DoD's $172M IT services contract awarded to Peraton Enterprise Solutions LLC shows fair value but limited competition

Contract Overview

Contract Amount: $172,317,830 ($172.3M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2018-10-01

End Date: 2019-09-30

Contract Duration: 364 days

Daily Burn Rate: $473.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF FOR THE PROVISION OF NON-PERSONAL SERVICES IAW NGEN CONTRACT AND THIS ORDER'S REQUIREMENT.

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $172.3 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: IGF::OT::IGF FOR THE PROVISION OF NON-PERSONAL SERVICES IAW NGEN CONTRACT AND THIS ORDER'S REQUIREMENT. Key points: 1. Contract value of $172.3M for IT services represents a significant investment in defense IT infrastructure. 2. Awarded under full and open competition, indicating a broad search for qualified vendors. 3. The contract's fixed-price nature shifts performance risk to the contractor. 4. Delivery order structure suggests a need for agile IT support within the Navy. 5. The relatively short duration of 364 days points to a specific, time-bound requirement. 6. The contract's focus on computer systems design services aligns with modern defense IT needs.

Value Assessment

Rating: good

The contract's total value of $172.3 million for a one-year period for computer systems design services appears reasonable given the scope. Benchmarking against similar large-scale IT service contracts for the Department of Defense suggests that pricing is likely competitive, especially considering the fixed-price structure which incentivizes contractor efficiency. The absence of significant overruns or modifications in the provided data also points towards effective cost management during the performance period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. While the specific number of bidders is not provided, this procurement method generally fosters a competitive environment, which should lead to better pricing and service offerings for the government. The fact that it was competed broadly suggests that the government sought the best value from a wide range of potential providers.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for cost savings by encouraging multiple companies to offer their best prices and innovative solutions to win the contract.

Public Impact

The Department of the Navy benefits from enhanced computer systems design and support, crucial for its operational readiness. Military personnel and civilian staff gain access to improved IT infrastructure and services. The contract supports the broader defense mission by ensuring robust technological capabilities. The contract likely supports a workforce skilled in IT systems design and implementation, potentially within Virginia.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if follow-on contracts are not competed.
Reliance on a single contractor for critical IT systems could pose a risk if performance degrades.
The fixed-price nature, while good for cost control, might limit flexibility if unforeseen technical challenges arise.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
Fixed-price contract type transfers cost overrun risk to the contractor.
The contract appears to have been executed without significant issues based on available data.
The contractor, Peraton Enterprise Solutions LLC, has experience in government IT services.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader Information Technology (IT) industry. The IT sector is a significant area of federal spending, supporting everything from cybersecurity to data analytics and infrastructure management. The market for these services is highly competitive, with numerous large and small businesses vying for government contracts. This specific contract likely represents a portion of the Department of Defense's overall IT modernization and sustainment efforts, which are substantial given the scale and complexity of military operations.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a set-aside provision. However, the prime contractor, Peraton Enterprise Solutions LLC, may still engage small businesses as subcontractors to fulfill specific aspects of the contract, depending on their own subcontracting plans and the nature of the services required. The absence of a small business set-aside means that opportunities for small businesses were not specifically reserved through this particular award.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the contracting officer's representative (COR) within the Department of the Navy. Performance monitoring, quality assurance, and adherence to contract terms are key oversight functions. Transparency is generally maintained through contract databases like FPDS-NG, which record award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's lifecycle.

Related Government Programs

NGEN (Next Generation Enterprise Network) Contracts
DoD IT Modernization Programs
Navy IT Support Services
Computer Systems Design Services

Risk Flags

Potential for scope creep in fixed-price contracts.
Reliance on a single vendor for critical IT services.
Limited competition may impact price discovery.
Contract duration tied to fiscal year cycles.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $172.3 million to PERATON ENTERPRISE SOLUTIONS LLC. IGF::OT::IGF FOR THE PROVISION OF NON-PERSONAL SERVICES IAW NGEN CONTRACT AND THIS ORDER'S REQUIREMENT.

Who is the contractor on this award?

The obligated recipient is PERATON ENTERPRISE SOLUTIONS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $172.3 million.

