HHS awards $61.3M contract for IT services to EMERGENT, LLC under full and open competition

Contract Overview

Contract Amount: $61,322,163 ($61.3M)

Contractor: Emergent, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2019-05-01

End Date: 2024-04-30

Contract Duration: 1,826 days

Daily Burn Rate: $33.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF:OT:IGF

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $61.3 million to EMERGENT, LLC for work described as: IGF:OT:IGF Key points: 1. Contract value of $61.3M over 5 years indicates significant investment in IT services. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The contract's duration of 1826 days (5 years) implies a need for sustained IT support. 4. Award to EMERGENT, LLC, a single entity, highlights the concentration of IT service delivery. 5. The NAICS code 541519 (Other Computer Related Services) points to a broad scope of IT support. 6. Fixed-price contract type aims to control costs and transfer risk to the contractor. 7. The contract is a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle.

Value Assessment

Rating: good

The contract value of $61.3 million over five years for IT services appears reasonable given the duration and scope. Benchmarking against similar IT service contracts awarded by HHS or other federal agencies for comparable services would provide a more precise value-for-money assessment. The firm fixed-price structure suggests an effort to manage costs effectively, but without detailed service level agreements or performance metrics, a definitive value assessment is challenging. The number of bids received (3) is on the lower side for full and open competition, which could indicate either a specialized service area or potential limitations in market reach.

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 a bid. Three bids were received, which is a moderate level of competition. While more than a sole-source or limited competition, three bidders may not represent the full spectrum of potential providers, potentially impacting price discovery. The agency's approach to soliciting bids and the evaluation criteria used would further inform the effectiveness of this competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging multiple vendors to offer their best pricing and innovative solutions, leading to potentially lower costs and higher quality services. A moderate number of bidders suggests a reasonable, though not exhaustive, effort to secure competitive pricing.

Public Impact

The Centers for Medicare and Medicaid Services (CMS) benefits from this contract through enhanced IT support. Services delivered likely include a range of computer-related functions essential for CMS operations. The geographic impact is primarily within Maryland, where the contract is managed or performed. Workforce implications include employment opportunities for IT professionals within EMERGENT, LLC and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (3) for a full and open competition could suggest potential market concentration or barriers to entry.
The specific nature of 'Other Computer Related Services' is broad and may obscure the precise value and necessity of all services procured.
Lack of detailed performance metrics or service level agreements in the provided data makes it difficult to assess the contractor's performance trajectory.
The contract's significant duration (5 years) could lead to vendor lock-in if not managed proactively with performance reviews.

Positive Signals

Awarded under full and open competition, which typically fosters competitive pricing and innovation.
Firm fixed-price contract type helps to control costs and provides budget certainty for the agency.
The contract duration of 5 years allows for stability and long-term planning for essential IT services.
The contract is a delivery order, suggesting it aligns with a pre-established IDIQ contract, potentially streamlining procurement processes.

Sector Analysis

The IT services sector within the federal government is vast, encompassing a wide array of support functions from software development to network management. This contract, categorized under NAICS 541519 (Other Computer Related Services), falls into a broad segment of this market. Federal spending on IT services consistently ranks among the largest categories of government procurement. Comparable spending benchmarks would involve analyzing the average cost of similar IT support contracts across agencies like HHS, considering factors such as contract duration, scope of services, and contractor size.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (sb: false) and does not explicitly mention small business subcontracting goals (ss: false). This suggests that the primary award went to a large business, EMERGENT, LLC. Consequently, the direct impact on the small business ecosystem through this specific award is likely minimal, unless EMERGENT, LLC voluntarily engages small businesses as subcontractors. Further analysis of subcontracting plans would be needed to determine any indirect benefits to small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the Centers for Medicare and Medicaid Services (CMS). Transparency is facilitated through contract databases like FPDS.gov, where award details are publicly available. Accountability measures are embedded in the firm fixed-price contract terms, requiring the contractor to deliver specified services within budget. The potential for Inspector General (IG) involvement exists if performance issues, fraud, or waste are identified.

Related Government Programs

IT Services
Computer Related Services
Health Information Technology Services
CMS IT Modernization Efforts
Federal IT Procurement

Risk Flags

Moderate Competition Level
Broad Service Category
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $61.3 million to EMERGENT, LLC. IGF:OT:IGF

Who is the contractor on this award?

The obligated recipient is EMERGENT, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $61.3 million.

What is the period of performance?

Start: 2019-05-01. End: 2024-04-30.

