DHS awards $51.5M contract for IV&V services to American Systems Corp., with 35% of task orders potentially going to small businesses

Contract Overview

Contract Amount: $51,531,483 ($51.5M)

Contractor: American Systems Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2022-05-08

End Date: 2026-05-07

Contract Duration: 1,460 days

Daily Burn Rate: $35.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: INDEPENDENT VERIFICATION AND VALIDATION SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20229

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $51.5 million to AMERICAN SYSTEMS CORPORATION for work described as: INDEPENDENT VERIFICATION AND VALIDATION SERVICES Key points: 1. The contract value of $51.5 million over four years represents a significant investment in ensuring the integrity of IT systems. 2. Competition dynamics indicate a full and open approach, suggesting a robust market for these specialized services. 3. The cost-plus-fixed-fee pricing structure requires careful monitoring to ensure cost containment and value for money. 4. Performance context is crucial, as Independent Verification and Validation (IV&V) directly impacts the reliability of critical homeland security systems. 5. The contract is positioned within the broader IT services sector, specifically focusing on system design and validation. 6. A notable aspect is the potential for small business subcontracting, indicating a commitment to broader economic participation.

Value Assessment

Rating: good

Benchmarking the $51.5 million contract value against similar IV&V services requires detailed analysis of scope and duration. However, the cost-plus-fixed-fee (CPFF) structure, while common, necessitates vigilant oversight to prevent cost overruns. The average annual value of approximately $12.9 million appears reasonable for specialized IT assurance services supporting a major agency like CBP. Without specific per-unit data, a direct price comparison is difficult, but the competitive award suggests pricing was deemed acceptable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The presence of three bidders suggests a moderately competitive environment for this specific requirement. While more bidders could potentially drive prices lower, a competitive award process is a positive indicator for price discovery and value.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more efficient pricing and better service quality.

Public Impact

U.S. Customs and Border Protection (CBP) will benefit from enhanced assurance of its critical IT systems, improving operational effectiveness. The services delivered include independent verification and validation, ensuring that IT systems meet requirements and perform as intended. The contract is geographically focused on the District of Columbia, where CBP's headquarters and key operational centers are located. While not a direct large-scale job creator, the contract supports specialized IT professionals and potentially creates subcontracting opportunities for small businesses.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The cost-plus-fixed-fee (CPFF) contract type can incentivize higher spending if not managed tightly, potentially increasing costs beyond initial estimates.
The duration of 1460 days (4 years) requires sustained oversight to ensure ongoing performance and value throughout the contract lifecycle.
The specific nature of IV&V services means that any performance failures could have significant downstream impacts on CBP's mission.
Limited public information on the specific IV&V methodologies to be employed makes it challenging to assess the depth of assurance provided.
The contract's focus on IT systems means it is susceptible to evolving technological risks and cybersecurity threats.

Positive Signals

Awarded under full and open competition, indicating a robust market and potentially competitive pricing.
The contract aims to improve the reliability and effectiveness of critical IT systems for a vital federal agency.
The potential for small business subcontracting demonstrates a commitment to supporting smaller enterprises within the federal contracting ecosystem.
The fixed-fee component of the CPFF contract provides some level of cost predictability for the government.
The contract specifies a clear period of performance, allowing for structured management and evaluation.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on Computer Systems Design Services (NAICS 541512). The market for Independent Verification and Validation (IV&V) services is specialized, supporting government agencies in ensuring the quality and integrity of their complex IT investments. Comparable spending benchmarks would involve analyzing other IV&V contracts across federal agencies, particularly those with similar mission-critical IT needs. The overall federal IT services market is substantial, with agencies consistently investing in system modernization and assurance.

Small Business Impact

Although this contract was not specifically set aside for small businesses (SS=false, SB=false), the award notice indicates that 35% of the task orders may be subcontracted to small businesses. This suggests a deliberate effort to leverage the small business ecosystem for specialized support within the larger contract. The impact on the small business ecosystem could be positive, providing opportunities for firms with expertise in IV&V or related IT services to participate in federal projects.

Oversight & Accountability

Oversight for this contract will primarily be managed by the U.S. Customs and Border Protection (CBP) contracting officer and their representatives. The cost-plus-fixed-fee structure necessitates close financial oversight to monitor expenditures against the fixed fee and ensure cost reasonableness. Transparency is facilitated through contract award notices and reporting requirements. While no specific Inspector General jurisdiction is mentioned, the Department of Homeland Security's Office of Inspector General (OIG) would likely have oversight authority over significant contracts impacting agency operations.

