Agriculture awards $14.6M for system modernization, but competition was limited

Contract Overview

Contract Amount: $14,592,185 ($14.6M)

Contractor: Arlluk Technology Solutions LLC

Awarding Agency: Department of Agriculture

Start Date: 2024-03-27

End Date: 2027-03-26

Contract Duration: 1,094 days

Daily Burn Rate: $13.3K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: O&M SYSTEM MODERNIZATION AND INTEGRATION

Place of Performance

Location: ANCHORAGE, ANCHORAGE County, ALASKA, 99503

State: Alaska Government Spending

Plain-Language Summary

Department of Agriculture obligated $14.6 million to ARLLUK TECHNOLOGY SOLUTIONS LLC for work described as: O&M SYSTEM MODERNIZATION AND INTEGRATION Key points: 1. The contract focuses on modernizing and integrating critical systems for the Animal and Plant Health Inspection Service. 2. Limited competition raises concerns about potential overpayment and reduced value for taxpayer funds. 3. The firm-fixed-price contract type aims to control costs, but the lack of competition may negate this benefit. 4. The contractor, ARLLUK TECHNOLOGY SOLUTIONS LLC, is tasked with a significant IT modernization effort. 5. The contract duration of nearly three years suggests a substantial and ongoing need for these services. 6. The geographic scope is Alaska, indicating a specific regional focus for this system upgrade.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the limited competition. Without multiple bids, it's difficult to ascertain if the $14.6 million price reflects a competitive market rate. The firm-fixed-price structure provides some cost certainty, but the lack of competitive pressure means the government may not be receiving the best possible value. Further analysis would require comparing the scope of work and deliverables to similar system modernization projects awarded under more competitive conditions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed under the Simplified Acquisition Procedures (SAP) and was awarded as a sole-source contract. This means that only one vendor, ARLLUK TECHNOLOGY SOLUTIONS LLC, was solicited for this requirement. The lack of competition limits the government's ability to explore different solutions and pricing structures, potentially leading to higher costs than if multiple vendors had been involved. The rationale for the sole-source award is not provided, which is a significant concern for transparency and cost-effectiveness.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions and innovation that typically arise from a competitive bidding process. This can result in higher overall spending for the same or similar services.

Public Impact

The Animal and Plant Health Inspection Service (APHIS) will benefit from modernized and integrated IT systems, improving operational efficiency. Services delivered include system modernization and integration, crucial for data management and operational support. The geographic impact is focused on Alaska (AK), suggesting the systems being modernized are critical for APHIS operations in that region. The contract supports the IT workforce, likely involving roles in system development, integration, and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition raises concerns about fair pricing and potential for cost overruns.
Lack of transparency regarding the sole-source justification hinders assessment of necessity.
The significant dollar amount warrants closer scrutiny of performance metrics and deliverables.
Potential for vendor lock-in due to the sole-source nature of the award.

Positive Signals

Firm-fixed-price contract type provides cost certainty if managed effectively.
The contract addresses a critical need for system modernization, which can improve government efficiency.
The contractor is tasked with a specific, defined scope of work.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on IT services and system integration. The market for IT modernization and integration services is large and competitive, with numerous firms capable of performing such work. The Department of Agriculture's spending on IT services is substantial, and contracts like this represent a significant portion of their operational budget. Benchmarking this contract's value against similar IT modernization efforts across federal agencies would be crucial for assessing its cost-effectiveness.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting opportunities. The sole-source nature of the award suggests that ARLLUK TECHNOLOGY SOLUTIONS LLC was the primary recipient, and it is unclear if they are a small business or if they have plans to engage small businesses for subcontracting. This lack of explicit small business engagement could limit opportunities for smaller firms within the federal contracting ecosystem for this specific project.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the contracting officer and the program office within the Animal and Plant Health Inspection Service. As a sole-source award, transparency might be reduced compared to a competed contract. Accountability will be driven by the terms of the firm-fixed-price contract and performance monitoring. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

IT System Modernization
Federal IT Services
Department of Agriculture IT Spending
Animal and Plant Health Inspection Service Operations
Sole Source IT Contracts

Risk Flags

Limited Competition
Sole Source Award
Lack of Transparency (Justification)

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $14.6 million to ARLLUK TECHNOLOGY SOLUTIONS LLC. O&M SYSTEM MODERNIZATION AND INTEGRATION

Who is the contractor on this award?

The obligated recipient is ARLLUK TECHNOLOGY SOLUTIONS LLC.

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Animal and Plant Health Inspection Service).

What is the total obligated amount?

The obligated amount is $14.6 million.

What is the period of performance?

Start: 2024-03-27. End: 2027-03-26.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of meeting the government's needs. This could be due to unique capabilities, proprietary technology, or urgent requirements where competition is not feasible. Without this justification, it is impossible to fully assess the necessity and reasonableness of awarding the contract without competition. Further investigation into agency procurement records would be required to obtain this critical information. The lack of competition inherently raises concerns about potential price inflation and reduced value for taxpayer dollars.

How does the $14.6 million cost compare to similar IT system modernization projects within the federal government?

Directly comparing the $14.6 million cost to similar IT system modernization projects is challenging without detailed scope, complexity, and duration information for those other projects. However, for a nearly three-year contract focused on modernization and integration, this figure is within a plausible range for federal IT spending. The key concern here is the lack of competition. If this contract had been competed, the government might have secured similar services at a lower price point. Benchmarking against publicly available data for sole-source IT modernization contracts of similar scale and duration would be the most relevant comparison, though such data is often limited.

What are the key performance indicators (KPIs) for this contract, and how will they be monitored?

The provided data does not specify the key performance indicators (KPIs) for this contract. However, for an 'O&M SYSTEM MODERNIZATION AND INTEGRATION' contract, typical KPIs would likely include system uptime, successful data migration rates, reduction in system errors or downtime, user satisfaction, and timely completion of project milestones. Monitoring would be conducted by the APHIS program office and contracting officer's representative (COR). The firm-fixed-price nature of the contract implies that the contractor is responsible for delivering the defined scope within the agreed-upon price, with performance issues potentially leading to contract remedies.

What is ARLLUK TECHNOLOGY SOLUTIONS LLC's track record with similar federal IT modernization contracts?

Information regarding ARLLUK TECHNOLOGY SOLUTIONS LLC's specific track record with similar federal IT modernization contracts is not provided in the data. To assess their capability and past performance, one would need to review contract databases (like FPDS or SAM.gov) for previous awards to this contractor, particularly those involving system modernization and integration for agencies like the Department of Agriculture. Evaluating past performance, including any past performance evaluations or awards/incentives, is crucial for understanding their reliability and expertise in executing complex IT projects.

What is the potential risk associated with the 'Other Computer Related Services' NAICS code (541519) for this type of project?

The NAICS code 541519, 'Other Computer Related Services,' is broad and encompasses a wide range of IT services. For a system modernization and integration project, the risk associated with this code lies in the potential for scope creep and the difficulty in precisely defining all necessary services upfront. If the modernization involves complex legacy systems or requires significant integration with disparate platforms, the 'other' category can mask unforeseen challenges. Effective project management, clear requirements, and robust oversight are critical to mitigating risks within such a broad classification, especially when awarded sole-source.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 12639524R0013

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3800 CENTERPOINT DR STE 700, ANCHORAGE, AK, 99503

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $26,463,850

Exercised Options: $14,592,185

Current Obligation: $14,592,185

Actual Outlays: $7,785,730

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline