VA awards $308.8M for IT support, raising questions on value and competition

Contract Overview

Contract Amount: $308,757,507 ($308.8M)

Contractor: Govcio, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-08-23

End Date: 2026-08-22

Contract Duration: 1,460 days

Daily Burn Rate: $211.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: HEALTH SERVICES PORTFOLIO TECHNICAL MANAGEMENT AND STRATEGIC SOLUTIONING SUPPORT

Place of Performance

Location: COLUMBIA, HOWARD County, MARYLAND, 21046

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $308.8 million to GOVCIO, LLC for work described as: HEALTH SERVICES PORTFOLIO TECHNICAL MANAGEMENT AND STRATEGIC SOLUTIONING SUPPORT Key points: 1. Contract value is substantial, requiring careful scrutiny for cost-effectiveness. 2. Limited competition dynamics may impact price discovery and taxpayer value. 3. Performance risks associated with IT support services need continuous monitoring. 4. This contract supports critical IT infrastructure for the VA. 5. The IT services sector is highly competitive, making this award notable.

Value Assessment

Rating: fair

The contract's total value of $308.8 million over four years is significant. Benchmarking against similar IT support contracts is challenging without more granular data on specific services. The time-and-materials pricing structure, while flexible, can lead to cost overruns if not managed tightly. The awarded amount appears within a broad range for large-scale IT support, but the lack of detailed cost breakdowns makes a precise value-for-money assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. However, the number of bids received (6) is on the lower side for a contract of this magnitude and scope, suggesting potential limitations in the competitive landscape or the complexity of the requirements. This level of competition may not have driven the most aggressive pricing.

Taxpayer Impact: While full and open competition is generally beneficial for taxpayers, a limited number of bidders can result in higher prices than if a more robust competitive field had emerged.

Public Impact

Veterans will benefit from improved IT services supporting their healthcare and benefits. Essential IT infrastructure and strategic solutions will be maintained and enhanced. The primary geographic impact is within the Department of Veterans Affairs' national operations. This contract supports IT professionals and potentially creates or sustains jobs in the tech sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep due to time-and-materials pricing structure.
Risk of vendor lock-in if transition planning is inadequate.
Ensuring consistent service quality across a large portfolio.
Managing scope changes effectively to control costs.

Positive Signals

Awarded through full and open competition, promoting a fair process.
Contract duration provides stability for essential IT services.
Focus on strategic solutions suggests alignment with VA modernization goals.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader IT services industry. This market is characterized by rapid technological advancements and a high demand for specialized expertise. The VA's spending on IT support is substantial, reflecting the complexity and scale of its operations. Comparable spending benchmarks would typically involve other large federal agencies procuring similar comprehensive IT management and strategic support.

Small Business Impact

The contract data indicates that small business participation was not a primary focus, as the 'ss' (small business set-aside) and 'sb' (small business) flags are false. There is no explicit mention of subcontracting goals for small businesses. This suggests that the prime contractor, GOVCIO, LLC, is likely a large business, and opportunities for small businesses may be limited unless they are direct subcontractors not specified in this award data.

Oversight & Accountability

Oversight will likely be managed through the VA's contracting officers and program managers. Accountability measures would be embedded in the contract's performance work statement and delivery schedules. Transparency is facilitated by the contract award being publicly available, but detailed performance metrics and financial breakdowns may require further inquiry. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

VA IT Modernization
Federal Civilian IT Services
IT Management and Support Contracts
Strategic Technology Solutions

Risk Flags

Potential for cost overruns due to T&M pricing.
Limited number of bidders may indicate reduced competition.
Complexity of managing IT services across a large health portfolio.
Ensuring data security and privacy for sensitive health information.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $308.8 million to GOVCIO, LLC. HEALTH SERVICES PORTFOLIO TECHNICAL MANAGEMENT AND STRATEGIC SOLUTIONING SUPPORT

Who is the contractor on this award?

The obligated recipient is GOVCIO, LLC.

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 $308.8 million.

What is the period of performance?

Start: 2022-08-23. End: 2026-08-22.

What is the historical spending pattern for similar IT support services at the VA?

