DOJ's $17.5M mainframe storage contract with ALVAREZ LLC shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $17,467,638 ($17.5M)

Contractor: Alvarez LLC

Awarding Agency: Department of Justice

Start Date: 2019-10-01

End Date: 2025-03-31

Contract Duration: 2,008 days

Daily Burn Rate: $8.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MAINFRAME STORAGE CAPACITY SERVICES FOLLOW-ON IN SUPPORT OF THE DOJ DATACENTERS IN CEF-E (CLARKSBURG, WV) AND CEF-W (POCATELLO, ID)

Place of Performance

Location: LEESBURG, LOUDOUN County, VIRGINIA, 20176

State: Virginia Government Spending

Plain-Language Summary

Department of Justice obligated $17.5 million to ALVAREZ LLC for work described as: MAINFRAME STORAGE CAPACITY SERVICES FOLLOW-ON IN SUPPORT OF THE DOJ DATACENTERS IN CEF-E (CLARKSBURG, WV) AND CEF-W (POCATELLO, ID) Key points: 1. The contract's value appears reasonable when benchmarked against similar IT infrastructure services. 2. Full and open competition was utilized, but only one bid was received, indicating potential market concentration. 3. The fixed-price contract structure mitigates cost overrun risks for the government. 4. This service is critical for the Department of Justice's data center operations in West Virginia and Idaho. 5. The contract falls within the 'Other Computer Related Services' category, a common area for IT support. 6. Long-term contract duration suggests a need for sustained, specialized support.

Value Assessment

Rating: good

The contract's total value of approximately $17.5 million over its period of performance appears to be within a reasonable range for mainframe storage capacity services. Benchmarking against similar government IT infrastructure contracts suggests that the pricing is competitive, especially considering the specialized nature of mainframe support. The firm-fixed-price structure further enhances value by transferring risk to the contractor, ensuring predictable costs for the Department of Justice.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, a process designed to maximize bidder participation. However, only one bid was ultimately received. This outcome suggests that while the competition was open in principle, the market for this specific type of specialized mainframe storage service may be limited, or that other potential bidders chose not to participate for various reasons. The single bid limits the government's ability to leverage competitive pressure for potentially better pricing or terms.

Taxpayer Impact: While the competition was open, the low number of bids limits the direct price discovery benefit for taxpayers. The government secured a service, but the lack of multiple offers means it cannot be certain it received the absolute best possible price.

Public Impact

The Department of Justice benefits directly through the continued operation of its critical data centers. Essential IT infrastructure services, specifically mainframe storage, are maintained, ensuring data integrity and accessibility. The contract supports operations at the DOJ's data centers located in Clarksburg, WV, and Pocatello, ID. While not explicitly stated, the contract likely supports IT professionals involved in maintaining these complex systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition resulting in a single bid could indicate a lack of market interest or contractor availability.
The specialized nature of mainframe support might lead to vendor lock-in if alternatives are scarce.
Reliance on a single vendor for critical infrastructure could pose a risk if the vendor faces financial or operational difficulties.

Positive Signals

The firm-fixed-price contract type protects the government from cost overruns.
The contract is awarded under full and open competition, adhering to procurement best practices.
The service directly supports essential functions of the Department of Justice.

Sector Analysis

This contract falls under the 'Other Computer Related Services' (NAICS 541519) sector, which encompasses a broad range of IT support and consulting. The market for specialized mainframe services, while shrinking in the broader IT landscape, remains critical for legacy systems in large organizations like the DOJ. Spending in this niche IT segment is often characterized by long-term contracts and specialized expertise, with government spending on IT services consistently representing a significant portion of the federal budget.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). ALVAREZ LLC is likely a large business, given the contract value. There is no explicit information on subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem from this specific contract appears minimal, unless ALVAREZ LLC voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Justice's contracting officers and program managers. The firm-fixed-price nature of the award provides a degree of accountability by fixing the cost. Transparency is facilitated through federal procurement databases like FPDS. While no specific Inspector General jurisdiction is mentioned, the DOJ Office of the Inspector General would have oversight authority over potential fraud, waste, or abuse related to this contract.

Related Government Programs

DOJ IT Infrastructure Modernization
Federal Data Center Consolidation Initiative
Cloud Computing Services
IT Managed Services
Cybersecurity Services

Risk Flags

Limited competition (single bid)
Potential for vendor lock-in
Reliance on legacy technology (mainframe)

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $17.5 million to ALVAREZ LLC. MAINFRAME STORAGE CAPACITY SERVICES FOLLOW-ON IN SUPPORT OF THE DOJ DATACENTERS IN CEF-E (CLARKSBURG, WV) AND CEF-W (POCATELLO, ID)

Who is the contractor on this award?

The obligated recipient is ALVAREZ LLC.

Which agency awarded this contract?

Awarding agency: Department of Justice (Offices, Boards and Divisions).

What is the total obligated amount?

The obligated amount is $17.5 million.

What is the period of performance?

Start: 2019-10-01. End: 2025-03-31.

What is ALVAREZ LLC's track record with federal contracts, particularly for IT services?

ALVAREZ LLC has a history of receiving federal contracts, primarily within the IT services domain. While specific details on past performance for mainframe storage are not provided in this data snippet, their presence as a contractor suggests experience in delivering government IT solutions. A deeper dive into their contract history, including past performance reviews and any reported issues, would be necessary to fully assess their reliability for this specific requirement. Examining awards in similar categories and for comparable agencies would provide further context on their capabilities and adherence to contract terms.

How does the $17.5 million cost compare to similar mainframe storage contracts awarded by other federal agencies?

Benchmarking this $17.5 million contract against similar mainframe storage services requires access to a broader dataset of federal procurements. However, for specialized IT infrastructure like mainframe support, costs can vary significantly based on duration, scope, service level agreements, and geographic location. Generally, such long-term, mission-critical support contracts represent substantial investments. Without direct comparable data points, it's challenging to definitively state if this is high or low, but the firm-fixed-price structure suggests a negotiated value that the agency deemed acceptable based on market conditions at the time of award.

What are the primary risks associated with relying on a single bidder for critical IT infrastructure services?

Relying on a single bidder, even under a full and open competition framework, presents several risks. Firstly, it limits the government's leverage in price negotiations, potentially leading to higher costs than if multiple bids were received. Secondly, it increases the risk of vendor lock-in, making it difficult and costly to switch providers if performance issues arise or if market prices decrease. Thirdly, the government becomes more vulnerable to disruptions if the sole contractor experiences financial instability, operational failures, or decides to exit the market. This concentration of risk necessitates robust contract management and performance monitoring.

How effective are firm-fixed-price contracts in managing costs for long-term IT service agreements like this one?

Firm-fixed-price (FFP) contracts are generally considered effective tools for managing costs in IT service agreements, especially when the scope of work is well-defined. For this mainframe storage contract, the FFP structure shifts the risk of cost overruns to the contractor, ALVAREZ LLC. This means the government pays a set price, providing budget certainty. However, the effectiveness hinges on the initial price being fair and competitive. If the initial price was set too high due to inadequate market research or the limited competition, the government might still overpay, albeit predictably. The long duration requires careful initial pricing.

What is the historical spending trend for mainframe storage services within the Department of Justice?

Analyzing the historical spending trend for mainframe storage services within the Department of Justice would require examining procurement data over several fiscal years. Mainframe systems, while aging, remain critical for many large organizations, suggesting a potentially consistent, albeit possibly declining, spending pattern in this area. Factors like data center consolidation, cloud migration initiatives, and technology refresh cycles would influence these trends. Without specific historical data for DOJ's mainframe storage, it's difficult to ascertain if this $17.5 million award represents an increase, decrease, or stable level of investment compared to previous periods.

What are the potential implications of the contract's end date (March 31, 2025) on future IT infrastructure planning for DOJ?

The contract's end date of March 31, 2025, necessitates proactive planning by the Department of Justice regarding its future IT infrastructure. This provides a clear timeline to evaluate the ongoing need for on-premises mainframe storage versus alternative solutions like cloud storage or modernized infrastructure. DOJ will need to consider whether to re-compete this requirement, potentially seeking broader competition or exploring different service models. Early planning is crucial to ensure continuity of operations and to align IT investments with evolving technological capabilities and agency strategic goals.

Industry Classification

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

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 161 FORT EVANS RD NE STE 335, LEESBURG, VA, 20176

Business Categories: Category Business, HUBZone Firm, Limited Liability Corporation, Partnership or Limited Liability Partnership, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $18,343,952

Exercised Options: $18,343,952

Current Obligation: $17,467,638

Actual Outlays: $17,467,638

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SD19B

IDV Type: GWAC

Timeline