Leidos Inc. awarded $167M for CMS application hosting and end-user support through FY22 funding
Contract Overview
Contract Amount: $166,900,496 ($166.9M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Health and Human Services
Start Date: 2022-09-29
End Date: 2026-11-30
Contract Duration: 1,523 days
Daily Burn Rate: $109.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: TIME AND MATERIALS
Sector: IT
Official Description: THE PURPOSE OF THIS ACTION IS TO PROVIDE FY22 FUNDING FROM PROJECT 000010 HOSTING OPERATIONS AND END-USER SUPPORT (0511: PROGRAM OPERATIONS_DIRECT:DISC), TO PROVIDE END TO END APPLICATION HOSTING SERVICES FOR OVER 300 CMS BUSINESS APPLICATIONS. THE
Place of Performance
Location: RESTON, FAIRFAX County, VIRGINIA, 20190
State: Virginia Government Spending
Plain-Language Summary
Department of Health and Human Services obligated $166.9 million to LEIDOS, INC. for work described as: THE PURPOSE OF THIS ACTION IS TO PROVIDE FY22 FUNDING FROM PROJECT 000010 HOSTING OPERATIONS AND END-USER SUPPORT (0511: PROGRAM OPERATIONS_DIRECT:DISC), TO PROVIDE END TO END APPLICATION HOSTING SERVICES FOR OVER 300 CMS BUSINESS APPLICATIONS. THE Key points: 1. Contract provides essential IT infrastructure and support for over 300 CMS business applications. 2. Funding allocated for FY22, with a performance period extending through November 2026. 3. The contract type is Time and Materials, which can pose cost control challenges. 4. Leidos, Inc. is the incumbent contractor, suggesting potential for continuity but also risk of complacency. 5. The North American Industry Classification System (NAICS) code 541519 indicates a broad scope of computer-related services. 6. This action represents a significant investment in maintaining critical healthcare IT systems.
Value Assessment
Rating: fair
The contract value of $167 million over approximately four years for hosting and end-user support for over 300 applications appears to be within a reasonable range for large-scale IT services. However, without specific details on the scope of services, service level agreements, and comparable contract pricing for similar environments, a definitive value-for-money assessment is challenging. The Time and Materials pricing structure warrants close monitoring to ensure costs do not escalate beyond initial projections.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 3 bidders suggests a moderate level of competition for this significant IT services contract. While full and open competition is generally preferred for ensuring competitive pricing, the specific number of bidders can influence the intensity of that competition.
Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down prices through market forces, ensuring the government receives competitive bids for its IT services.
Public Impact
Beneficiaries include Medicare and Medicaid beneficiaries who rely on the uninterrupted operation of CMS systems. Services delivered encompass end-to-end application hosting and user support, crucial for healthcare program administration. The geographic impact is national, supporting the administration of federal healthcare programs across the United States. Workforce implications include the need for skilled IT professionals to manage and maintain complex hosting environments.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Time and Materials contract type can lead to cost overruns if not managed diligently.
- The broad scope of 'Other Computer Related Services' may lack specificity, potentially leading to scope creep.
- Reliance on a single vendor for critical hosting services could create vendor lock-in.
Positive Signals
- Awarded under full and open competition, suggesting a competitive bidding process.
- The contract duration of over 4 years provides stability for critical IT operations.
- The incumbent contractor, Leidos, Inc., likely possesses institutional knowledge of CMS systems.
Sector Analysis
This contract falls within the IT services sector, specifically focusing on application hosting and end-user support. The market for such services is large and competitive, with numerous providers offering cloud, managed hosting, and IT support solutions. Comparable spending benchmarks would typically involve analyzing other large government contracts for similar IT infrastructure and application management services, often measured by cost per application or cost per user.
Small Business Impact
There is no indication of a small business set-aside for this contract, nor are there explicit subcontracting requirements mentioned in the provided data. This suggests that the primary award went to a large business. The impact on the small business ecosystem would depend on whether Leidos, Inc. engages small businesses as subcontractors, which is not detailed here.
Oversight & Accountability
Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures would be defined in the contract's performance work statement and service level agreements. Transparency is generally facilitated through contract award databases like FPDS-NG, though detailed performance metrics may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- CMS IT Modernization
- Federal Health IT Services
- Government Cloud Computing Services
- End-User Support Contracts
- Application Hosting Services
Risk Flags
- Cost Overruns Risk (Time and Materials)
- Scope Creep Potential
- Vendor Lock-in
- Performance Monitoring Challenges
Tags
it-services, application-hosting, end-user-support, health-and-human-services, centers-for-medicare-and-medicaid-services, time-and-materials, full-and-open-competition, large-contract, virginia, leidos-inc
Frequently Asked Questions
What is this federal contract paying for?
