VA awards $30.1M for Dynamics 365 development, exceeding initial estimates by $33.5M

Contract Overview

Contract Amount: $30,131,912 ($30.1M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2020-07-29

End Date: 2023-01-15

Contract Duration: 900 days

Daily Burn Rate: $33.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: GOVERNMENT MICROSOFT DYNAMICS 365 DEVELOPMENT AND OPERATIONS TASK ORDER UNDER THE TRANSFORMATION TWENTY-ONE TOTAL TECHNOLOGY NEXT GENERATION (T4NG)PROGRAM

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $30.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: GOVERNMENT MICROSOFT DYNAMICS 365 DEVELOPMENT AND OPERATIONS TASK ORDER UNDER THE TRANSFORMATION TWENTY-ONE TOTAL TECHNOLOGY NEXT GENERATION (T4NG)PROGRAM Key points: 1. The contract's final value significantly surpassed its initial estimated value, indicating potential scope changes or underestimation. 2. A firm-fixed-price structure was used, which typically shifts cost risk to the contractor but can lead to higher initial bids. 3. The task order was issued under a large, established IT services program (T4NG), suggesting a pre-vetted contractor pool. 4. The duration of the task order (900 days) is substantial, implying a complex and ongoing development effort. 5. The specific nature of Dynamics 365 development and operations points to a need for specialized software expertise. 6. The contract was awarded to a single, large incumbent contractor, raising questions about broader market engagement.

Value Assessment

Rating: questionable

The final award amount of $30.1 million is substantially higher than the initial estimated value of $33,480, representing a significant deviation. While the T4NG program aims for competitive pricing, the magnitude of this increase warrants scrutiny. Benchmarking against similar Dynamics 365 development contracts within the federal government is difficult without more granular data on scope and complexity. However, such a large variance suggests either a significant underestimation of initial requirements or substantial scope creep during the task order's lifecycle.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This task order was competed under the Transformation Twenty-One Total Technology Next Generation (T4NG) program, which is designed for full and open competition. However, the data indicates only one award was made to General Dynamics Information Technology, Inc. The number of bidders that responded to this specific task order is not provided, but the fact that it was a delivery order under a larger IDIQ suggests that multiple vendors could have bid. The competitive dynamics for this specific task order are unclear without knowing the number of proposals received.

Taxpayer Impact: While competed under a broad program, the limited visibility into the specific competition for this task order makes it difficult to definitively assess its impact on taxpayer value. A robust competition typically drives down costs.

Public Impact

Veterans Affairs (VA) personnel will benefit from improved or new functionalities within their Dynamics 365 environment. The services delivered include development and operations for Microsoft Dynamics 365, a critical enterprise resource planning and customer relationship management system. The geographic impact is primarily within the VA's operational footprint, likely supporting administrative and clinical functions nationwide. The contract supports IT professionals and developers, potentially including specialized roles for Dynamics 365 expertise.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost overrun from initial estimate to final award value.
Lack of transparency regarding the number of bidders for this specific task order.
Potential for scope creep given the large increase in contract value.
Reliance on a single large contractor for critical system development.

Positive Signals

Awarded under a large, established IT services contract vehicle (T4NG) designed for competition.
Firm-fixed-price contract type can provide cost certainty if scope is well-defined.
Task order addresses a specific need for Dynamics 365 development and operations.

Sector Analysis

The federal IT services market is vast, with significant spending on enterprise resource planning (ERP) and customer relationship management (CRM) systems like Microsoft Dynamics 365. Agencies like the VA rely heavily on these platforms for managing operations, patient care, and administrative functions. The T4NG program itself represents a major vehicle for IT procurement, indicating a competitive landscape among large system integrators. Spending benchmarks for similar Dynamics 365 implementations vary widely based on complexity, customization, and user base, but multi-million dollar awards are common for comprehensive development and operational support.

Small Business Impact

This contract was not specifically set aside for small businesses, and the awardee is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Given the nature of the work (specialized Dynamics 365 development), it's possible that specialized small businesses could be involved as subcontractors, but this is not guaranteed by the contract terms presented. The overall impact on the small business IT ecosystem is likely minimal unless subcontracting opportunities are actively pursued.

Oversight & Accountability

The Department of Veterans Affairs has internal oversight mechanisms for task orders issued under IDIQ contracts like T4NG. The firm-fixed-price nature of the award provides some cost control. Transparency is dependent on the VA's reporting practices for task order details and performance metrics. Inspector General oversight would apply if performance issues or potential fraud were identified.

Related Government Programs

T4NG Program
Microsoft Dynamics 365
Enterprise Resource Planning (ERP) Systems
Customer Relationship Management (CRM) Systems
IT Services Procurement

Risk Flags

Significant Cost Variance
Potential Scope Creep
Limited Competition Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $30.1 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. GOVERNMENT MICROSOFT DYNAMICS 365 DEVELOPMENT AND OPERATIONS TASK ORDER UNDER THE TRANSFORMATION TWENTY-ONE TOTAL TECHNOLOGY NEXT GENERATION (T4NG)PROGRAM

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $30.1 million.

What is the period of performance?

Start: 2020-07-29. End: 2023-01-15.

What specific factors contributed to the final award value of $30.1M being so much higher than the initial estimated value of $33,480?

The substantial difference between the initial estimated value ($33,480) and the final award value ($30,131,912.41) for this task order is highly unusual and suggests a significant discrepancy in how the requirement was initially scoped or estimated. Possible explanations include: 1) The initial estimate was a placeholder or represented only a very small initial phase of work, with the bulk of the requirement being added later through modifications or subsequent task orders that were consolidated under this award. 2) There was a severe underestimation of the labor hours, complexity, or duration required for the Dynamics 365 development and operations. 3) The initial estimate was for a different, much smaller scope that was later expanded significantly. Without access to the contract modifications and detailed justification for the award, it is difficult to pinpoint the exact cause, but it warrants further investigation into the procurement process and requirements definition.

How does the final award amount compare to other similar Dynamics 365 development contracts within the VA or other federal agencies?

Benchmarking this $30.1 million award requires comparing it to similar large-scale Microsoft Dynamics 365 development and operations task orders. Contracts of this magnitude typically involve extensive customization, integration with other systems, and long-term operational support for a large user base. For instance, other federal agencies have awarded similar multi-million dollar contracts for ERP/CRM system implementations and sustainment. The VA itself has a history of large IT investments. However, without specific details on the scope, number of users, modules implemented (e.g., Finance, Supply Chain, HR, Case Management), and duration, a direct comparison is challenging. The key factor is whether the $30.1M reflects the complexity and duration of the services delivered relative to market rates for comparable federal IT projects.

What are the primary risks associated with a firm-fixed-price contract of this size and duration for complex software development?

For a firm-fixed-price (FFP) contract of this magnitude ($30.1M over approx. 900 days), the primary risks revolve around scope definition and management. If the scope is not meticulously defined and controlled, the contractor bears the risk of cost overruns due to unforeseen complexities or changes, potentially leading to reduced quality, contractor default, or requests for equitable adjustments. Conversely, if the government's requirements evolve significantly, the FFP structure can make it difficult and costly to incorporate necessary changes. For the government, the risk is paying a premium upfront to cover the contractor's risk, and potential disputes if the scope is ambiguous. Effective change management and clear requirements are crucial to mitigate these risks.

What is the track record of General Dynamics Information Technology, Inc. (GDIT) in delivering large-scale Dynamics 365 projects for the federal government?

General Dynamics Information Technology, Inc. (GDIT) is a major federal IT contractor with a broad portfolio of services, including enterprise system implementation and support. While GDIT has extensive experience with various large-scale IT programs, specific public data on their track record solely focused on Microsoft Dynamics 365 development and operations at this scale for the VA might be limited. Their past performance on similar ERP/CRM projects, regardless of the specific software platform, would be a key indicator. Assessing their success would involve reviewing past performance evaluations, contract awards, and any reported issues or successes on comparable projects within the federal space. GDIT's size and tenure suggest they have the capacity, but project-specific success rates for Dynamics 365 would require deeper analysis.

How does the VA's spending on Dynamics 365 compare to its overall IT budget and spending on similar enterprise systems?

The VA's IT budget is substantial, allocated across numerous systems and initiatives supporting healthcare, benefits, and administration. Spending on enterprise systems like Dynamics 365, which can underpin critical functions, is a significant component. To assess this $30.1M award in context, it should be compared against the VA's total IT obligations for the relevant fiscal years and specifically against spending on other major enterprise platforms (e.g., EHR systems, financial management systems). Understanding the proportion of the IT budget dedicated to Dynamics 365 provides insight into its strategic importance and whether this investment aligns with broader IT modernization goals. Without comparative data on other enterprise system spending, it's hard to definitively state if this represents a disproportionate investment.

What are the potential implications of awarding this task order under the T4NG program versus a direct solicitation?

Awarding this task order under the T4NG Indefinite Delivery/Indefinite Quantity (IDIQ) contract vehicle offers several implications compared to a direct solicitation. T4NG is a pre-competed contract vehicle, meaning the foundational contract terms, including labor rates and general business terms, have already been negotiated and competed. This can streamline the procurement process for individual task orders, potentially leading to faster award times. It also leverages existing competition established during the T4NG vehicle's award. However, it might limit the pool of potential bidders to those who hold positions on the T4NG contract. A direct solicitation might allow for broader market reach but would involve a longer, more complex procurement cycle from scratch.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 3150 FAIRVIEW PARK DR STE 100, FALLS CHURCH, VA, 22042

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

Financial Breakdown

Contract Ceiling: $200,926,000

Exercised Options: $30,131,912

Current Obligation: $30,131,912

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $4,975,326

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA11816D1016

IDV Type: IDC

Timeline