SEC awards $50.9M IT contract for application enhancements and maintenance to ARETEC, INC

Contract Overview

Contract Amount: $50,929,677 ($50.9M)

Contractor: Aretec, Inc

Awarding Agency: Securities and Exchange Commission

Start Date: 2021-11-01

End Date: 2026-10-31

Contract Duration: 1,825 days

Daily Burn Rate: $27.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: LABOR HOURS

Sector: IT

Official Description: NATIONAL EXAMINATION PROGRAM (NEP) - IT APPLICATION ENHANCEMENTS & MAINTENANCE

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20549

State: District of Columbia Government Spending

Plain-Language Summary

Securities and Exchange Commission obligated $50.9 million to ARETEC, INC for work described as: NATIONAL EXAMINATION PROGRAM (NEP) - IT APPLICATION ENHANCEMENTS & MAINTENANCE Key points: 1. Contract focuses on IT application enhancements and maintenance, crucial for agency operations. 2. ARETEC, INC. secured this contract through full and open competition. 3. The contract duration is 5 years, indicating a long-term need for these services. 4. The primary service is Computer Systems Design Services, a key IT support function. 5. This award represents a significant investment in the Securities and Exchange Commission's IT infrastructure.

Value Assessment

Rating: good

The contract's total value of $50.9 million over five years suggests a substantial investment in IT modernization and maintenance. Benchmarking against similar IT service contracts for federal agencies of comparable size and scope would provide a clearer picture of value for money. The pricing structure, likely based on labor hours, needs careful monitoring to ensure efficiency and prevent cost overruns. Without specific performance metrics or detailed cost breakdowns, a definitive value assessment is challenging, but the duration and scope imply a recognized need for these services.

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,' indicating that while the competition was broad, specific sources may have been excluded based on prior performance or other criteria. The presence of 5 bids suggests a reasonably competitive environment, which typically leads to better price discovery and value for the government. However, the exclusion of certain sources could potentially limit the breadth of innovation or the most competitive pricing.

Taxpayer Impact: The full and open competition, even with exclusions, aims to ensure that taxpayer dollars are used efficiently by fostering a competitive bidding process. This approach generally leads to more favorable pricing and a wider selection of qualified contractors.

Public Impact

The Securities and Exchange Commission (SEC) benefits directly through enhanced and maintained IT applications, supporting its mission to protect investors and maintain fair markets. The services delivered are critical for the operational efficiency and security of the SEC's IT systems. The primary geographic impact is within the District of Columbia, where the SEC is headquartered. The contract supports the IT workforce, potentially creating or sustaining jobs in computer systems design and related fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep if labor hours are not managed effectively.
Risk of vendor lock-in if the enhanced applications become highly specialized and difficult to transition.
Dependence on a single contractor for critical IT infrastructure maintenance.

Positive Signals

Awarded through a competitive process, suggesting a baseline level of cost-effectiveness.
Long-term contract duration allows for stable support and potential for deep expertise development.
Focus on IT application enhancements indicates a commitment to modernizing agency systems.

Sector Analysis

This contract falls within the IT services sector, specifically Computer Systems Design Services. The federal IT services market is vast, with agencies consistently investing in application development, maintenance, and modernization to support their missions. This contract aligns with the broader trend of government agencies seeking specialized IT support to manage complex systems and data. Comparable spending benchmarks would involve looking at other large IT service contracts awarded to similar-sized agencies for application support.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific award, 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 within the provided data. This suggests that the primary contractor, ARETEC, INC., is likely a larger entity, and the contract may not directly contribute to the small business ecosystem unless subcontracting opportunities are pursued independently by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically be managed by the Securities and Exchange Commission's contracting officers and program managers. Accountability measures would be embedded in the contract's terms and conditions, including performance standards, delivery schedules, and payment milestones. Transparency is generally facilitated through contract award databases like FPDS-NG, where basic information is publicly available. The Inspector General's office for the SEC would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

IT Application Development
IT Maintenance Services
Computer Systems Design
Information Technology Support Services
Federal IT Modernization Programs

Risk Flags

Potential for cost overruns due to labor-hour pricing.
Risk of vendor lock-in.
Dependence on contractor performance for critical IT functions.
Effectiveness of competition level due to source exclusions.

Frequently Asked Questions

What is this federal contract paying for?

