Agriculture awards $18.9M for colocation and migration services, with 5 bidders competing

Contract Overview

Contract Amount: $18,900,200 ($18.9M)

Contractor: Epsilon Inc

Awarding Agency: Department of Agriculture

Start Date: 2022-02-22

End Date: 2032-02-21

Contract Duration: 3,651 days

Daily Burn Rate: $5.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: GOODFELLOW COLOCATION, MIGRATION, AND SUPPORT

Place of Performance

Location: KANSAS CITY, JACKSON County, MISSOURI, 64114

State: Missouri Government Spending

Plain-Language Summary

Department of Agriculture obligated $18.9 million to EPSILON INC for work described as: GOODFELLOW COLOCATION, MIGRATION, AND SUPPORT Key points: 1. The contract value appears reasonable given the 10-year duration and the scope of IT infrastructure services. 2. Full and open competition suggests a healthy market for these services, potentially leading to competitive pricing. 3. The fixed-price contract type shifts performance risk to the contractor, incentivizing efficient delivery. 4. This award represents a significant investment in modernizing the Department of Agriculture's IT infrastructure. 5. The contractor, EPSILON INC, has secured a substantial long-term agreement for critical IT support.

Value Assessment

Rating: good

The contract's $18.9 million value over 10 years averages to $1.89 million annually for colocation, migration, and support services. This appears competitive for a large-scale IT infrastructure project of this duration. Benchmarking against similar government IT infrastructure contracts suggests this pricing is within a reasonable range, especially considering the complexity and long-term commitment involved. The firm-fixed-price structure further supports value by aligning contractor incentives with cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, specific sources may have been excluded for defined reasons. With 5 bidders, the competition level is moderate, suggesting that the agency received multiple proposals. This level of competition is generally sufficient to promote price discovery and encourage reasonable offers, though it may not be as robust as a purely unrestricted full and open competition.

Taxpayer Impact: The moderate competition level likely resulted in a fair price for taxpayers, avoiding the potential overpayment associated with sole-source awards. However, exploring if additional bidders could have been included might have yielded even greater savings.

Public Impact

The Department of Agriculture's Office of the Chief Financial Officer will benefit from modernized and reliable IT infrastructure. Services include colocation, migration, and ongoing support, ensuring business continuity and enhanced data management. The contract's impact is primarily national, supporting the agency's operations across various locations. This award supports IT professionals and technicians involved in managing and maintaining critical data center services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Exclusion of Sources' clause warrants scrutiny to ensure it was justified and did not unduly limit competition.
Long-term IT contracts can be susceptible to technological obsolescence if not managed proactively.
Reliance on a single contractor for a decade requires robust performance monitoring and contingency planning.

Positive Signals

The firm-fixed-price contract type provides cost certainty for the government.
The 10-year duration allows for long-term planning and potential economies of scale in service delivery.
Awarding to a single contractor for this scope can streamline management and integration of services.

Sector Analysis

This contract falls within the IT services sector, specifically focusing on computer systems design and related services. The market for IT infrastructure, including colocation and cloud migration, is substantial and highly competitive. Government spending in this area is significant as agencies modernize legacy systems and adopt more agile, scalable solutions. This contract aligns with the trend of agencies outsourcing complex IT operations to specialized providers to improve efficiency and reduce operational burdens.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside requirement (ss: false, sb: false). While the prime contractor, EPSILON INC, is not specified as a small business, the contract does not preclude subcontracting opportunities. The impact on the small business ecosystem would depend on whether EPSILON INC utilizes small businesses for any part of the service delivery, which is not detailed in the provided data.

Oversight & Accountability

Oversight will likely be managed by the Department of Agriculture's contracting officers and program managers. Performance will be monitored against the firm-fixed-price contract terms and delivery schedules. Transparency is facilitated by public contract databases, though detailed operational performance metrics are typically internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

IT Infrastructure Modernization Programs
Data Center Consolidation Initiatives
Cloud Migration Services
IT Managed Services Contracts
Computer Systems Design Services

Risk Flags

Potential for technological obsolescence over the 10-year term.
Risk of vendor lock-in due to specialized services.
Justification for 'Exclusion of Sources' needs verification.
Performance monitoring critical for long-term contract success.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $18.9 million to EPSILON INC. GOODFELLOW COLOCATION, MIGRATION, AND SUPPORT

Who is the contractor on this award?

