VA awards $39.5M contract for IT services to Metgreen Solutions Inc., highlighting potential value concerns

Contract Overview

Contract Amount: $39,513,589 ($39.5M)

Contractor: Metgreen Solutions Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-09-27

End Date: 2025-09-26

Contract Duration: 1,825 days

Daily Burn Rate: $21.7K/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: RED SEAL PRODUCTS AND MAINTENANCE

Place of Performance

Location: AUSTIN, TRAVIS County, TEXAS, 78772

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $39.5 million to METGREEN SOLUTIONS INC for work described as: RED SEAL PRODUCTS AND MAINTENANCE Key points: 1. Contract value appears high relative to the number of bids received, suggesting potential overpayment. 2. Limited competition may have inflated pricing, impacting overall value for money. 3. The contract's duration and fixed-price nature present some cost control risks. 4. Performance context is limited, making it difficult to assess the effectiveness of services rendered. 5. This contract falls within the 'Other Computer Related Services' category, a broad area with varying market rates. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

The contract's total value of $39.5 million over five years, with only one bid received, raises concerns about value for money. Benchmarking against similar IT service contracts for the VA or other agencies with multiple bidders would be necessary to determine if the pricing is competitive. Without comparable data, it's difficult to definitively assess if the government secured a fair price. The fixed-price nature, while offering cost certainty, could lead to overpayment if the contractor's costs are significantly lower than anticipated.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while competition was sought, certain sources may have been excluded, potentially limiting the pool of bidders. The fact that only one bid was received is a significant indicator of limited competition. This lack of robust competition can lead to reduced price discovery and potentially higher costs for the government, as the primary incentive for competitive pricing is diminished.

Taxpayer Impact: A single bid suggests that taxpayers may not have received the most cost-effective solution. The government's negotiating power is weakened, potentially leading to higher overall expenditure for the services provided.

Public Impact

Veterans Affairs (VA) will benefit from the IT services provided, aiming to improve their technological infrastructure. The contract supports the delivery of 'Other Computer Related Services,' which could encompass a range of IT support, maintenance, or development. Services are likely to be delivered within Texas, as indicated by the 'ST' and 'SN' fields. The contract may have implications for the IT workforce, potentially creating or sustaining jobs within the sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition (one bid) raises concerns about price competitiveness and potential overpayment.
The broad 'Other Computer Related Services' category makes it difficult to assess specific performance metrics and value.
Lack of small business participation could limit opportunities for smaller, innovative firms.
The five-year duration could lead to vendor lock-in or reduced flexibility if needs change.

Positive Signals

The contract is awarded to a single entity, potentially streamlining management and communication.
Fixed-price contract type provides cost certainty for the government, assuming the scope is well-defined.
The contract is for IT services, which are critical for modern government operations.

Sector Analysis

The 'Other Computer Related Services' category (NAICS code 541519) is a broad segment of the IT services market. This sector encompasses a wide array of services, including IT consulting, system integration, and IT support. The market is characterized by a mix of large and small providers. Spending in this area is substantial across federal agencies, supporting everything from cloud migration to cybersecurity and general IT maintenance. Benchmarking requires careful consideration of the specific services rendered, as rates can vary significantly.

Small Business Impact

The contract does not appear to have a small business set-aside (SS is false, SB is false). This indicates that the competition was open to all eligible businesses, and there was no specific provision to reserve a portion of the contract for small businesses. The absence of a set-aside, especially with only one bidder, raises questions about whether small businesses were aware of or able to compete for this opportunity. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within this contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Veterans Affairs (VA). The contract's fixed-price nature and five-year duration necessitate robust performance monitoring to ensure services are delivered as specified and that the contractor meets performance standards. Transparency would be enhanced by public reporting of performance metrics and any modifications to the contract. The VA's Inspector General would have jurisdiction to investigate any potential fraud, waste, or abuse related to this award.