Historical spending on IT support services at the Department of Veterans Affairs (VA) has been consistently high, reflecting the agency's vast digital infrastructure and critical mission. Prior to this $308.8 million award, the VA has engaged in numerous contracts for IT management, systems integration, cybersecurity, and technical support. For instance, previous large-scale contracts have often been in the hundreds of millions of dollars, spread across various IT domains. Analyzing past spending reveals a trend towards consolidating IT support functions to achieve economies of scale and improve service delivery. However, it also highlights recurring challenges in managing costs effectively and ensuring that technology investments align with evolving healthcare needs and modernization goals. Understanding these patterns is crucial for assessing whether the current contract represents a continuation of established spending levels, a strategic shift, or an anomaly.

How does the awarded price per labor hour compare to market rates for similar IT support roles?

Determining the precise awarded price per labor hour is not feasible with the provided data, as the contract is structured as 'Time and Materials' (T&M) and specific labor categories, rates, and ceilings are not detailed. T&M contracts bill for direct labor hours at specified hourly rates, plus the cost of materials. To benchmark this against market rates, one would need access to the contract's detailed CLIN (Contract Line Item Number) structure, which breaks down labor rates by skill level (e.g., junior, senior, expert analysts, project managers) and geographic location. Generally, IT support roles can range significantly in price per hour, from $50-$100 for basic support to $200-$400+ for highly specialized technical or management expertise. Without the specific labor rates negotiated for this $308.8 million VA contract, a direct comparison to market rates remains speculative. However, given the scale and the 'full and open competition' nature, the VA likely aimed for competitive rates, but the T&M structure inherently carries a risk of higher overall costs if not meticulously managed.

What are the key performance indicators (KPIs) used to measure the success of this contract?

The specific Key Performance Indicators (KPIs) for this contract are not publicly detailed in the award summary. However, for a contract of this nature—providing 'HEALTH SERVICES PORTFOLIO TECHNICAL MANAGEMENT AND STRATEGIC SOLUTIONING SUPPORT'—typical KPIs would likely focus on service availability, system uptime, response times for technical issues, project delivery timelines, adherence to budget, and user satisfaction. For technical management, KPIs might include metrics related to system performance, security compliance, and successful implementation of upgrades or new solutions. For strategic solutioning, success would be measured by the effectiveness and efficiency of the proposed solutions in meeting the VA's healthcare portfolio objectives. The contract's performance work statement (PWS) would outline these KPIs, along with acceptable performance levels and any associated award fees or penalties.

What is the contractor's track record with the VA or similar agencies for IT support services?

GOVCIO, LLC, the contractor awarded this $308.8 million contract, has a track record that warrants examination. While the provided data doesn't detail their specific past performance on VA contracts, a comprehensive assessment would involve reviewing their contract history, past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any prior experience with large-scale IT support, technical management, and strategic solutioning for federal agencies, particularly within the healthcare sector. Agencies often rely on past performance as a significant evaluation factor in recompeting contracts. A positive track record with the VA or similar health-focused agencies would indicate a lower risk and a higher likelihood of successful contract execution. Conversely, any history of performance issues, cost overruns, or missed deadlines could raise concerns about the current award's execution.

What are the potential risks associated with the 'Time and Materials' (T&M) contract type for this scope of work?

The primary risk associated with a Time and Materials (T&M) contract type, such as the one awarded to GOVCIO, LLC for $308.8 million, is the potential for cost escalation and lack of definitive cost control. Unlike fixed-price contracts, T&M contracts do not set a ceiling on the total cost, allowing the contractor to bill for actual labor hours and material costs incurred. This can lead to the government paying more than anticipated if the project scope expands, if labor hours are not efficiently utilized, or if material costs increase unexpectedly. For the VA, this means a heightened need for rigorous oversight, detailed tracking of all billable hours and expenses, and strong program management to ensure that the work performed is necessary, efficient, and aligned with project goals. Without strict controls, the $308.8 million ceiling could be exceeded, impacting the overall value for taxpayers.

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 › IT AND TELECOM - IT MANAGEMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 101 CONSTITUTION AVE NW STE 100W, WASHINGTON, DC, 20001

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: $389,931,519

Exercised Options: $308,757,507

Current Obligation: $308,757,507

Actual Outlays: $225,405,975

Subaward Activity

Number of Subawards: 59

Total Subaward Amount: $161,429,439

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA11816D1003

IDV Type: IDC

Timeline