SBA's $169M COVID-19 IT support contract awarded to Guidehouse LLP without competition

Contract Overview

Contract Amount: $169,459,435 ($169.5M)

Contractor: Guidehouse LLP

Awarding Agency: Small Business Administration

Start Date: 2021-02-01

End Date: 2022-07-31

Contract Duration: 545 days

Daily Burn Rate: $310.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: COVID 19 - EMERGENCY PROFESSIONAL SUPPORT SERVICES TO SUPPORT SBA, OCA, OPSM, AND THE CAFS IT SYSTEMS

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22042

State: Virginia Government Spending

Plain-Language Summary

Small Business Administration obligated $169.5 million to GUIDEHOUSE LLP for work described as: COVID 19 - EMERGENCY PROFESSIONAL SUPPORT SERVICES TO SUPPORT SBA, OCA, OPSM, AND THE CAFS IT SYSTEMS Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost savings through competition. 2. Significant portion of spending allocated to IT systems supporting various SBA offices during the pandemic. 3. The contract's duration of 545 days indicates a substantial, ongoing need for these services. 4. Awarded as a Firm Fixed Price contract, which can offer cost certainty but may limit flexibility. 5. No small business set-aside was applied, suggesting a focus on specialized capabilities. 6. The North American Industry Classification System (NAICS) code 541990 covers a broad range of professional services.

Value Assessment

Rating: questionable

Benchmarking the value for this sole-source contract is challenging without comparable bids. The $169.4 million expenditure for IT support services during a critical period warrants scrutiny. While the firm-fixed-price structure provides cost predictability, the absence of competition means there's no direct market comparison to assess if the pricing represents optimal value for the taxpayer. Further analysis would require understanding the specific services rendered and their impact on SBA's operational continuity during the emergency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically reserved for situations where only one vendor possesses the necessary unique capabilities or when urgent circumstances preclude a competitive process. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. It also bypasses opportunities to engage a wider range of businesses, including small businesses, that could offer innovative solutions.

Public Impact

Provides critical IT support services to the Small Business Administration (SBA), including OCA, OPSM, and CAFS systems. Ensures the continuity of essential government operations during the COVID-19 pandemic. Benefits SBA staff by maintaining the functionality of vital IT infrastructure. Supports the agency's mission to assist small businesses, particularly during an economic crisis.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Lack of competition may reduce incentive for cost optimization by the contractor.
Broad service category (541990) could obscure specific cost drivers.

Positive Signals

Firm Fixed Price contract provides budget certainty.
Awarded during a national emergency, suggesting a focus on rapid deployment and continuity.
Contract supports critical IT systems for a vital agency.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically IT support. The market for such services is vast and highly competitive, with numerous firms capable of providing IT infrastructure management and support. However, the sole-source nature of this award bypasses typical market dynamics. Comparable spending benchmarks for IT support services to federal agencies vary widely based on scope, duration, and complexity, but large-scale emergency support contracts can represent significant investments.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to Guidehouse LLP, a large firm, suggests that the SBA prioritized specialized capabilities or immediate availability over small business participation for this particular requirement. This means potential opportunities for small businesses to participate in this specific contract were likely limited.

Oversight & Accountability

Oversight for this contract would primarily fall under the Small Business Administration's internal contracting and program management offices. As a sole-source award, it may receive heightened scrutiny from oversight bodies like the SBA's Office of Inspector General, especially concerning the justification for the non-competitive award and the reasonableness of costs incurred. Transparency would depend on the SBA's reporting practices and public availability of contract performance details.

Related Government Programs

COVID-19 Emergency Support Services
SBA IT Modernization Programs
Federal IT Infrastructure Support
Professional and Technical Services Contracts

Risk Flags

Sole-source award
Lack of competition
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Small Business Administration awarded $169.5 million to GUIDEHOUSE LLP. COVID 19 - EMERGENCY PROFESSIONAL SUPPORT SERVICES TO SUPPORT SBA, OCA, OPSM, AND THE CAFS IT SYSTEMS

Who is the contractor on this award?

The obligated recipient is GUIDEHOUSE LLP.