What is the period of performance?

Start: 2018-10-01. End: 2019-09-30.

What is the track record of Peraton Enterprise Solutions LLC with federal contracts, particularly in IT services?

Peraton Enterprise Solutions LLC has a substantial history of performing federal contracts, particularly within the IT and defense sectors. They are known for providing a range of services including network engineering, cybersecurity, cloud solutions, and enterprise IT management. Their experience often involves large-scale, complex projects for agencies like the Department of Defense, NASA, and intelligence community components. Analyzing their past performance on similar contracts, including contract values, duration, and any reported issues or successes, would provide further insight into their capability to deliver on this specific $172.3 million award. Their track record generally indicates a capacity to handle significant government IT requirements.

How does the $172.3 million value compare to similar IT service contracts awarded by the Department of the Navy?

The $172.3 million value for a one-year computer systems design services contract is substantial but falls within the typical range for large IT support and development contracts awarded by major military branches like the Department of the Navy. The Navy, like other branches, invests heavily in maintaining and upgrading its complex IT infrastructure. Contracts of this magnitude are often for enterprise-wide solutions, network management, or significant system overhauls. When compared to other NGEN-related contracts or similar large-scale IT service awards within the DoD, this value appears commensurate with the scope of services typically required for maintaining and advancing critical defense IT systems over a fiscal year.

What are the primary risks associated with a fixed-price contract for computer systems design services?

The primary risk with a fixed-price contract for computer systems design services lies in the potential for scope creep and unforeseen technical challenges. While the fixed-price structure shifts financial risk to the contractor, it can also disincentivize the contractor from proposing innovative solutions if they are not explicitly defined in the original scope, or lead to disputes if the government's needs evolve. If the system design proves more complex than initially estimated, the contractor may face reduced profit margins or attempt to cut corners. Conversely, the government risks receiving a product that may not fully meet evolving requirements if changes are not managed through formal modification processes, which can be costly and time-consuming.

How effective is 'full and open competition' in ensuring value for money for IT services?

Full and open competition is generally considered the most effective method for ensuring value for money in IT services. By allowing all responsible sources to bid, the government maximizes the pool of potential offerors, increasing the likelihood of receiving competitive pricing and innovative technical solutions. This broad competition drives down costs as contractors vie for the award. Furthermore, it provides the government with a wider range of options to select the best technical approach and the most advantageous price. While it requires more administrative effort upfront to solicit and evaluate bids, the long-term benefits in terms of cost savings and quality of service typically outweigh these initial costs.

What is the typical duration for delivery orders under large IT contracts like NGEN?

Delivery orders under large, indefinite-delivery/indefinite-quantity (IDIQ) contracts, such as those within the NGEN program, can vary significantly in duration. However, a duration of 364 days, as seen in this specific order, is quite common. This duration often aligns with fiscal year constraints, allowing agencies to obligate funds within a specific budget cycle and re-evaluate needs annually. It also provides flexibility, enabling the government to adjust requirements or switch vendors more readily if necessary, without being locked into a multi-year commitment for a specific task order. Longer durations are also possible for more extensive projects, but shorter terms are frequent for task-specific IT support.

What does the NAICS code 541512 (Computer Systems Design Services) encompass in the context of defense IT?

The NAICS code 541512, Computer Systems Design Services, encompasses a broad range of activities critical to defense IT. This includes designing, developing, and integrating hardware, software, and communication technologies. For the Department of Defense, this can involve everything from designing secure network architectures and command and control systems to developing custom software applications for specific military functions, and planning for the implementation of new IT infrastructure. It covers the entire lifecycle from conceptualization and analysis to system integration and potentially post-implementation support, ensuring that the complex IT needs of the military are met with tailored technological solutions.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Peraton Solutions Inc. (UEI: 081218565)

Address: 13600 EDS DR, HERNDON, VA, 20171

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $172,317,830

Exercised Options: $172,317,830

Current Obligation: $172,317,830

Subaward Activity

Number of Subawards: 807

Total Subaward Amount: $135,317,460

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0003913D0013

IDV Type: IDC

Timeline