Leidos awarded $86.5M contract for HUD IT support, raising questions about competition and value
Contract Overview
Contract Amount: $86,506,544 ($86.5M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Housing and Urban Development
Start Date: 2021-02-28
End Date: 2024-02-27
Contract Duration: 1,094 days
Daily Burn Rate: $79.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: PROVIDE END USER SUPPORT SERVICES FOR DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.
Place of Performance
Location: RESTON, FAIRFAX County, VIRGINIA, 20190
State: Virginia Government Spending
Plain-Language Summary
Department of Housing and Urban Development obligated $86.5 million to LEIDOS, INC. for work described as: PROVIDE END USER SUPPORT SERVICES FOR DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT. Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of over three years suggests a long-term need for these services. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Performance is managed by the Department of Housing and Urban Development itself. 5. The contract value is substantial, indicating a critical IT support function for HUD. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller firms.
Value Assessment
Rating: questionable
The contract's value of $86.5 million over three years for IT support services is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar government contracts. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can sometimes lead to higher costs if not managed rigorously, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure warrants close scrutiny to ensure cost efficiency.
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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary qualifications or when urgency dictates a direct award. The lack of competition means that potential cost savings that could arise from a bidding process were not realized. It also limits the government's ability to explore a wider range of solutions or innovative approaches from different providers.
Taxpayer Impact: The absence of competition means taxpayers may not have received the best possible price for these essential IT support services. Without competing bids, there is less pressure on the contractor to offer the most cost-effective solution, potentially leading to higher overall expenditure.
Public Impact
Federal employees within the Department of Housing and Urban Development benefit from reliable IT infrastructure and support. Essential government functions related to housing and urban development are enabled by the continuity of these IT services. The contract supports IT operations primarily within HUD's Virginia-based facilities. The contract likely supports a workforce of IT professionals employed by Leidos, contributing to the IT services sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potential cost savings for taxpayers.
- Cost Plus Fixed Fee contract type can incentivize higher costs if not closely monitored.
- Lack of transparency in the procurement process due to sole-source nature.
- Potential for vendor lock-in given the long-term nature and sole-source award.
Positive Signals
- Leidos is a large, established government contractor with significant experience in IT services.
- The contract ensures continuity of essential IT support for a critical federal agency.
- The fixed fee component provides some level of cost predictability for the government.
Sector Analysis
The IT services sector within the federal government is vast, encompassing a wide range of support, development, and maintenance activities. This contract falls under computer systems design services, a significant sub-sector. Federal spending in this area often focuses on maintaining legacy systems, modernizing infrastructure, and providing cybersecurity. Comparable contracts in this space can range from millions to billions of dollars, depending on the scope and duration, with agencies like HUD relying heavily on IT for their operations.
Small Business Impact
This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. Consequently, this award does not directly benefit the small business ecosystem through set-asides. While Leidos, as a large prime contractor, may engage small businesses as subcontractors, the absence of a formal set-aside or explicit subcontracting goals means opportunities for small businesses are not guaranteed or prioritized under this specific award.
Oversight & Accountability
Oversight for this contract is primarily managed by the Department of Housing and Urban Development's contracting officers and program managers. As a sole-source award, the justification for this approach would be documented internally. Transparency is limited due to the non-competitive nature. There is no specific mention of an Inspector General's direct involvement in the award phase, though the HUD OIG would have jurisdiction over audits and investigations related to contract performance and potential fraud or abuse.
Related Government Programs
- Federal Civilian IT Support Services
- Department of Housing and Urban Development IT Modernization Efforts
- Cost-Plus Fixed Fee IT Contracts
- Sole-Source IT Procurements
Risk Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Lack of competition
- Long contract duration without re-competition
Tags
it-services, computer-systems-design, hud, leidos-inc, definitive-contract, sole-source, cost-plus-fixed-fee, federal-civilian, virginia, it-support
Frequently Asked Questions
What is this federal contract paying for?
