.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer facilities management services. The IT services market is vast and highly competitive, with significant government spending allocated to maintaining and upgrading technological infrastructure. Comparable spending benchmarks for IT support services vary widely based on scope, duration, and complexity, but this contract's value is consistent with medium-to-large scale IT support engagements within federal agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a result, small businesses likely did not have a direct opportunity to bid on this specific delivery order. There is no information provided regarding subcontracting plans or performance related to small business participation.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contracting officers and program managers. Washington Headquarters Services, as the servicing agency, would also play a role. Inspector General (IG) reports or audits could be initiated if specific concerns regarding performance, cost, or compliance arise. Transparency is facilitated through contract databases like FPDS, where basic award information is publicly available.

Related Government Programs

Department of Defense IT Services Contracts
Computer Facilities Management Services
Washington Headquarters Services Contracts
IT Support for Federal Agencies

Risk Flags

Limited competition
Satisfactory performance rating
Exclusion of sources in competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $72.3 million to NETCENTRICS CORPORATION. CUSTOMER SUPPORT

Who is the contractor on this award?

The obligated recipient is NETCENTRICS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Washington Headquarters Services).

What is the total obligated amount?

The obligated amount is $72.3 million.

What is the period of performance?

Start: 2012-09-28. End: 2015-03-31.

What was the specific reason for excluding certain sources in the competition process?

The provided data indicates the contract was awarded under 'Full and Open Competition After Exclusion of Sources.' However, the specific rationale for excluding certain sources is not detailed in the available information. Typically, such exclusions might occur due to reasons like proprietary technology, specific security requirements that only certain vendors could meet, or if the contract was a follow-on to a previous effort where only specific vendors possessed the necessary knowledge or infrastructure. Without further documentation, the exact justification remains unclear, but it inherently limits the competitive landscape for this particular award.

How does the performance rating of 'Satisfactory' compare to other IT support contracts within the DoD?

A 'Satisfactory' performance rating, often denoted by 'ST' in contract systems, signifies that the contractor met the contract requirements and fulfilled obligations in an acceptable manner. It is a common rating, indicating that the service was adequate but did not necessarily exceed expectations. Compared to other IT support contracts, 'Satisfactory' is neither exceptional nor poor. Many contracts aim for 'Exceptional' or 'Very Good' ratings, suggesting that while Netcetics Corporation fulfilled its duties, there might have been areas where service could have been enhanced. However, 'Satisfactory' is generally considered acceptable performance by the government and does not typically trigger contractual remedies unless specific performance metrics were missed.

What is the typical cost range for similar Computer Facilities Management Services contracts awarded by the DoD?

The typical cost range for Computer Facilities Management Services (CFMS) contracts awarded by the DoD can vary significantly based on the scope, duration, geographic location, and specific services required. For a contract valued at approximately $72 million over roughly 2.5 years, this falls within a moderate to large spending bracket for IT support. Benchmarking requires detailed comparison of service level agreements (SLAs), number of users supported, types of hardware/software managed, and security requirements. However, general market analysis suggests that contracts in this range are not uncommon for comprehensive IT support functions within large federal agencies like the DoD, especially when considering the complexity and criticality of supporting defense operations.

What are the potential risks associated with a 'Satisfactory' performance rating and limited competition?

A 'Satisfactory' performance rating combined with limited competition presents a few potential risks. Firstly, 'Satisfactory' performance implies that the contractor met basic requirements but may not have excelled, potentially leading to inefficiencies or missed opportunities for service improvement that a more competitive environment might drive. Secondly, limited competition can reduce the incentive for the incumbent contractor to innovate or offer cost savings, as they face fewer alternatives. This could translate to taxpayers potentially overpaying for services that could be delivered more efficiently or effectively by a more competitive field. It also raises questions about whether the government secured the best possible value.

How has DoD spending on IT support services, specifically CFMS, trended over the past five years?

Historical spending data for DoD IT support services, including Computer Facilities Management Services (CFMS), generally shows a consistent and significant investment. While specific figures for CFMS alone are not provided here, overall IT spending by the DoD has remained robust, driven by modernization efforts, cybersecurity needs, and the ongoing digital transformation across military branches. Trends often indicate a shift towards cloud computing, data analytics, and advanced network infrastructure, but foundational support services like CFMS remain critical. Spending levels can fluctuate based on budget allocations, strategic priorities, and the lifecycle of major IT programs. It's common for such contracts to be re-competed or extended, reflecting sustained demand for these essential services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Facilities Management Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HQ003410R0046

Offers Received: 2

Pricing Type: FIXED PRICE LEVEL OF EFFORT (B)

Evaluated Preference: NONE

Contractor Details

Parent Company: Haystax Technology , Inc. (UEI: 026295970)

Address: 1953 GALLOWS RD STE 860, VIENNA, VA, 22182

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $72,260,481

Exercised Options: $72,260,481

Current Obligation: $72,260,481

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ003411D0002

IDV Type: IDC

Timeline