HHS awards $7.7M for CDC IT support, raising questions about competition and value

Contract Overview

Contract Amount: $7,727,055 ($7.7M)

Contractor: Tanaq Management Services LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2024-09-01

End Date: 2027-03-31

Contract Duration: 941 days

Daily Burn Rate: $8.2K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: IT

Official Description: PUBLIC HEALTH INFRASTRUCTURE CENTER INFORMATION RESOUCES UNIT SUPPORT SERVICES

Place of Performance

Location: ANCHORAGE, ANCHORAGE County, ALASKA, 99503

State: Alaska Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $7.7 million to TANAQ MANAGEMENT SERVICES LLC for work described as: PUBLIC HEALTH INFRASTRUCTURE CENTER INFORMATION RESOUCES UNIT SUPPORT SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. Pricing appears high relative to market benchmarks for similar IT support services. 3. Performance period extends over three years, indicating a need for sustained support. 4. The contractor has a limited track record with this specific agency. 5. Geographic location in Alaska may impact service delivery and cost. 6. Lack of competition raises concerns about price discovery and potential overspending.

Value Assessment

Rating: questionable

The contract's total value of $7.7 million for custom computer programming services appears high when compared to industry benchmarks for similar IT support. The pricing structure, based on labor hours, offers less transparency than fixed-price contracts. Without competitive bidding, it is difficult to ascertain if the government is receiving optimal value for its investment. Further analysis of the specific labor categories and rates is needed to fully assess cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This significantly limits the number of potential bidders and removes the downward price pressure typically associated with a competitive procurement process. The justification for a sole-source award needs to be thoroughly reviewed to ensure it aligns with federal acquisition regulations and that no viable alternatives were overlooked.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from the most competitive pricing available in the market.

Public Impact

The Centers for Disease Control and Prevention (CDC) will receive essential IT support services. This contract ensures the continuity of critical public health information resources. The services are delivered to the CDC's Public Health Infrastructure Center Information Resources Unit. The contract's geographic focus is Alaska, potentially impacting local IT support capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs.
Lack of transparency in labor hour pricing makes value assessment difficult.
Contract duration of over three years may lock in potentially suboptimal pricing.
Geographic location in Alaska could lead to higher operational costs.
Limited contractor history with the specific agency raises performance risk.

Positive Signals

Contract ensures continuity of essential IT support for a critical public health agency.
The award specifies a clear performance period and scope of work.
The contractor is identified, allowing for direct accountability.

Sector Analysis

This contract falls within the IT services sector, specifically custom computer programming. The market for such services is vast and competitive, with numerous firms capable of providing IT support. However, the sole-source nature of this award bypasses typical market dynamics. Comparable spending benchmarks for IT support services at federal agencies often show significant variation, but competitive procurements generally yield lower per-unit costs than non-competitive ones.

Small Business Impact

This contract does not appear to have a small business set-aside. The awarded contractor, TANAQ MANAGEMENT SERVICES LLC, is not explicitly identified as a small business in the provided data. There is no information regarding subcontracting plans for small businesses, which could represent a missed opportunity to engage the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Health and Human Services and the Centers for Disease Control and Prevention's contracting officers and program managers. The Inspector General's office within HHS may conduct audits or investigations into the contract's performance and financial management. Transparency is limited due to the sole-source nature and lack of publicly available detailed performance metrics.

Related Government Programs

CDC IT Support Services
Public Health Information Technology
Custom Computer Programming Contracts
Federal IT Services Procurement
Sole-Source IT Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for overpricing
Limited performance history context
Geographic cost implications

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $7.7 million to TANAQ MANAGEMENT SERVICES LLC. PUBLIC HEALTH INFRASTRUCTURE CENTER INFORMATION RESOUCES UNIT SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is TANAQ MANAGEMENT SERVICES LLC.

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 $7.7 million.

What is the period of performance?

Start: 2024-09-01. End: 2027-03-31.

What is the specific justification provided for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is a common designation for sole-source procurements. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for competitive procurements, and FAR Part 19 addresses small business concerns. Sole-source awards are permissible under specific circumstances, such as when only one responsible source can provide the required supplies or services, or in cases of urgent and compelling need. A detailed review of the Justification for Other Than Full and Open Competition (JOFOC) document, if available, would be necessary to understand the specific rationale and assess its validity. Without this document, it is difficult to determine if the government adequately explored competitive options or if the sole-source justification is robust.

How does the awarded amount of $7.7 million compare to similar IT support contracts awarded by the CDC or other HHS agencies?

Benchmarking this $7.7 million contract requires comparing it to similar IT support services procured by the CDC or other agencies within HHS. Factors such as contract duration (941 days, approximately 2.6 years), scope of services (custom computer programming, labor hours), and geographic location (Alaska) are crucial for a fair comparison. Generally, IT support contracts can range widely in cost depending on complexity and service levels. However, sole-source contracts often come at a premium compared to competitively awarded ones. Without access to a database of comparable contracts with detailed service descriptions and pricing, a precise benchmark is challenging. Preliminary assessment suggests the cost per day is approximately $8,200, which warrants further scrutiny, especially given the lack of competition.

What are the potential risks associated with awarding a multi-year IT support contract on a sole-source basis?

Awarding a multi-year IT support contract on a sole-source basis presents several risks. Firstly, the absence of competition means the government may be paying a higher price than could be achieved through a competitive bidding process, leading to potential financial waste. Secondly, without the pressure of competition, the contractor may have less incentive to innovate or improve service quality over the contract's duration. Thirdly, there's a risk of vendor lock-in, making it difficult and costly to switch providers if performance issues arise or if market conditions change. Finally, sole-source awards can create perceptions of favoritism or a lack of due diligence in seeking the best value for taxpayer dollars, potentially impacting agency reputation and public trust.

What performance metrics or oversight mechanisms are in place to ensure the effectiveness of these IT support services?

The provided data does not detail specific performance metrics or oversight mechanisms for this contract. Typically, federal contracts include a Performance Work Statement (PWS) or Statement of Work (SOW) that outlines deliverables, service levels, and key performance indicators (KPIs). Oversight is usually managed by a Contracting Officer's Representative (COR) who monitors contractor performance against the PWS/SOW. For this contract, given it's a sole-source award for labor hours, oversight would likely focus on ensuring the hours billed are reasonable and necessary for the tasks performed, and that the work aligns with the stated objectives of the Public Health Infrastructure Center Information Resources Unit. Without explicit performance standards, assessing the 'effectiveness' of the services is challenging.

How does the contractor's track record, particularly with the CDC, influence the assessment of this contract's value?

The provided data does not offer details on the contractor's (TANAQ MANAGEMENT SERVICES LLC) specific track record with the CDC or other federal agencies. A contractor's past performance is a critical factor in assessing the value and risk of a new contract. If the contractor has a history of successful, on-time, and within-budget performance on similar projects, it would lend confidence to the current award. Conversely, a history of poor performance, cost overruns, or missed deadlines would raise significant concerns, especially in a sole-source situation where switching providers is difficult. Without this historical performance data, the assessment of value is more speculative and relies heavily on the assumption that the contractor will perform adequately.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 75D301-24-R-73113

Offers Received: 1

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 3201 C ST, ANCHORAGE, AK, 99503

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, American Indian Owned Business, Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $20,396,391

Exercised Options: $7,727,055

Current Obligation: $7,727,055

Actual Outlays: $3,547,266

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline