HHS awarded $1.22B to HP Enterprise Services for IT support, with a 2208-day duration

Contract Overview

Contract Amount: $122,045,568 ($122.0M)

Contractor: HP Enterprise Services, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 1999-12-15

End Date: 2005-12-31

Contract Duration: 2,208 days

Daily Burn Rate: $55.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Place of Performance

Location: TEXAS

State: Texas Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $122.0 million to HP ENTERPRISE SERVICES, LLC for work described as: Key points: 1. Contract value of $1.22 billion over 2208 days suggests a significant, long-term IT support requirement. 2. The 'Cost Plus Award Fee' (CPAF) contract type allows for performance-based incentives, potentially driving efficiency. 3. A full and open competition indicates a broad market search, likely leading to competitive pricing. 4. The contract's duration of nearly 6 years implies a critical and ongoing need for these IT services. 5. The award to a single contractor, HP Enterprise Services, highlights their established capability in this domain. 6. The absence of small business set-aside suggests the scope or nature of services may not be conducive to smaller firms.

Value Assessment

Rating: good

The contract's total value of $1.22 billion over approximately 6 years averages to roughly $203 million annually. This figure needs to be benchmarked against similar large-scale IT support contracts within federal agencies to fully assess value. The CPAF structure, while offering flexibility, requires careful monitoring of costs and award fees to ensure they align with performance and market rates. Without specific performance metrics and award fee payouts, a precise value-for-money assessment is challenging, but the competitive award process is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. This process is designed to foster a competitive environment, which typically leads to better pricing and service offerings for the government. The fact that HP Enterprise Services was ultimately awarded the contract implies they offered the best value proposition among the bidders. The number of bidders is not specified, but the 'full and open' designation is a strong indicator of a robust competition.

Taxpayer Impact: A full and open competition generally benefits taxpayers by driving down costs through market forces and encouraging innovation from a wider pool of potential contractors.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially millions of individuals interacting with these healthcare programs. Services delivered likely encompass a broad range of IT support, including infrastructure management, software development, maintenance, and help desk functions. The geographic impact is national, supporting federal IT operations across various locations. Workforce implications may include direct employment by HP Enterprise Services and potential indirect impacts on federal IT staff.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns in a Cost Plus Award Fee (CPAF) contract if not rigorously managed.
Long contract duration could lead to vendor lock-in and reduced flexibility for future technological advancements.
Dependence on a single large contractor for critical IT infrastructure poses a risk if performance falters.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that likely secured favorable terms.
The CPAF structure incentivizes performance, which can lead to higher quality service delivery.
The significant contract value indicates a substantial commitment to essential IT services for CMS.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on IT support services for a major federal health agency. The market for large-scale federal IT support is substantial, with numerous large system integrators and service providers competing for these contracts. Comparable spending benchmarks would involve analyzing other multi-year, multi-million dollar IT service contracts awarded by agencies like HHS, DOD, or GSA to understand the pricing and scope relative to market norms.

Small Business Impact

The contract was not awarded as a small business set-aside, nor is there an indication of specific small business subcontracting goals in the provided data. This suggests that the primary contractor, HP Enterprise Services, is expected to perform the majority of the work. While large prime contracts can sometimes lead to subcontracting opportunities for small businesses, the absence of explicit set-asides means these opportunities may be less structured or guaranteed. The impact on the small business ecosystem would depend on HP's subcontracting strategy.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officers and program managers within the Centers for Medicare and Medicaid Services (CMS). The Cost Plus Award Fee (CPAF) structure necessitates robust performance monitoring to ensure that award fees are justified. Transparency would be facilitated through contract award databases and potentially through agency reporting on IT investments. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Health IT Services
Large-Scale IT Infrastructure Support Contracts
CMS IT Modernization Efforts
Government-Wide IT Acquisition Vehicles

Risk Flags

Long contract duration
Cost Plus Award Fee structure requires diligent oversight
Potential for vendor lock-in

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $122.0 million to HP ENTERPRISE SERVICES, LLC. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is HP ENTERPRISE SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $122.0 million.

What is the period of performance?

Start: 1999-12-15. End: 2005-12-31.

What specific IT services were included under this $1.22 billion contract?

While the provided data does not detail the specific IT services, contracts of this magnitude awarded to HP Enterprise Services by CMS typically encompass a wide array of support functions. These often include enterprise infrastructure management (servers, networks, data centers), application development and maintenance, cybersecurity services, help desk and end-user support, IT project management, and potentially cloud migration or management services. The 'Cost Plus Award Fee' (CPAF) structure suggests that performance metrics were established for these services, and the contractor's ability to meet or exceed these metrics would determine the 'award fee' component of their compensation, in addition to cost reimbursement.

How does the annual cost of this contract compare to similar IT support contracts at HHS or other agencies?

The contract's total value of $1.22 billion over 2208 days (approximately 6 years) equates to an average annual expenditure of roughly $203 million. To benchmark this effectively, one would need to compare it against other large, comprehensive IT support contracts awarded by agencies like HHS, the Department of Defense, or the General Services Administration. Factors such as the scope of services (e.g., infrastructure vs. application development), the specific technologies involved, the level of security required, and the competitive landscape at the time of award all influence pricing. Without access to detailed service level agreements and performance data for comparable contracts, a precise comparison is difficult, but $203 million annually for a major agency's IT support is substantial and indicative of a significant operational footprint.

What were the key performance indicators (KPIs) used to determine the 'award fee' in this CPAF contract?

The specific Key Performance Indicators (KPIs) for this Cost Plus Award Fee (CPAF) contract are not detailed in the provided summary data. However, for large IT support contracts, typical KPIs often revolve around service availability and uptime (e.g., network, server, application availability), response and resolution times for help desk tickets and system incidents, project completion rates and adherence to timelines, system performance metrics (e.g., processing speed, latency), and cybersecurity compliance. The 'award fee' component is designed to incentivize the contractor to exceed baseline performance requirements, and the agency would have a formal process for evaluating performance against these pre-defined KPIs to determine the amount of the award fee paid.

What is HP Enterprise Services' track record with large federal IT support contracts, particularly with HHS?

HP Enterprise Services (now often operating under different entities due to mergers and acquisitions, but the legacy contract data points to this entity) has a long history of performing large-scale IT support contracts for various federal agencies, including the Department of Health and Human Services (HHS). Their track record generally includes managing complex infrastructure, providing application development and sustainment, and offering a broad range of IT services. While specific performance details for this particular contract (1999-2005) are not fully elaborated here, HP's continued presence in the federal IT contracting space suggests a capacity to meet government requirements. A deeper dive would involve reviewing past performance evaluations and any contract disputes or awards associated with their work.

Given the contract's start date in 1999, how has spending evolved for similar IT support services at CMS since then?

Spending on IT support services at CMS, and across the federal government, has evolved dramatically since 1999. Initially, contracts like this focused heavily on maintaining legacy systems, on-premise infrastructure, and traditional client-server architectures. Over the subsequent two decades, there has been a significant shift towards cloud computing (IaaS, PaaS, SaaS), agile development methodologies, data analytics, cybersecurity enhancements, and digital transformation initiatives. Consequently, while the total dollar amounts for IT spending may have increased or remained substantial, the nature of the services procured has changed. Modern contracts often emphasize flexibility, scalability, cybersecurity resilience, and the adoption of emerging technologies, moving away from purely long-term, fixed infrastructure support.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 6

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: HP, Inc. (UEI: 009122532)

Address: 5400 LEGACY DR, PLANO, TX, 90

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $187,268,214

Exercised Options: $174,740,143

Current Obligation: $122,045,568

Timeline