Securities and Exchange Commission awarded $50.9 million to ARETEC, INC. NATIONAL EXAMINATION PROGRAM (NEP) - IT APPLICATION ENHANCEMENTS & MAINTENANCE

Who is the contractor on this award?

The obligated recipient is ARETEC, INC.

Which agency awarded this contract?

Awarding agency: Securities and Exchange Commission (Securities and Exchange Commission).

What is the total obligated amount?

The obligated amount is $50.9 million.

What is the period of performance?

Start: 2021-11-01. End: 2026-10-31.

What is ARETEC, INC.'s track record with the federal government, particularly with the SEC?

ARETEC, INC. has a history of federal contracting, with this award representing a significant engagement. Analyzing their past performance on similar IT service contracts, especially with the Securities and Exchange Commission, is crucial. Past performance evaluations, if available, would shed light on their ability to meet deadlines, manage costs, and deliver quality services. A review of their contract history would reveal the types of services they have provided, their award values, and their performance ratings on previous government engagements. Understanding their experience with complex IT systems and application maintenance is key to assessing their suitability for this role.

How does the $50.9 million contract value compare to similar IT application enhancement and maintenance contracts?

The $50.9 million contract value over five years places this award in the mid-to-large tier for federal IT service contracts. To benchmark its value, one would compare it to contracts of similar scope (application enhancement and maintenance) awarded by agencies of comparable size and mission complexity (e.g., other financial regulatory bodies or large civilian agencies). Factors like the number of users supported, the criticality of the applications, and the specific technical requirements influence pricing. A detailed analysis would involve examining the average cost per year or per application supported in comparable contracts, adjusting for inflation and specific service level agreements.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential cost overruns due to the labor-hour pricing model, which requires diligent oversight to ensure efficiency. There's also a risk of technical obsolescence if the enhancements do not keep pace with evolving technology or if the maintenance strategy is not robust. Dependence on a single vendor for critical IT functions poses a risk if the contractor's performance falters or if they face financial instability. Mitigation strategies likely involve strong contract management, regular performance reviews, clearly defined milestones, and potentially incorporating incentives for cost savings or performance improvements. The SEC's contracting and program management teams are responsible for active risk management throughout the contract lifecycle.

How effective is the 'Full and Open Competition After Exclusion of Sources' approach in ensuring optimal value for taxpayers?

This contracting approach aims to balance broad competition with specific requirements or past performance considerations. By excluding certain sources, the agency might be targeting contractors with proven capabilities or avoiding those with documented performance issues. While 'full and open' competition generally drives down prices and encourages innovation, the exclusion of sources can limit the pool of potential bidders. The effectiveness in ensuring value for taxpayers depends on whether the exclusions were justified and if the remaining pool still offered sufficient competition. If the exclusions were too broad, it could lead to less competitive pricing than a truly unrestricted full and open competition.

What is the historical spending pattern for IT application enhancement and maintenance at the SEC?

Analyzing historical spending patterns for IT application enhancement and maintenance at the SEC is essential for context. This involves examining previous contract awards for similar services, their values, durations, and the contractors involved. Understanding trends in IT spending, such as increases or decreases in budget allocation for these services over the past 5-10 years, can reveal strategic shifts or persistent needs. Comparing current spending levels to historical averages helps determine if the $50.9 million award is an anomaly, an increase reflecting new initiatives, or a continuation of established investment levels in IT infrastructure.

What are the implications of the 'Labor Hours' (LH) contract type on cost control and performance?

The 'Labor Hours' (LH) contract type means the government pays for the actual hours worked by contractor personnel at pre-negotiated hourly rates. This type of contract offers flexibility, allowing the scope of work to evolve as needed. However, it places a significant burden on the government for oversight to ensure that hours are reasonable and necessary for the work performed. Cost control relies heavily on effective monitoring of labor hours and rates. Performance is typically measured against task completion and quality, but the direct link between cost and effort can sometimes lead to incentives for longer task durations if not managed carefully. This necessitates robust project management and auditing by the agency.

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 - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 50310221R0013

Offers Received: 5

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 10201 FAIRFAX BLVD STE 223, FAIRFAX, VA, 22030

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, Hispanic American Owned Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $101,102,846

Exercised Options: $50,929,677

Current Obligation: $50,929,677

Actual Outlays: $45,194,639

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 50310220D0012

IDV Type: IDC

Timeline