Department of Housing and Urban Development awarded $86.5 million to LEIDOS, INC.. PROVIDE END USER SUPPORT SERVICES FOR DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT.
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
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 $86.5 million.
What is the period of performance?
Start: 2021-02-28. End: 2024-02-27.
What is the justification for awarding this contract on a sole-source basis?
The provided data indicates the contract was awarded as 'NOT COMPETED,' which is synonymous with a sole-source award. Federal procurement regulations typically require agencies to compete contracts to ensure fair and open competition and obtain the best value for the government. Sole-source awards are exceptions, usually justified under specific circumstances such as when only one responsible source is available, or in cases of urgent and compelling need. Without further documentation from HUD, the precise justification for this sole-source award remains unclear. Agencies must publicly justify sole-source awards above certain thresholds, and this information is typically available through sources like SAM.gov's contract award justifications.
How does the Cost Plus Fixed Fee (CPFF) contract type compare to other IT support contracts?
Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with other contract types like Firm-Fixed-Price (FFP), where the price is set regardless of the contractor's costs, incentivizing efficiency. CPFF contracts are often used when the scope of work is not well-defined or is expected to change, offering flexibility. However, they carry a higher risk of cost growth compared to FFP, as the government bears the cost risk. For IT support, FFP might be preferred for well-defined services, while CPFF could be used for research, development, or complex integration projects where uncertainty is high. The choice of CPFF here suggests potential uncertainty in the scope or requirements for HUD's IT support.
What is Leidos's track record with similar IT support contracts for federal agencies?
Leidos, Inc. is a major government contractor with extensive experience in providing IT services across various federal agencies, including defense, civilian, and intelligence communities. They have a history of managing large-scale IT support, system integration, cybersecurity, and cloud migration projects. Their track record includes numerous contracts with agencies similar to HUD, such as the Department of Veterans Affairs, the General Services Administration, and various defense departments. While specific performance metrics for this particular HUD contract are not detailed here, Leidos generally possesses the scale and expertise to handle complex IT requirements. However, past performance on other contracts can vary, and a deeper dive into specific past performance reviews and contract close-outs would be necessary for a comprehensive assessment.
What are the potential risks associated with a sole-source IT support contract of this duration?
A sole-source IT support contract lasting over three years carries several risks. Firstly, the lack of competition means HUD may be paying a premium for services, as there was no competitive pressure to drive down prices. Secondly, the government risks becoming dependent on a single vendor (vendor lock-in), making it difficult and costly to switch providers in the future, even if performance or pricing becomes unsatisfactory. Thirdly, without the regular scrutiny of a competitive bidding process, there's a potential for complacency or reduced innovation from the contractor over the contract's life. Finally, the Cost Plus Fixed Fee structure, combined with a sole-source award, increases the risk of cost overruns if not managed with extremely diligent oversight and robust performance metrics.
How does this contract's value compare to overall federal IT spending?
The $86.5 million awarded to Leidos represents a fraction of the total federal IT spending, which typically runs into the tens of billions of dollars annually. For example, federal IT spending has historically been in the range of $90-$110 billion per year. While $86.5 million is a significant sum for a single contract, it is not an outlier in the context of the vast federal IT landscape. However, the manner of its award (sole-source) and its contract type (CPFF) are more critical factors for analysis than its absolute value relative to total federal IT spending. The focus should be on ensuring this specific expenditure represents good value for money and effective service delivery for HUD's needs.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - APLLICATIONS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: 86615321R00012
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 1750 PRESIDENTS ST, 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: $102,076,781
Exercised Options: $86,506,544
Current Obligation: $86,506,544
Actual Outlays: $75,962,217
Subaward Activity
Number of Subawards: 115
Total Subaward Amount: $29,951,891
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2021-02-28
Current End Date: 2024-02-27
Potential End Date: 2024-02-27 00:00:00
Last Modified: 2024-09-30
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