DoD's $23.8M Defense Medical Logistics System contract awarded to CACI Premier Technology, LLC, lacked competition

Contract Overview

Contract Amount: $23,788,478 ($23.8M)

Contractor: CACI Premier Technology, LLC

Awarding Agency: Department of Defense

Start Date: 2011-10-01

End Date: 2014-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $21.7K/day

Competition Type: NOT COMPETED

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: DEVELOPMENT AND SUSTAINMENT FOR DEFENSE MEDICAL LOGISTICS SYSTEM SUPPORT APPLICATION

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $23.8 million to CACI PREMIER TECHNOLOGY, LLC for work described as: DEVELOPMENT AND SUSTAINMENT FOR DEFENSE MEDICAL LOGISTICS SYSTEM SUPPORT APPLICATION Key points: 1. The contract's value of $23.8 million over three years suggests a significant investment in critical medical logistics IT infrastructure. 2. Awarded on a sole-source basis, the lack of competition raises questions about potential overpricing and missed opportunities for innovation. 3. The contract's duration and scope indicate a long-term reliance on a single vendor for essential defense medical support systems. 4. Performance context is limited without specific metrics on system uptime, user satisfaction, or the impact on medical supply chain efficiency. 5. Positioned within the Defense IT sector, this contract supports the operational readiness of military medical services. 6. The use of Time and Materials pricing could lead to cost overruns if not closely managed and monitored.

Value Assessment

Rating: questionable

Benchmarking this contract's value is challenging without specific performance metrics or comparable sole-source awards for similar IT support services within the DoD. The $23.8 million total value over three years averages approximately $7.9 million annually. Given the critical nature of medical logistics, this figure might be reasonable if it reflects extensive system development, maintenance, and support. However, the absence of competition and the Time and Materials pricing structure introduce significant risk of inflated costs. A more competitive bidding process or a fixed-price contract could have provided better assurance of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically justified when only one vendor possesses the necessary capabilities, proprietary technology, or when urgency precludes a full and open competition. The lack of competition here means that the government did not benefit from the price discovery and innovation that typically arise from a competitive bidding process. It limits the government's ability to negotiate the best possible price and terms.

Taxpayer Impact: For taxpayers, a sole-source award means there is a higher risk of paying a premium for goods or services. Without competitive pressure, the awarded price may not reflect the lowest achievable cost, potentially leading to less efficient use of public funds.

Public Impact

Military medical personnel and units benefit from the reliable functioning of the Defense Medical Logistics System, ensuring timely access to medical supplies. The contract delivers IT support services essential for the operation and maintenance of a critical defense logistics application. The geographic impact is nationwide, supporting military medical facilities across various bases and operational theaters. Workforce implications include the potential need for specialized IT personnel within CACI Premier Technology, LLC, to manage and sustain the system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Time and Materials contract type carries inherent risk of cost overruns without strict oversight.
Lack of transparency in the justification for sole-source award.
Potential for vendor lock-in due to specialized system knowledge.
Limited insight into performance metrics and system effectiveness.

Positive Signals

Award to an established contractor (CACI) with a known presence in government IT services.
Contract supports a critical defense function (medical logistics), indicating strategic importance.
Defined period of performance (3 years) provides a clear timeframe for service delivery.
Contract is for development and sustainment, suggesting a comprehensive approach to system lifecycle management.

Sector Analysis

The IT services sector supporting the federal government is vast and highly competitive. Contracts like this, focused on specialized logistics and medical support systems for the Department of Defense, represent a significant segment. The market for defense IT is characterized by large prime contractors, often with extensive experience and security clearances, who then subcontract to smaller, specialized firms. The annual spending on defense IT can reach tens of billions of dollars, with a substantial portion allocated to sustainment and modernization of existing systems. This contract fits within the broader category of IT support and sustainment services, crucial for maintaining operational readiness.

Small Business Impact

This contract was not awarded to a small business, nor does it appear to have specific small business set-aside provisions mentioned. The prime contractor, CACI Premier Technology, LLC, is a large business. Without explicit subcontracting plans or goals detailed in the award information, the direct impact on the small business ecosystem is unclear. However, large prime contractors often utilize small businesses for specialized services, so there may be indirect subcontracting opportunities. Further analysis would be needed to determine if subcontracting goals were established and met.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the relevant contracting officers within the Department of Defense. Given the sole-source nature and Time and Materials pricing, rigorous oversight is crucial to ensure fair pricing, prevent cost overruns, and verify that the services delivered meet the contract's requirements. Transparency is limited by the sole-source justification; however, contract performance reports and audits, if conducted, would serve as accountability measures. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Health Agency IT Support
Medical Logistics Modernization Programs
DoD Enterprise Resource Planning Systems
Military Health System Information Technology

Risk Flags

Sole-source award
Time and Materials pricing
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.8 million to CACI PREMIER TECHNOLOGY, LLC. DEVELOPMENT AND SUSTAINMENT FOR DEFENSE MEDICAL LOGISTICS SYSTEM SUPPORT APPLICATION

Who is the contractor on this award?

