Interior's $37.8M Cloud Hosting Contract Awarded to SMARTRONIX, LLC Under Full and Open Competition

Contract Overview

Contract Amount: $37,785,494 ($37.8M)

Contractor: Smartronix, LLC

Awarding Agency: Department of the Interior

Start Date: 2018-11-15

End Date: 2024-10-29

Contract Duration: 2,175 days

Daily Burn Rate: $17.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: OT::IGF::OT U.S. COMMODITY FUTURE TRADING COMMISSION CLOUD HOSTING SERVICES

Place of Performance

Location: HOLLYWOOD, SAINT MARYS County, MARYLAND, 20636

State: Maryland Government Spending

Plain-Language Summary

Department of the Interior obligated $37.8 million to SMARTRONIX, LLC for work described as: OT::IGF::OT U.S. COMMODITY FUTURE TRADING COMMISSION CLOUD HOSTING SERVICES Key points: 1. The contract represents a significant investment in cloud infrastructure for the Department of the Interior. 2. SMARTRONIX, LLC, a known entity in government IT services, secured this award. 3. The duration of the contract suggests a long-term need for these services. 4. The 'Other Computer Related Services' NAICS code indicates a broad scope of potential IT support. 5. The contract's value places it in the mid-to-large tier for IT service awards. 6. The use of Time and Materials pricing warrants scrutiny for cost control over the contract's life.

Value Assessment

Rating: fair

Benchmarking this contract's value against similar cloud hosting services for federal agencies is challenging without more specific service details. However, the $37.8 million ceiling over approximately six years suggests a moderate annual spend. The Time and Materials (T&M) pricing structure, while flexible, can lead to cost overruns if not managed diligently, making value assessment dependent on effective oversight and contractor performance. Compared to fixed-price contracts for defined cloud services, T&M introduces inherent cost uncertainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The presence of two bids suggests a competitive environment, though the exact number of interested parties and the rigor of the evaluation process would provide a clearer picture of the competition's intensity. A limited number of bidders can sometimes indicate market concentration or specialized requirements.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation. However, with only two bids, the potential for significant price savings may have been constrained compared to a scenario with numerous competing offers.

Public Impact

Federal agencies, including the Department of the Interior, benefit from enhanced IT infrastructure and cloud capabilities. The contract supports the delivery of essential IT services and potentially improves operational efficiency. The primary geographic impact is within the operational areas of the Department of the Interior, likely nationwide. The contract may support a workforce skilled in cloud computing, cybersecurity, and IT infrastructure management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Time and Materials (T&M) pricing structure can lead to cost escalation if not closely monitored.
Limited competition (two bidders) might reduce the pressure on pricing and service innovation.
The broad NAICS code (541519) could mask specific service inefficiencies if not detailed in task orders.

Positive Signals

Awarded under full and open competition, ensuring a broad range of potential providers could compete.
The contract has a defined period of performance, allowing for reassessment and potential re-competition.
SMARTRONIX, LLC has experience in government contracting, suggesting familiarity with federal requirements.

Sector Analysis

The federal IT services market is vast and highly competitive, with significant spending allocated to cloud computing, infrastructure, and related services. This contract falls within the broader category of IT professional services, specifically focusing on cloud hosting. The market includes large system integrators and specialized cloud providers. Spending benchmarks for similar cloud hosting contracts vary widely based on scope, duration, and service level agreements, but contracts in the tens of millions are common for large agencies.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses, nor is SMARTRONIX, LLC listed as a small business. Therefore, the primary impact on the small business ecosystem would be through potential subcontracting opportunities, which are not detailed in the provided data. Without specific subcontracting plans or goals, it's difficult to assess the direct benefit to small businesses.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Interior's contracting officers and program managers. The contract's performance would be monitored through regular reporting, performance reviews, and adherence to the terms and conditions, including the Time and Materials pricing. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Cloud Computing Services
IT Infrastructure Support
Managed IT Services
Government IT Contracts
Department of the Interior IT Spending

Risk Flags

Time and Materials Pricing
Limited Competition (2 Bidders)
Broad NAICS Code Scope

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $37.8 million to SMARTRONIX, LLC. OT::IGF::OT U.S. COMMODITY FUTURE TRADING COMMISSION CLOUD HOSTING SERVICES

Who is the contractor on this award?

The obligated recipient is SMARTRONIX, LLC.