Related Government Programs

IT Professional Services
Information Technology Support Services
Computer Systems Design Services
Cloud Computing Services
IT Consulting Services

Risk Flags

Limited competition
Potential for overpayment
Lack of transparency in service details
Absence of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $39.5 million to METGREEN SOLUTIONS INC. RED SEAL PRODUCTS AND MAINTENANCE

Who is the contractor on this award?

The obligated recipient is METGREEN SOLUTIONS INC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $39.5 million.

What is the period of performance?

Start: 2020-09-27. End: 2025-09-26.

What is the track record of Metgreen Solutions Inc. with federal contracts, particularly with the VA?

A review of federal procurement data would be necessary to assess Metgreen Solutions Inc.'s track record. This would involve examining past contract awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any history of disputes or contract terminations. Understanding their experience with similar IT services, contract values, and agency types can provide insight into their capability and reliability. For this specific contract, the limited competition suggests either a niche specialization or potentially a lack of widespread awareness of the opportunity among qualified contractors, which could be related to Metgreen's market position or the nature of the solicitation.

How does the awarded price compare to market rates for similar 'Other Computer Related Services' in Texas?

To benchmark the awarded price, one would need to compare it against industry data for 'Other Computer Related Services' (NAICS 541519) specifically within Texas, or for similar government contracts nationwide. This comparison should consider the specific services rendered, the level of expertise required, and the contract duration. Factors such as the number of bids received (only one in this case) are critical context; a single bid often suggests that the price may not be as competitive as it would be in a multi-bid scenario. Without access to detailed service breakdowns and comparable contract data, a precise per-unit cost comparison is challenging, but the limited competition inherently raises a red flag regarding potential price inflation.

What are the specific IT services being procured under this contract, and what are the key performance indicators (KPIs)?

The contract falls under the broad category of 'Other Computer Related Services' (NAICS 541519). To understand the specific services, one would need to review the contract's Statement of Work (SOW) or Performance Work Statement (PWS). This document details the exact tasks, deliverables, and technical requirements. Key Performance Indicators (KPIs) would also be defined in the SOW/PWS, outlining measurable standards for service quality, response times, uptime, and other critical aspects. Without access to these documents, it's impossible to assess the scope of work or evaluate performance effectively. The generality of the NAICS code suggests a need for careful scrutiny of the SOW to ensure the contract is well-defined and measurable.

What is the risk associated with the five-year duration of this contract?

A five-year contract duration (1825 days) presents several risks. Firstly, it ties the government to a specific vendor and set of services for an extended period, potentially limiting flexibility to adapt to rapidly changing technological needs or to take advantage of new solutions that emerge during the contract term. Secondly, over such a long period, the risk of scope creep or the contractor becoming complacent increases. While a fixed-price contract aims to mitigate cost overruns, a lengthy duration can still lead to the government paying above-market rates if the initial pricing was not sufficiently competitive or if market conditions change significantly. Robust oversight and regular performance reviews are crucial to manage these risks.

Given the limited competition, what is the potential impact on future contract solicitations for similar services?

The fact that this contract received only one bid, despite being advertised under full and open competition (albeit with exclusions), could have a chilling effect on future solicitations. It might signal to potential bidders that the market is either too small, too specialized, or that the solicitation process itself is not attractive. This could lead to fewer bidders in subsequent rounds, potentially perpetuating the issue of limited competition and higher prices. Agencies often analyze reasons for low bid counts to refine their acquisition strategies, but if the underlying market conditions or solicitation terms remain unchanged, similar outcomes may persist, ultimately costing taxpayers more.

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 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: 3203 KOENIGSTEIN AVE, NORFOLK, NE, 68701

Business Categories: Category Business, Corporate Entity Not Tax Exempt, 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: $39,513,589

Exercised Options: $39,513,589

Current Obligation: $39,513,589

Actual Outlays: $17,001,763

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SD37B

IDV Type: GWAC

Timeline