HHS awards $67.4M IT contract for data modernization, with 4 bidders competing
Contract Overview
Contract Amount: $67,361,467 ($67.4M)
Contractor: Peraton Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2021-08-16
End Date: 2026-08-15
Contract Duration: 1,825 days
Daily Burn Rate: $36.9K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: TIME AND MATERIALS
Sector: IT
Official Description: IT SERVICE AND DATA MODERNIZATION SERVICES
Place of Performance
Location: ATLANTA, DEKALB County, GEORGIA, 30341
State: Georgia Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $67.4 million to PERATON INC. for work described as: IT SERVICE AND DATA MODERNIZATION SERVICES Key points: 1. Contract aims to modernize IT systems and data infrastructure for CDC. 2. Competition level suggests potential for competitive pricing, though specific benchmarks are needed. 3. Performance period of five years indicates a long-term commitment to modernization efforts. 4. Contract type is Time and Materials, which can pose cost control risks if not managed closely. 5. The award is a Delivery Order under a larger IDIQ contract, suggesting a phased approach. 6. Focus on Computer Systems Design Services aligns with broader federal IT modernization goals.
Value Assessment
Rating: fair
The total award amount of $67.4 million over five years averages to approximately $13.5 million annually. Benchmarking this against similar IT service contracts for data modernization within federal agencies is challenging without more granular data on scope and deliverables. The Time and Materials pricing structure, while flexible, requires diligent oversight to ensure value for money and prevent cost overruns. Compared to fixed-price contracts for similar modernization efforts, this structure may offer less upfront cost certainty for the government.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, with four bidders participating. The presence of multiple bidders generally indicates a healthy competitive environment, which can drive down prices and encourage innovation. However, the specific number of bidders (four) is moderate, and without knowing the technical qualifications and pricing strategies of each, it's difficult to definitively assess the intensity of the competition. The agency's decision to use full and open competition suggests confidence in the market's ability to provide suitable solutions.
Taxpayer Impact: A full and open competition with multiple bidders is generally favorable for taxpayers, as it increases the likelihood of securing services at competitive market rates and reduces the risk of paying inflated prices due to limited options.
Public Impact
The Centers for Disease Control and Prevention (CDC) will benefit from modernized IT systems and data capabilities. Services delivered include computer systems design and data modernization, crucial for public health initiatives. The geographic impact is primarily national, supporting CDC's mission across the United States. Workforce implications may include the need for specialized IT skills within the CDC and potential opportunities for contractors' IT professionals.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Time and Materials (T&M) contract type can lead to cost overruns if not closely monitored for scope creep and labor hours.
- Lack of specific performance metrics in the provided data makes it difficult to assess the effectiveness of the modernization effort.
- The contract is a Delivery Order under a larger IDIQ, suggesting potential for task orders that may evolve in scope and cost over time.
Positive Signals
- Awarded under full and open competition, indicating a robust bidding process.
- The contract duration of five years allows for sustained effort in complex IT modernization.
- The focus on data modernization aligns with critical public health infrastructure needs.
Sector Analysis
The IT services sector, particularly within government contracting, is highly competitive. This contract falls under Computer Systems Design Services (NAICS 541512), a segment focused on designing and developing integrated IT solutions. Federal spending in this area is substantial, driven by the ongoing need to modernize legacy systems, enhance cybersecurity, and improve data analytics capabilities across agencies. Comparable spending benchmarks would typically involve analyzing IT modernization contracts awarded by agencies like HHS, NIH, or other large federal entities for similar scope and duration.
Small Business Impact
The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Peraton Inc., the awardee, is a large business. There is no information provided regarding subcontracting plans or goals for small businesses. This means that the primary contract will be executed by a large entity, and any direct benefit to the small business ecosystem would depend on Peraton's subcontracting decisions, which are not detailed here.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and program officials within the Centers for Disease Control and Prevention (CDC). As a Time and Materials contract, rigorous oversight of labor hours, rates, and direct costs is essential to ensure fair and reasonable pricing and prevent scope creep. Transparency is facilitated through contract award databases like FPDS. The specific Inspector General jurisdiction would be that of the Department of Health and Human Services (HHS), which can conduct audits and investigations into contract performance and financial management.
Related Government Programs
- HHS IT Modernization Initiatives
- CDC Data Infrastructure Projects
- Federal Civilian IT Services Contracts
- Delivery Orders under IDIQs
Risk Flags
- Time and Materials contract type requires close monitoring to control costs.
- Scope creep risk inherent in long-term IT modernization projects.
- Dependence on contractor performance for critical data modernization.
Tags
it-services, data-modernization, hhs, cdc, delivery-order, full-and-open-competition, time-and-materials, computer-systems-design, large-business, georgia
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $67.4 million to PERATON INC.. IT SERVICE AND DATA MODERNIZATION SERVICES
Who is the contractor on this award?
The obligated recipient is PERATON INC..
Which agency awarded this contract?
Awarding agency: Department of Health and Human Services (Centers for Disease Control and Prevention).