Which agency awarded this contract?

Awarding agency: Department of the Interior (Departmental Offices).

What is the total obligated amount?

The obligated amount is $37.8 million.

What is the period of performance?

Start: 2018-11-15. End: 2024-10-29.

What is the specific nature of the cloud hosting services being provided under this contract?

The provided data indicates the NAICS code is 541519, 'Other Computer Related Services,' and the contract type is 'Time and Materials.' This suggests a broad scope of IT services related to hosting, which could encompass infrastructure as a service (IaaS), platform as a service (PaaS), or managed hosting solutions. However, without access to the specific contract details or task orders, the precise nature of the services—such as whether it involves public, private, or hybrid cloud environments, specific software dependencies, or data migration support—remains undefined. The 'Delivery Order' award type implies this is a task order against a larger indefinite-delivery indefinite-quantity (IDIQ) contract, further obscuring the specific service details at this summary level.

How does the pricing structure (Time and Materials) compare to industry standards for similar cloud hosting contracts?

Time and Materials (T&M) pricing is common in government contracting, particularly for services where the scope of work is not easily defined upfront or is expected to evolve. For cloud hosting, T&M offers flexibility, allowing the government to adjust resources and services as needed. However, it shifts cost risk to the government, as the final price depends on the actual hours worked and materials used. Industry standards often favor fixed-price or hybrid models for more predictable cloud services like standard IaaS or SaaS offerings. While T&M can be effective with strong oversight, agencies often prefer more cost-certain structures for long-term, stable requirements to ensure value for money and prevent potential cost overruns.

What is SMARTRONIX, LLC's track record with similar federal cloud hosting contracts?

SMARTRONIX, LLC has a documented history of performing IT services for the federal government. While specific details on their cloud hosting performance for the Department of the Interior under this particular contract are not provided in the summary data, their general experience suggests they are familiar with federal procurement regulations and operational requirements. A deeper analysis would involve reviewing past performance evaluations (e.g., CPARS reports), the size and complexity of previous cloud-related contracts they have managed, and any reported issues or successes. Their ability to secure this contract under full and open competition indicates they met the government's initial qualifications.

What are the potential risks associated with a Time and Materials contract for cloud hosting services?

The primary risk with a Time and Materials (T&M) contract for cloud hosting is the potential for cost overruns due to the unpredictable nature of hours and materials. Without strict oversight, contractors may not be incentivized to work efficiently, leading to inflated labor hours or unnecessary material costs. Scope creep can also be a significant issue, as changes or additions to the service requirements can easily increase the total cost. Furthermore, T&M contracts can make budget forecasting more challenging for the agency. To mitigate these risks, robust monitoring of labor hours, material usage, and task completion is essential, often supplemented by cost ceilings and regular performance reviews.

How does the $37.8 million contract value compare to the Department of the Interior's overall IT spending?

The $37.8 million contract value represents a notable investment within the Department of the Interior's IT budget. To contextualize this, one would need to compare it against the department's total annual IT spending, which typically runs into hundreds of millions or even billions of dollars. This specific contract likely supports a critical function, such as core infrastructure or a significant application suite. While substantial, it may represent a fraction of the department's overall technology expenditure. Analyzing historical spending trends for cloud services and IT infrastructure within the DOI would provide a clearer picture of its relative significance and whether this award aligns with previous investment patterns.

What are the implications of awarding this contract to a single vendor (SMARTRONIX, LLC) for future competition?

Awarding this contract to SMARTRONIX, LLC means they will be the incumbent provider for cloud hosting services for the duration of the contract (until October 2024). This incumbency can create barriers for potential future competitors, as SMARTRONIX will possess intimate knowledge of the system, infrastructure, and agency needs. When the contract nears its end, the agency will need to decide whether to recompete, extend, or transition services. If recompeting, potential bidders will need to invest resources to understand the existing environment, potentially putting them at a disadvantage compared to the incumbent. However, the initial award was under full and open competition, suggesting the market has the capacity for multiple players.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 140D0418Q0420

Offers Received: 2

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 44150 SMARTRONIX WAY, HOLLYWOOD, MD, 20636

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $37,785,494

Exercised Options: $37,785,494

Current Obligation: $37,785,494

Actual Outlays: $37,615,011

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $153,400

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: IND13PC00029

IDV Type: IDC

Timeline