Which agency awarded this contract?

Awarding agency: Small Business Administration (Small Business Administration).

What is the total obligated amount?

The obligated amount is $169.5 million.

What is the period of performance?

Start: 2021-02-01. End: 2022-07-31.

What specific IT systems were supported under this contract, and what was the criticality of their function during the COVID-19 emergency?

The contract data indicates support for SBA, OCA, OPSM, and CAFS IT systems. While specific functionalities are not detailed, these likely encompass critical operational, financial, and administrative systems essential for the Small Business Administration's mission. During the COVID-19 emergency, SBA's role expanded significantly, processing unprecedented volumes of loan applications and providing economic relief. Therefore, the criticality of these IT systems would have been exceptionally high, requiring robust maintenance, troubleshooting, and potentially rapid scaling to handle increased demand and ensure uninterrupted service delivery to small businesses nationwide.

How does the $169.4 million expenditure compare to typical annual IT spending for the SBA?

Without specific data on the SBA's annual IT budget, a direct comparison is difficult. However, $169.4 million represents a substantial investment, especially for a contract spanning approximately 18 months (February 2021 to July 2022). Federal agencies often allocate significant portions of their budgets to IT, but this figure could represent a considerable increase or a concentrated expenditure during the emergency period. To assess its relative scale, one would need to compare it against the SBA's baseline IT operational and modernization budgets for preceding and subsequent years, as well as the total agency budget.

What was the justification for awarding this contract on a sole-source basis, and were any alternatives considered?

The provided data states the contract was 'NOT COMPETED,' implying a sole-source award. Typically, sole-source justifications are based on factors such as unique capabilities held by only one vendor, urgent and compelling needs that preclude a competitive process, or specific government-unique requirements. For this contract, the justification likely centered on the need for immediate, specialized IT support to manage SBA's critical systems during the unprecedented demands of the COVID-19 pandemic. Alternatives might have been considered but deemed insufficient or too time-consuming to implement given the emergency context. A formal justification document (e.g., Justification and Approval - J&A) would detail these reasons.

What is Guidehouse LLP's track record with federal IT support contracts, particularly emergency-related ones?

Guidehouse LLP has a significant presence in the federal contracting space, offering a range of consulting and IT services. While the provided data focuses on this specific $169.4 million contract, Guidehouse has historically secured numerous contracts with various federal agencies, including those related to IT modernization, cybersecurity, and program management. Their experience often involves supporting complex government operations. Information regarding their specific track record with emergency-related IT support contracts would require a deeper dive into contract databases and agency performance reports to ascertain their past performance in similar high-pressure, time-sensitive situations.

What are the potential risks associated with a sole-source award of this magnitude for IT services?

The primary risk associated with a sole-source award of this magnitude is the potential for inflated costs due to the lack of competitive bidding. Without market pressure, the contractor may not be incentivized to offer the most cost-effective solutions. Another risk is vendor lock-in, where the agency becomes overly reliant on a single provider, potentially hindering future flexibility or the adoption of new technologies. Furthermore, the absence of competition can limit opportunities for innovation and may raise concerns about the thoroughness of due diligence in selecting the 'best' vendor for the task, even if that vendor is highly capable.

How does the Firm Fixed Price (FFP) contract type influence the risk and cost-sharing between the government and Guidehouse LLP?

A Firm Fixed Price (FFP) contract establishes a set price for the work to be performed, regardless of the contractor's actual costs. This shifts the primary cost risk to the contractor; if their costs exceed the agreed-upon price, their profit margin decreases. Conversely, if they manage costs effectively and complete the work for less than the FFP, their profit increases. For the government, FFP provides budget certainty and predictability. However, in a sole-source context, the initial FFP might be negotiated without the benefit of competitive benchmarking, potentially leading to a price that is higher than what could have been achieved through competition.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1800 TYSONS BLVD FL 7, MCLEAN, VA, 22102

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

Financial Breakdown

Contract Ceiling: $169,459,435

Exercised Options: $169,459,435

Current Obligation: $169,459,435

Actual Outlays: $169,459,435

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 73351020D0002

IDV Type: IDC

Timeline