Interior Department awards $17.3M for SAP S/4 HANA software, with Redhawk IT Solutions securing the deal

Contract Overview

Contract Amount: $17,283,368 ($17.3M)

Contractor: Redhawk IT Solutions, LLC

Awarding Agency: Department of the Interior

Start Date: 2024-04-01

End Date: 2027-03-31

Contract Duration: 1,094 days

Daily Burn Rate: $15.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SAP BUSINESS SUITE 4 SAP HANA (SAP S/4 HANA) SOFTWARE LICENSE AND MAINTENANCE

Place of Performance

Location: WOODBRIDGE, PRINCE WILLIAM County, VIRGINIA, 22192

State: Virginia Government Spending

Plain-Language Summary

Department of the Interior obligated $17.3 million to REDHAWK IT SOLUTIONS, LLC for work described as: SAP BUSINESS SUITE 4 SAP HANA (SAP S/4 HANA) SOFTWARE LICENSE AND MAINTENANCE Key points: 1. The contract value represents a significant investment in modernizing the Department of the Interior's financial and operational systems. 2. Competition dynamics appear robust, with a full and open competition after exclusion of sources, suggesting a deliberate effort to ensure fair pricing. 3. The fixed-price contract structure aims to mitigate cost overruns, a common risk in large-scale IT procurements. 4. This award positions Redhawk IT Solutions as a key partner in supporting critical federal IT infrastructure. 5. The duration of the contract, nearly three years, indicates a long-term commitment to the selected software and vendor. 6. The specific nature of SAP S/4 HANA suggests a focus on enterprise resource planning and business process optimization.

Value Assessment

Rating: good

Benchmarking the exact value of this specific SAP S/4 HANA license and maintenance contract is challenging without granular data on user counts, modules, and support levels. However, the $17.3 million over approximately three years for a comprehensive enterprise resource planning (ERP) system for a large federal agency like the Department of the Interior appears within a reasonable range for such complex software deployments. The fixed-price nature of the contract provides cost certainty, which is a positive indicator for value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition after exclusion of sources.' This indicates that while the competition was open, there might have been an initial exclusion of certain sources before the final bidding process. The fact that it was ultimately competed openly suggests that multiple vendors had the opportunity to bid, which is generally conducive to competitive pricing and innovation. The number of bidders is not specified, but the open nature implies a healthy level of market interest.

Taxpayer Impact: A full and open competition, even with initial exclusions, generally benefits taxpayers by driving down prices through market forces and encouraging vendors to offer their best value propositions.

Public Impact

Federal employees across the Department of the Interior will benefit from modernized financial management and operational tools. The services delivered include the provision of SAP S/4 HANA software licenses and ongoing maintenance, crucial for enterprise resource planning. The geographic impact is nationwide, supporting the Department's operations across all its bureaus and offices. Workforce implications include potential training needs for personnel to effectively utilize the new SAP system and support its implementation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with a large-scale ERP system like SAP S/4 HANA.
Complexity of implementation and integration with existing legacy systems could pose risks.
Reliance on a single vendor for critical software licenses and maintenance requires careful contract management.

Positive Signals

Modernization of core financial and operational systems can lead to increased efficiency and better data management.
The use of a widely adopted enterprise software like SAP S/4 HANA suggests a commitment to industry best practices.
The fixed-price contract structure provides budget certainty for the Department.

Sector Analysis

The IT services sector, particularly enterprise resource planning (ERP) software, is a significant area of federal spending. Large agencies like the Department of the Interior rely on robust ERP systems for managing complex operations, finances, and human resources. Spending on such software and associated maintenance can range from millions to hundreds of millions of dollars annually across the government. This contract fits within the broader trend of federal agencies upgrading legacy systems to more modern, integrated platforms like SAP S/4 HANA to improve efficiency and data analytics capabilities.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. The primary focus appears to be on securing a large-scale enterprise solution, likely requiring the capabilities of larger IT service providers or software vendors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Interior's internal procurement and financial management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified software and maintenance. Transparency is generally maintained through federal procurement databases like SAM.gov, where contract awards are published. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected.

Related Government Programs

Federal Enterprise Resource Planning (ERP) Systems
Department of the Interior IT Modernization Initiatives
Large-Scale Software License and Maintenance Contracts
Government-Wide Enterprise Software Solutions

Risk Flags

Potential for implementation delays
Risk of cost overruns during integration
Need for extensive user training
Vendor lock-in concerns

Frequently Asked Questions

What is this federal contract paying for?

Department of the Interior awarded $17.3 million to REDHAWK IT SOLUTIONS, LLC. SAP BUSINESS SUITE 4 SAP HANA (SAP S/4 HANA) SOFTWARE LICENSE AND MAINTENANCE

Who is the contractor on this award?