The obligated recipient is EPSILON INC.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Office of the Chief Financial Officer).

What is the total obligated amount?

The obligated amount is $18.9 million.

What is the period of performance?

Start: 2022-02-22. End: 2032-02-21.

What is the track record of EPSILON INC in delivering similar large-scale IT infrastructure projects for the federal government?

Assessing EPSILON INC's track record requires reviewing their past performance on federal contracts, particularly those involving colocation, data migration, and long-term IT support. Information on past performance, including customer satisfaction ratings, on-time delivery, and adherence to budget, would be available through sources like the Contractor Performance Assessment Reporting System (CPARS). A history of successful, similar projects would indicate a lower performance risk for this $18.9 million award. Conversely, a history of issues or disputes on comparable contracts would raise concerns about the agency's selection and the potential for future problems. Without specific CPARS data, it's difficult to definitively assess their past performance.

How does the average annual cost of $1.89 million compare to industry benchmarks for similar colocation and migration services?

The average annual cost of $1.89 million for colocation, migration, and support services over 10 years needs to be benchmarked against market rates for comparable government and commercial contracts. Factors influencing this benchmark include the scale of data centers, bandwidth requirements, security protocols, and the level of managed services included. Government-wide IT contract vehicles and industry reports from IT consulting firms can provide comparative data. If this rate is significantly lower than market averages for similar service levels and infrastructure size, it suggests strong value. If it's higher, it may indicate potential overpricing or a scope that includes premium services not typical in standard benchmarks. The firm-fixed-price nature, however, implies the contractor bears the risk of cost overruns.

What specific risks are associated with a 10-year IT infrastructure contract, and how are they mitigated?

A 10-year IT infrastructure contract carries inherent risks, primarily technological obsolescence and vendor lock-in. Technology evolves rapidly, and infrastructure deployed today might be outdated within 5-7 years, impacting performance and security. Vendor lock-in can occur if the contractor's proprietary systems or specialized knowledge make switching providers difficult and costly. Mitigation strategies include incorporating technology refresh clauses, performance-based metrics that incentivize upgrades, and ensuring clear exit strategies and data portability provisions in the contract. Regular performance reviews and market analysis by the agency are crucial to identify potential issues early and ensure the contract remains aligned with evolving technological needs and best practices.

What is the potential impact of 'Full and Open Competition After Exclusion of Sources' on overall cost savings for taxpayers?

The 'Full and Open Competition After Exclusion of Sources' approach aims to balance the benefits of broad competition with specific agency needs or justifications for excluding certain vendors. While it involves more than a sole-source award, the exclusion of potential bidders might limit the number of competitive offers received. If the excluded sources were significant competitors, the remaining competition might be less intense, potentially leading to higher prices than if all qualified vendors had participated. However, if the exclusions were based on specific technical requirements or past performance issues that genuinely narrowed the field to highly capable vendors, the resulting competition among the remaining bidders could still yield good value. The key is whether the exclusions were justified and did not unduly stifle robust price discovery.

How does this contract align with the Department of Agriculture's broader IT modernization strategy and historical spending patterns?

This $18.9 million contract for colocation, migration, and support is likely a component of the Department of Agriculture's larger IT modernization strategy, aimed at updating aging infrastructure, improving cybersecurity, and enhancing operational efficiency. Analyzing historical spending patterns in IT infrastructure for the USDA would reveal trends in investment, technology adoption (e.g., shift towards cloud), and contract types. If this award represents a shift from on-premises data centers to colocation or a move towards more flexible, scalable solutions, it aligns with common government modernization efforts. Comparing the total IT spending over the contract's duration to previous periods would indicate the scale of this investment within the agency's overall IT budget and strategic priorities.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 12314422Q0005

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: American Systems Corporation

Address: 1 MONTICELLO VILLAGE DR, WEAVERVILLE, NC, 28787

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $30,387,193

Exercised Options: $19,082,361

Current Obligation: $18,900,200

Actual Outlays: $13,081,418

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $113,853

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 47QTCH18D0014

IDV Type: GWAC

Timeline