Related Government Programs

IT Services
System Design
Independent Verification and Validation
Homeland Security IT
Customs and Border Protection Systems
Federal IT Contracts

Risk Flags

Cost Overrun Risk (CPFF)
Performance Risk
Scope Creep Potential
Cybersecurity Vulnerability
Dependency on Contractor Expertise

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $51.5 million to AMERICAN SYSTEMS CORPORATION. INDEPENDENT VERIFICATION AND VALIDATION SERVICES

Who is the contractor on this award?

The obligated recipient is AMERICAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $51.5 million.

What is the period of performance?

Start: 2022-05-08. End: 2026-05-07.

What is the track record of American Systems Corporation in delivering IV&V services to federal agencies?

American Systems Corporation has a documented history of providing IT services, including IV&V, to various federal agencies. Their experience often includes support for complex systems and mission-critical applications. A thorough review of their past performance on similar contracts, particularly those involving large-scale IT systems and rigorous validation requirements, would be necessary to fully assess their capabilities. This would involve examining past performance evaluations, any reported issues or successes, and their ability to meet deadlines and budget constraints on previous engagements. Their ability to secure this significant DHS contract suggests a positive assessment of their past performance by the agency.

How does the pricing structure (Cost Plus Fixed Fee) compare to other IV&V contracts of similar scope?

The Cost Plus Fixed Fee (CPFF) structure is common for complex IT services where the exact scope or effort can be difficult to define precisely upfront, such as IV&V. This structure allows for flexibility while providing the contractor with a fixed profit margin. Compared to other IV&V contracts, CPFF is often chosen when innovation or adaptation is expected. However, it carries a higher risk of cost growth for the government if not managed diligently. Fixed-price contracts might offer better cost certainty but could be less adaptable to evolving IV&V needs. Benchmarking requires comparing the fixed fee percentage and the estimated cost base against similar contracts, considering the specific deliverables and risks involved.

What are the primary risks associated with this IV&V contract for CBP, and how are they being mitigated?

Key risks include potential cost overruns due to the CPFF structure, inadequate IV&V findings that fail to identify critical system flaws, and contractor performance issues impacting CBP's IT system reliability. Mitigation strategies likely involve robust contract surveillance by CBP personnel, detailed performance metrics and reporting requirements, and potentially independent technical reviews of the IV&V work. The fixed fee provides some incentive for efficiency, but the government must actively manage the cost aspect. Furthermore, the full and open competition aims to mitigate risks associated with contractor capability by selecting a proven provider.

How effective is the subcontracting plan for small businesses in ensuring broad participation and value?

The plan to subcontract 35% of task orders to small businesses is a positive signal for broader participation. The effectiveness hinges on the specific types of services designated for subcontracting and the ability of American Systems Corporation to identify and engage qualified small businesses. Success would be measured by the actual amount of subcontracting achieved, the quality of services provided by small business subcontractors, and whether this approach enhances overall value and innovation. A transparent reporting mechanism for subcontracting achievements would be crucial for assessing effectiveness.

What is the historical spending trend for IV&V services at CBP or DHS, and how does this contract fit?

Historical spending on IV&V services at CBP and DHS is likely substantial, given the agency's critical mission and extensive IT infrastructure. This $51.5 million contract over four years represents a significant, but potentially consistent, level of investment in IT assurance. Understanding past spending patterns would involve analyzing previous IV&V contracts, their values, durations, and the specific systems they supported. This contract appears to align with ongoing efforts to maintain and validate the integrity of CBP's technology, suggesting a sustained focus on this area rather than a significant deviation or surge in spending.

What are the implications of the 'Computer Systems Design Services' classification for the scope of work?

The NAICS code 541512, 'Computer Systems Design Services,' indicates that the contract's scope likely involves the design, development, modification, and integration of computer systems. For an IV&V contract, this means the services will focus on verifying and validating that these designed systems meet specified requirements, function correctly, and are secure. It implies that the contractor will be deeply involved in understanding the system architecture, development processes, and testing methodologies employed by CBP's primary IT developers. The IV&V work will therefore be closely tied to the system lifecycle, from design through implementation and operation.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 8260 GREENSBORO DR STE 600, MCLEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $125,928,367

Exercised Options: $51,531,483

Current Obligation: $51,531,483

Actual Outlays: $28,345,752

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $19,292,947

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 47QTCK18D0027

IDV Type: GWAC

Timeline