What is the total obligated amount?
The obligated amount is $67.4 million.
What is the period of performance?
Start: 2021-08-16. End: 2026-08-15.
What is Peraton Inc.'s track record with large federal IT modernization contracts, particularly those involving data systems?
Peraton Inc. has a significant track record in federal IT services, including large-scale modernization efforts. They have been involved in numerous contracts across various agencies, often focusing on complex systems integration, cybersecurity, and mission-critical IT infrastructure. While specific details on their data modernization projects for HHS are not provided here, their broader portfolio suggests experience with the types of challenges inherent in such initiatives. A deeper dive into their past performance on similar contracts, including client feedback and any past performance issues or successes, would be necessary for a comprehensive assessment. Their history includes significant acquisitions, which have expanded their capabilities in areas relevant to IT and data services.
How does the $13.5 million annual average cost compare to similar IT modernization contracts within HHS or other federal agencies?
The average annual cost of approximately $13.5 million for this IT service and data modernization contract is moderate within the context of large federal IT projects. However, a direct comparison is difficult without a detailed understanding of the specific scope, complexity, and deliverables. Contracts for enterprise-wide data modernization can range significantly, from tens of millions to hundreds of millions of dollars annually, depending on the agency's size, the state of its legacy systems, and the desired end-state capabilities. To benchmark effectively, one would need to compare this contract against others with similar objectives (e.g., cloud migration, data warehousing, analytics platform development) and similar contract types (e.g., T&M vs. FFP) awarded to agencies of comparable size and mission focus, such as other components within HHS or agencies like CMS or NIH.
What are the primary risks associated with the Time and Materials (T&M) contract type for this data modernization effort?
The primary risk with a Time and Materials (T&M) contract for a data modernization effort is the potential for cost overruns due to a lack of a fixed ceiling on the total price. Unlike fixed-price contracts, T&M agreements pay the contractor for direct labor hours at specified hourly rates and for the actual cost of materials. This structure can incentivize longer project durations or less efficient work if not managed stringently. For data modernization, which can involve unforeseen technical challenges and evolving requirements, T&M offers flexibility but requires robust government oversight to monitor labor hours, ensure efficient task execution, and control the overall expenditure. Scope creep is a significant risk, as additional work can easily inflate costs without a pre-defined cap.
How effective is the competition level (4 bidders) in ensuring value for money for taxpayers on this $67.4M contract?
A competition level of four bidders is generally considered healthy and suggests a reasonable likelihood of achieving value for money. It indicates that multiple capable vendors were interested and able to bid, which typically drives competitive pricing and encourages innovation. However, the 'effectiveness' is relative. If these four bidders were all very similar in their technical approach and pricing, the competitive pressure might be less intense than if there were a wider range of proposals or significantly different cost structures. Without insight into the bid proposals themselves (technical scores, price points), it's hard to definitively say if this level of competition maximized taxpayer value. It is, however, a positive signal compared to sole-source or limited competition scenarios.
What are the historical spending patterns for IT Service and Data Modernization at the CDC or HHS?
Historical spending patterns for IT Service and Data Modernization at the CDC and HHS are generally characterized by significant and sustained investment. Agencies like HHS, responsible for critical public health functions, continuously invest in upgrading their IT infrastructure to manage vast amounts of health data, support research, and improve service delivery. Spending often fluctuates based on specific modernization initiatives, technological advancements (e.g., cloud adoption, AI integration), and evolving public health needs. While this specific $67.4 million award is a substantial single contract, it represents a portion of a larger, ongoing commitment to IT modernization across the department. Analyzing past budgets and contract awards for similar services would reveal trends in investment levels and focus areas.
What are the potential implications of this contract award on the broader IT services market, particularly for competitors?
The award of this $67.4 million contract to Peraton Inc. has several implications for the broader IT services market. Firstly, it signifies a significant win for Peraton, bolstering their revenue and market position within the federal IT sector, especially in data modernization. For competitors who bid but did not win, it highlights areas where they may need to improve their offerings, pricing strategies, or technical proposals to be more competitive in future solicitations. It also signals to the market that HHS/CDC is actively investing in data modernization, potentially encouraging other vendors to develop or refine their capabilities in this specific niche. The moderate competition level (4 bidders) suggests that the market has several players capable of undertaking such work, fostering a dynamic environment.
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) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: 75D301-21-R-71851
Offers Received: 4
Pricing Type: TIME AND MATERIALS (Y)
Evaluated Preference: NONE
Contractor Details
Address: 12975 WORLDGATE STE 7322, HERNDON, VA, 20170
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $70,168,335
Exercised Options: $69,246,831
Current Obligation: $67,361,467
Actual Outlays: $62,031,212
Subaward Activity
Number of Subawards: 21
Total Subaward Amount: $21,322,954
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: HHSN316201200025W
IDV Type: GWAC
Timeline
Start Date: 2021-08-16
Current End Date: 2026-08-15
Potential End Date: 2026-08-15 00:00:00
Last Modified: 2025-08-14
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