The obligated recipient is REDHAWK IT SOLUTIONS, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $17.3 million.

What is the period of performance?

Start: 2024-04-01. End: 2027-03-31.

What is the track record of Redhawk IT Solutions, LLC with federal contracts, particularly for large-scale IT software procurements?

Redhawk IT Solutions, LLC has a history of federal contracting, though specific details on their experience with procurements of this magnitude (SAP S/4 HANA for a large agency) would require a deeper dive into their contract portfolio. Their presence in the federal market suggests they possess the necessary registrations and capabilities to bid on government work. Analyzing past performance on similar contracts, including client satisfaction, on-time delivery, and adherence to budget, would be crucial for a comprehensive assessment. Without access to detailed performance data or a broader contract history, it's difficult to definitively assess their track record for this specific type of complex, high-value IT software deployment.

How does the $17.3 million contract value compare to similar SAP S/4 HANA procurements by other federal agencies?

Direct comparison of this $17.3 million contract value for SAP S/4 HANA software and maintenance to other federal agencies is challenging without knowing the specific modules, user licenses, support tiers, and implementation services included. However, for a large agency like the Department of the Interior, this figure appears to be within a plausible range for a comprehensive ERP system over a multi-year period. Larger agencies often face higher costs due to scale and complexity. Benchmarking would ideally involve comparing against contracts with similar scope, duration, and number of users. Generally, federal ERP implementations are substantial investments, and this amount reflects that reality.

What are the primary risks associated with the implementation and ongoing use of SAP S/4 HANA for the Department of the Interior?

The primary risks associated with implementing and using SAP S/4 HANA include significant implementation complexity, potential for cost overruns if not managed tightly (despite the fixed-price nature of this specific award, implementation phases can have their own cost dynamics), integration challenges with existing legacy systems, and the need for extensive user training and change management. There's also a risk of vendor lock-in, making future transitions costly. Ensuring data migration accuracy and security throughout the process is paramount. The Department must also ensure that the chosen modules and configurations align precisely with their evolving business needs to maximize the return on investment.

How effective is the 'full and open competition after exclusion of sources' approach in ensuring value for taxpayers in this IT procurement?

The 'full and open competition after exclusion of sources' approach aims to balance ensuring broad market participation with potentially streamlining the initial stages of the procurement. By excluding certain sources upfront, the agency might be targeting specific capabilities or market segments. However, the 'full and open' aspect means that ultimately, all eligible responsible sources could compete. This method can be effective if the exclusions are justified and do not unduly limit competition. For taxpayers, the key benefit lies in the potential for competitive pricing and innovative solutions that arise from a broad, yet appropriately focused, bidding process. Transparency in the exclusion rationale is important for accountability.

What is the historical spending pattern of the Department of the Interior on enterprise resource planning (ERP) software and related services?

Historical spending patterns on ERP software and services by the Department of the Interior would likely show a significant investment in maintaining and upgrading its core financial, human resources, and operational systems over the years. Agencies of this size typically operate with complex, often aging, legacy systems that require substantial ongoing maintenance and eventual replacement or modernization. The move to SAP S/4 HANA suggests a strategic decision to invest in a modern, integrated platform, potentially consolidating disparate systems and improving efficiency. Analyzing past expenditures on previous ERP systems (e.g., SAP ECC) and associated support contracts would provide context for the current $17.3 million award.

What are the potential long-term benefits and drawbacks of adopting SAP S/4 HANA for a federal agency like the Department of the Interior?

Long-term benefits of adopting SAP S/4 HANA include enhanced real-time analytics, improved operational efficiency through process automation, better data integration across departments, and a more modern, user-friendly interface. It can streamline financial management, supply chain operations, and human capital management. However, potential drawbacks include the high cost of implementation and ongoing licensing/maintenance, the complexity of the system requiring specialized skills, the risk of vendor lock-in, and the significant organizational change management required for successful adoption. Ensuring the system remains aligned with evolving federal regulations and agency needs over its lifecycle is also a consideration.

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 - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 140D0424Q0209

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2689 MAPLE RIDGE DR, WOODBRIDGE, VA, 22192

Business Categories: 8(a) Program Participant, Category Business, DoT Certified Disadvantaged Business Enterprise, Limited Liability Corporation, Minority Owned Business, Other Minority Owned Business, Partnership or Limited Liability Partnership, 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: $17,283,368

Exercised Options: $17,283,368

Current Obligation: $17,283,368

Actual Outlays: $11,244,788

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SD38B

IDV Type: GWAC

Timeline