HUD awards $109.6M for data center services to Peraton Enterprise Solutions, a sole-source contract

Contract Overview

Contract Amount: $109,648,745 ($109.6M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Housing and Urban Development

Start Date: 2021-02-01

End Date: 2023-01-31

Contract Duration: 729 days

Daily Burn Rate: $150.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: DATA CENTER AND END USER SERVICES

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20410

State: District of Columbia Government Spending

Plain-Language Summary

Department of Housing and Urban Development obligated $109.6 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: DATA CENTER AND END USER SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract duration of 729 days (2 years) is standard for IT infrastructure services. 3. The fixed-price contract type shifts performance risk to the contractor. 4. The North American Industry Classification System (NAICS) code 518210 indicates a focus on computing infrastructure and hosting. 5. The contract's value of $109.6 million places it in the mid-to-large tier for IT services. 6. The absence of small business set-aside suggests a focus on large prime contractors.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the lack of competitive bids. However, the total award of $109.6 million over two years averages to approximately $54.8 million annually. Without comparable contract data or market research, it's difficult to definitively assess if this represents a fair market price. The fixed-price nature, however, is generally favorable for the government in managing cost certainty, provided the initial price was reasonable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one vendor can provide the required services, often due to proprietary technology, existing infrastructure integration, or urgent needs. The lack of competition means that price discovery through bidding was bypassed, which can lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive pressure to drive down prices. The government did not leverage the potential cost savings that competition typically provides.

Public Impact

The Department of Housing and Urban Development (HUD) benefits from continued access to essential data center and end-user services. This contract ensures the operational continuity of critical IT infrastructure supporting HUD's mission. The services provided are essential for managing housing programs and data across the nation. The contract supports IT jobs within the contractor's organization, likely concentrated in areas with Peraton's operational footprint.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to overpayment.
Lack of transparency in the procurement process due to sole-source nature.
Potential for vendor lock-in given the nature of data center services.
Performance risks are mitigated by fixed-price, but initial pricing is unverified.
No explicit small business subcontracting goals mentioned, potentially limiting opportunities for smaller firms.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Contract duration of two years allows for stable service delivery.
Peraton is an established government contractor with experience in IT services.
Services are critical for HUD's ongoing operations, ensuring continuity.
Contract award supports essential government functions related to housing and urban development.

Sector Analysis

The IT services sector, specifically within computing infrastructure, data processing, web hosting, and related services (NAICS 518210), is a significant area of federal spending. Agencies rely heavily on these services to maintain operations, manage vast amounts of data, and deliver citizen-facing applications. Federal spending in this category often involves large, multi-year contracts due to the complexity and scale of IT infrastructure. Comparable contracts in this space can range from tens to hundreds of millions of dollars, depending on the scope and duration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. This means the primary award went to Peraton Enterprise Solutions LLC, a large business. While there's no explicit requirement for subcontracting to small businesses in the provided data, large federal contracts often include subcontracting plans. The absence of a set-aside suggests that opportunities for small businesses might be limited to potential subcontracting roles, rather than direct prime contracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Housing and Urban Development's (HUD) contracting officers and program managers. As a definitive contract, it is subject to standard federal procurement regulations. Transparency is limited due to the sole-source nature of the award. Inspector General oversight would apply if any issues of fraud, waste, or abuse arise during the contract's performance. Accountability is established through the fixed-price terms and performance expectations outlined in the contract.

Related Government Programs

Federal Data Center Consolidation Initiative
Cloud Computing Services Contracts
IT Infrastructure Modernization Programs
End-User Computing Services

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for unverified pricing
Limited transparency in procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Housing and Urban Development awarded $109.6 million to PERATON ENTERPRISE SOLUTIONS LLC. DATA CENTER AND END USER SERVICES

Who is the contractor on this award?

The obligated recipient is PERATON ENTERPRISE SOLUTIONS LLC.

Which agency awarded this contract?

Awarding agency: Department of Housing and Urban Development (Department of Housing and Urban Development).

What is the total obligated amount?

The obligated amount is $109.6 million.

What is the period of performance?

Start: 2021-02-01. End: 2023-01-31.

What is Peraton Enterprise Solutions LLC's track record with federal IT service contracts, particularly those involving data center operations?

Peraton Enterprise Solutions LLC, and its parent company Peraton Inc., have a substantial track record in providing IT and mission support services to various U.S. federal agencies. They are known for handling complex systems integration, cybersecurity, and managed IT services. Their experience often includes large-scale infrastructure projects, network operations, and data center management. Prior to this specific HUD contract, Peraton has held numerous other federal contracts, including significant awards from agencies like the Department of Defense, NASA, and the intelligence community, often involving critical infrastructure and sensitive data. This background suggests they possess the technical capabilities and experience necessary for managing HUD's data center and end-user services.

How does the $109.6 million award compare to similar data center service contracts awarded by federal agencies?

The $109.6 million award for two years of data center and end-user services is substantial, placing it in the mid-to-large tier for IT infrastructure contracts. Annualized, it's approximately $54.8 million. Federal agencies frequently award contracts in this range for similar services, especially for agencies with significant IT footprints like HUD. For instance, other large agencies might award contracts for data center hosting, cloud migration, or managed IT services that fall within the $50-$100 million annual range. However, direct comparisons are difficult without knowing the specific service level agreements, scope of work, and performance metrics. The sole-source nature of this award also complicates direct value comparisons, as competitive bids often drive prices down.

What are the primary risks associated with a sole-source award for critical IT infrastructure like data center services?

The primary risk associated with a sole-source award for critical IT infrastructure is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to innovate or provide optimal value. Without competing bids, the government cannot be assured it received the best possible price or terms. There's also a risk of vendor lock-in, where the agency becomes heavily reliant on the sole provider, making future transitions difficult and potentially costly. Furthermore, the absence of competition can sometimes correlate with less transparency in the procurement process and potentially fewer opportunities for robust oversight or performance benchmarking against industry standards.

How effective are fixed-price contracts in managing costs and risks for data center services compared to other contract types?

Fixed-price contracts, like the one awarded to Peraton, are generally effective in managing costs and risks for the government when the scope of work is well-defined and unlikely to change significantly. For data center services, where operational requirements are often predictable, a firm fixed-price contract shifts the risk of cost overruns to the contractor. This provides the government with cost certainty. However, if the initial price was not adequately benchmarked or if unforeseen technical challenges arise that were not accounted for, the contractor might cut corners on quality or service to maintain profitability, or seek change orders. For highly dynamic or R&D-intensive IT projects, cost-plus contracts might be more appropriate, but for stable infrastructure services, fixed-price is often preferred for budget predictability.

What is the historical spending pattern for data center and IT infrastructure services at HUD?

Historical spending patterns for data center and IT infrastructure services at HUD would likely show a consistent need for these services to support its mission-critical operations. Agencies like HUD manage vast amounts of data related to housing programs, grants, and financial transactions, necessitating robust IT infrastructure. Spending in this area typically involves multi-year contracts for hardware, software, maintenance, and managed services. While the specific historical dollar amounts for HUD's data center services are not provided here, it's reasonable to assume a significant and ongoing investment in this area, potentially fluctuating based on modernization efforts, cloud adoption strategies, or infrastructure upgrades. The current $109.6M award represents a substantial commitment for the specified period.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 86615321R00007

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 15050 CONFERENCE CENTER DR, CHANTILLY, VA, 20151

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: $109,648,745

Exercised Options: $109,648,745

Current Obligation: $109,648,745

Actual Outlays: $109,648,745

Subaward Activity

Number of Subawards: 85

Total Subaward Amount: $18,972,031

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: YES

Timeline