The obligated recipient is CACI PREMIER TECHNOLOGY, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $23.8 million.

What is the period of performance?

Start: 2011-10-01. End: 2014-09-30.

What specific capabilities does CACI Premier Technology, LLC possess that justified a sole-source award for the Defense Medical Logistics System?

Justification for sole-source awards typically centers on unique capabilities, proprietary technology, or critical urgency. For the Defense Medical Logistics System (DMLSS), CACI Premier Technology, LLC may have possessed unique knowledge of the system's architecture, source code, or specialized integration requirements that other vendors could not replicate within the necessary timeframe. Alternatively, the government might have argued that transitioning to a new vendor would have posed unacceptable risks to the continuity of critical medical logistics operations. Without the specific sole-source justification document, the precise reasons remain speculative, but they would need to demonstrate that full and open competition was not feasible or not in the government's best interest.

How does the Time and Materials (T&M) pricing structure compare to other contract types for IT sustainment services, and what are the associated risks?

Time and Materials (T&M) contracts are often used when the scope of work is not clearly defined or when the duration of the effort is uncertain. They reimburse the contractor for direct labor hours at specified hourly rates and for the actual cost of materials. While T&M offers flexibility, it carries significant risk for the government, primarily cost overruns, as the total contract cost is not fixed. Unlike fixed-price contracts, which incentivize contractor efficiency, T&M can potentially incentivize longer labor hours. For IT sustainment, T&M is generally less preferred than fixed-price or cost-plus-fixed-fee contracts, which provide better cost control and predictability, unless the scope is highly variable and requires rapid adaptation.

What are the potential performance risks associated with relying on a single vendor for critical defense medical logistics IT support?

Relying on a single vendor for critical IT support, especially in a sole-source context, introduces several performance risks. Firstly, there's a risk of vendor complacency, where the lack of competitive pressure might reduce the incentive to innovate or maintain peak performance. Secondly, the government becomes highly dependent on the vendor's stability, financial health, and continued commitment to the contract. If the vendor experiences financial difficulties, undergoes significant restructuring, or decides to exit the market, the government could face severe disruptions. Thirdly, knowledge transfer and system continuity become challenging if the government ever needs to switch vendors, potentially leading to extended transition periods and increased costs.

What historical spending patterns exist for the Defense Medical Logistics System, and how does this $23.8M award compare?

Analyzing historical spending for the Defense Medical Logistics System (DMLSS) is crucial for context. While the provided data covers a specific 3-year period (2011-2014) totaling $23.8 million, understanding prior and subsequent investments is key. If previous contracts for DMLSS were significantly lower or higher, it would indicate trends in cost or scope. For instance, if prior spending was much lower, this $23.8M award might suggest an expansion of services, increased complexity, or potentially rising costs due to inflation or market factors. Conversely, if prior spending was higher, it might indicate cost-saving measures or a reduction in scope. Without access to a broader historical spending database for DMLSS, a definitive comparison is difficult, but this award represents a substantial, multi-year investment.

What oversight mechanisms are typically in place for sole-source IT contracts within the Department of Defense to ensure value for money?

Oversight for sole-source IT contracts within the DoD typically involves several layers. Contracting Officers (COs) and their administrative teams are responsible for ensuring compliance with contract terms. Program Managers (PMs) oversee the technical execution and performance. For sole-source awards, especially those using T&M, there's often a heightened emphasis on CLIN-level (Contract Line Item Number) monitoring, detailed review of contractor invoices, and regular performance reviews. Government auditors, such as those from the Defense Contract Audit Agency (DCAA), may conduct audits of contractor costs and pricing. Additionally, the Defense Contract Management Agency (DCMA) provides contract administration services, monitoring contractor performance and compliance. Robust reporting requirements and regular meetings are standard to maintain visibility and accountability.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: CACI International Inc (UEI: 045534641)

Address: 14151 PARK MEADOW DRIVE, CHANTILLY, VA, 20151

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $23,788,478

Exercised Options: $23,788,478

Current Obligation: $23,788,478

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $189,364

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W74V8H04D0034

IDV Type: IDC

Timeline