Department of Health and Human Services awarded $166.9 million to LEIDOS, INC.. THE PURPOSE OF THIS ACTION IS TO PROVIDE FY22 FUNDING FROM PROJECT 000010 HOSTING OPERATIONS AND END-USER SUPPORT (0511: PROGRAM OPERATIONS_DIRECT:DISC), TO PROVIDE END TO END APPLICATION HOSTING SERVICES FOR OVER 300 CMS BUSINESS APPLICATIONS. THE
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
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 $166.9 million.
What is the period of performance?
Start: 2022-09-29. End: 2026-11-30.
What is the historical spending pattern for application hosting and end-user support at CMS?
Analyzing historical spending patterns for application hosting and end-user support at CMS is crucial for understanding cost trends and identifying potential efficiencies. While specific historical data for this exact contract is not provided, CMS, as a large federal agency managing complex healthcare IT systems, has consistently invested significant resources in maintaining and upgrading its technological infrastructure. Past contracts for similar services would likely show a steady increase in spending, driven by the growing number of applications, increasing data volumes, and the need for enhanced cybersecurity and user support. Benchmarking this $167 million award against previous multi-year contracts for hosting and support would reveal whether costs have remained stable, increased, or decreased relative to the scope of services provided and inflation.
How does the pricing structure (Time and Materials) compare to other government IT hosting contracts?
The Time and Materials (T&M) pricing structure used for this contract is common in government IT services, particularly when the scope of work is not precisely defined at the outset or is expected to evolve. However, T&M contracts carry inherent risks of cost escalation because the government pays for the actual labor hours and material costs incurred by the contractor, plus a fixed fee or percentage for profit. Compared to fixed-price contracts, T&M offers more flexibility but less cost certainty. Many government agencies prefer firm-fixed-price (FFP) contracts for well-defined services to ensure budget predictability. For IT hosting, FFP contracts are often used for standardized services, while T&M might be employed for more complex, evolving, or support-oriented tasks where precise effort is hard to estimate upfront. The government's ability to control costs under a T&M contract heavily relies on robust oversight, detailed tracking of hours and materials, and strong negotiation skills.
What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?
Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) are critical for ensuring the successful delivery of application hosting and end-user support services under this contract. While the specific KPIs and SLAs are not detailed in the provided data, they would typically encompass metrics related to system uptime and availability (e.g., 99.9% uptime), response times for end-user support requests (e.g., critical issues resolved within 2 hours), incident resolution times, data backup and recovery success rates, and security compliance adherence. These metrics are essential for measuring the contractor's performance against contractual obligations and ensuring the reliability and efficiency of CMS's critical IT infrastructure. Failure to meet these KPIs/SLAs would likely trigger contractual remedies, such as service credits or penalties, and could impact future contract awards.
What is Leidos, Inc.'s track record with similar large-scale government IT hosting contracts?
Leidos, Inc. has a substantial track record in providing large-scale IT services to various government agencies, including the Department of Health and Human Services (HHS) and its sub-agencies like CMS. Their experience often includes managing complex IT infrastructure, application hosting, cybersecurity, and end-user support for critical government systems. Evaluating their past performance on similar contracts would involve reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), any documented issues or successes, and their ability to manage large budgets and complex technical requirements. Given their incumbent status with CMS for these services, it suggests a level of satisfaction with their previous performance, though continuous monitoring is always necessary to ensure ongoing quality and value.
What is the potential impact of this contract on the broader federal IT services market?
This contract, valued at approximately $167 million, represents a significant award within the federal IT services market, particularly for application hosting and end-user support. Such large contracts awarded through full and open competition can influence market dynamics by setting benchmarks for pricing, service delivery, and technological capabilities. For companies like Leidos, Inc., securing such a substantial contract reinforces their position as a major player in the federal IT landscape. It also signals continued government investment in maintaining and supporting critical legacy and modern applications within large agencies like CMS. The success or challenges encountered in executing this contract can provide valuable lessons and insights for other agencies and contractors operating in the federal IT space.
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 › IT AND TELECOM - IT MANAGEMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 3
Pricing Type: TIME AND MATERIALS (Y)
Evaluated Preference: NONE
Contractor Details
Address: 1750 PRESIDENTS ST FL 5, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $217,019,136
Exercised Options: $166,900,496
Current Obligation: $166,900,496
Actual Outlays: $116,988,167
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Parent Contract
Parent Award PIID: GS35F116AA
IDV Type: FSS
Timeline
Start Date: 2022-09-29
Current End Date: 2026-11-30
Potential End Date: 2027-09-28 00:00:00
Last Modified: 2025-11-26
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