What is the track record of EMERGENT, LLC in performing federal IT contracts, particularly with HHS?

Assessing EMERGENT, LLC's track record requires a review of their past federal contract performance, including awards, past performance evaluations, and any history of contract disputes or terminations. Specifically for HHS, examining previous awards to EMERGENT, LLC within the Centers for Medicare and Medicaid Services (CMS) or other operating divisions would provide relevant context. Data from the Federal Procurement Data System (FPDS) and potentially CPARS (Contractor Performance Assessment Reporting System) would be crucial. A positive history of timely delivery, meeting quality standards, and staying within budget on similar IT service contracts would indicate a lower performance risk. Conversely, a history of issues could signal potential challenges for this current $61.3 million award.

How does the $61.3 million contract value compare to similar IT services contracts awarded by CMS or HHS?

To benchmark the $61.3 million contract value, one would compare it against other firm fixed-price contracts for 'Other Computer Related Services' (NAICS 541519) awarded by CMS or HHS over the past 3-5 years. Key comparison points include contract duration, the specific services rendered (e.g., system maintenance, software development, cybersecurity), and the number of bidders. If similar contracts of 5-year durations for comparable services typically range from $50 million to $70 million, then this award appears within a reasonable market range. However, if comparable contracts are significantly lower, it might suggest this award is priced higher than the market average, warranting further investigation into the scope or necessity of services.

What are the primary risks associated with this contract, given its scope and duration?

Key risks for this $61.3 million, 5-year IT services contract include scope creep, where the requirements expand beyond the original agreement, potentially increasing costs or delaying delivery. Given the broad NAICS code (541519), there's a risk of ambiguity in service definitions, leading to disputes. Contractor performance risk is also present; if EMERGENT, LLC fails to deliver adequate services, it could disrupt critical CMS operations. Technological obsolescence is another risk; IT evolves rapidly, and services procured today might be less relevant or efficient in five years. Finally, the moderate competition (3 bidders) could indicate a risk of suboptimal pricing or limited innovation compared to a more competitive environment.

How effective is the firm fixed-price (FFP) contract type in ensuring value for money for these IT services?

The firm fixed-price (FFP) contract type is generally effective in ensuring value for money by placing the risk of cost overruns on the contractor, incentivizing efficiency and cost control. For IT services, this means EMERGENT, LLC is motivated to deliver the agreed-upon services within the $61.3 million budget. This structure provides budget certainty for CMS. However, the effectiveness hinges on a clearly defined Statement of Work (SOW). If the SOW is vague, the contractor might deliver minimal acceptable services, or disputes could arise over what constitutes 'complete' work. Robust performance monitoring by CMS is crucial to ensure that the fixed price translates into high-quality, valuable services, not just minimally compliant ones.

What are the historical spending patterns for 'Other Computer Related Services' at CMS or HHS?

Analyzing historical spending patterns for NAICS code 541519 ('Other Computer Related Services') at CMS and HHS would reveal trends in procurement volume, average contract values, and the number of awards over time. This context helps determine if the $61.3 million award represents a typical investment, an increase, or a decrease in spending for these services. For instance, if historical spending shows a consistent pattern of multi-million dollar awards for similar durations and scopes, this contract aligns with established patterns. Conversely, a significant deviation might signal a new strategic initiative, a change in service needs, or a potential over/under-investment. Understanding these patterns aids in assessing the current award's proportionality and necessity.

What is the significance of this contract being a 'Delivery Order' under a larger IDIQ contract?

This contract being a 'Delivery Order' signifies that it is a task-specific order issued against a pre-existing Indefinite Delivery/Indefinite Quantity (IDIQ) contract. IDIQs are often used to streamline the procurement of services that are expected to be needed over time but with uncertain quantities or timing. The existence of an IDIQ suggests that CMS or HHS has already competed the overall IDIQ vehicle, potentially establishing a pool of pre-qualified contractors and pre-negotiated terms. This delivery order represents a specific call for services under that established framework. The benefits include faster ordering processes and potentially pre-negotiated rates, but the competition for this specific order might be limited to the contractors already on the IDIQ, rather than the entire market.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 75FCMC19R0027

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Mythics, Inc.

Address: 4525 MAIN ST STE 1500, VIRGINIA BEACH, VA, 23462

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

Financial Breakdown

Contract Ceiling: $63,983,657

Exercised Options: $61,322,163

Current Obligation: $61,322,163

Actual Outlays: $30,548,317

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: NNG15SC33B

IDV Type: GWAC

Timeline