Agriculture's $168M Financial Management System contract awarded to CGI Federal shows mixed value and limited competition

Contract Overview

Contract Amount: $167,792,846 ($167.8M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of Agriculture

Start Date: 2016-07-28

End Date: 2023-07-13

Contract Duration: 2,541 days

Daily Burn Rate: $66.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF ADP SOFTWARE OPERATIONS&MAINTENANCE, HOSTING AND REPORTING FOR THE FINANCIAL MANAGEMENT SYSTEM / SHARED SERVICE PROVIDER

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20250

State: District of Columbia Government Spending

Plain-Language Summary

Department of Agriculture obligated $167.8 million to CGI FEDERAL INC. for work described as: IGF::OT::IGF ADP SOFTWARE OPERATIONS&MAINTENANCE, HOSTING AND REPORTING FOR THE FINANCIAL MANAGEMENT SYSTEM / SHARED SERVICE PROVIDER Key points: 1. Value for money appears fair, with a significant portion of the contract value allocated to IT services and maintenance. 2. Competition dynamics indicate a sole-source award, raising concerns about price discovery and potential overpayment. 3. Risk indicators are moderate, stemming from the long duration of the contract and the sole-source nature. 4. Performance context is tied to essential financial management operations for the Department of Agriculture. 5. Sector positioning places this contract within the broader IT services and government modernization landscape.

Value Assessment

Rating: fair

The contract's value of approximately $168 million over its lifespan suggests a substantial investment in financial management systems. Benchmarking against similar large-scale IT service contracts for federal agencies indicates that pricing for such comprehensive solutions can vary widely. However, without more granular data on the specific services provided and their market rates, a precise value-for-money assessment is challenging. The fixed-price nature of the contract provides some cost certainty, but the lack of competition limits the ability to definitively state if the pricing is optimal.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning only one vendor, CGI Federal Inc., was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to less price negotiation leverage for the government and can limit the exploration of innovative solutions from a wider market.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that can arise from robust competition. The government may pay a premium without the assurance that the best possible price was secured.

Public Impact

The Department of Agriculture's financial management operations are directly supported, ensuring continuity in fiscal processes. Federal employees across various departments relying on accurate financial data will benefit from the system's maintenance and operation. The contract supports IT infrastructure and services within the District of Columbia, where the agency is headquartered. The contract sustains jobs within CGI Federal Inc., contributing to the IT services sector workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness for taxpayers.
Long contract duration (over 7 years) increases the risk of vendor lock-in and potential for price increases over time.
Lack of transparency in the sole-source justification makes it difficult to assess if alternatives were adequately considered.

Positive Signals

The contract supports a critical function (financial management) for a major federal agency.
Fixed-price contract type offers some predictability in costs.
The contractor, CGI Federal Inc., has a long-standing presence and experience in government IT services.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a significant segment of the IT services market supporting government operations. The total federal spending on IT services is in the tens of billions annually, with a substantial portion dedicated to maintaining and modernizing legacy systems and implementing new financial management solutions. This contract represents a notable investment within this category, focusing on the operational continuity and reporting capabilities of the Department of Agriculture's financial systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Consequently, there are no direct subcontracting opportunities mandated for small businesses through this specific award. The primary contractor, CGI Federal Inc., is a large business, and its subcontracting activities would be governed by broader federal regulations for large prime contractors, rather than specific set-asides for this particular contract.

Oversight & Accountability

Oversight for this contract would typically reside with the Department of Agriculture's contracting officers and program managers. The Office of the Inspector General (OIG) for the Department of Agriculture may also conduct audits or investigations into the contract's performance and financial management. Transparency is generally facilitated through contract databases like FPDS, though the sole-source nature might limit public insight into the justification and negotiation process.

Related Government Programs

Federal Financial Management Systems
Shared Service Provider Contracts
IT Operations and Maintenance Contracts
Department of Agriculture IT Spending

Risk Flags

Sole-source award
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $167.8 million to CGI FEDERAL INC.. IGF::OT::IGF ADP SOFTWARE OPERATIONS&MAINTENANCE, HOSTING AND REPORTING FOR THE FINANCIAL MANAGEMENT SYSTEM / SHARED SERVICE PROVIDER

Who is the contractor on this award?

The obligated recipient is CGI FEDERAL INC..

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Office of the Chief Financial Officer).

What is the total obligated amount?

The obligated amount is $167.8 million.

What is the period of performance?

Start: 2016-07-28. End: 2023-07-13.

What is the historical spending trend for financial management systems at the Department of Agriculture?

Analyzing historical spending on financial management systems at the Department of Agriculture requires access to detailed procurement data over multiple fiscal years. Typically, agencies like the USDA invest consistently in these systems due to their critical role in managing federal funds, ensuring compliance, and reporting financial status. Spending can fluctuate based on system upgrades, modernization efforts, or the consolidation of services. Without specific historical data for this contract or related systems, it's difficult to pinpoint precise trends. However, it's common for such systems to require ongoing maintenance and support contracts that represent a significant portion of the total lifecycle cost, often in the millions of dollars annually for a large agency.

How does the cost per year for this contract compare to similar financial management IT contracts in other federal agencies?

Comparing the annual cost of this $168 million contract (spread over approximately 7 years, equating to roughly $24 million per year) to similar financial management IT contracts across federal agencies is challenging without specific, comparable contract details. Factors such as the scope of services (e.g., software development, hosting, maintenance, user support), the complexity of the agency's financial operations, and the specific technologies used significantly influence costs. Large-scale financial system contracts for agencies like the Department of Defense or Treasury can range from tens to hundreds of millions annually. Given the sole-source nature, it's harder to benchmark against competitively bid contracts, which often yield lower prices. A detailed comparison would require analyzing contracts with similar service levels, user bases, and system functionalities.

What are the specific IT services included in this $168 million contract?

The data provided indicates that this contract covers 'ADP SOFTWARE OPERATIONS & MAINTENANCE, HOSTING AND REPORTING FOR THE FINANCIAL MANAGEMENT SYSTEM / SHARED SERVICE PROVIDER.' This suggests a comprehensive suite of IT services essential for the functioning of the Department of Agriculture's financial management system. These services likely include software maintenance and updates, ensuring the system runs smoothly and securely; hosting, which involves managing the infrastructure (servers, storage, networking) where the software resides; and reporting capabilities, enabling the generation of financial statements, analyses, and compliance reports. The contract may also encompass technical support, system administration, and potentially minor enhancements or bug fixes.

What is CGI Federal Inc.'s track record with large federal IT contracts, particularly in financial management?

CGI Federal Inc. has a substantial track record of performing large-scale IT contracts for various U.S. federal agencies, including those in financial management and shared services. They are a well-established government contractor with extensive experience in areas such as enterprise resource planning (ERP), financial systems, and IT infrastructure management. Their portfolio often includes complex, mission-critical systems. While specific performance metrics for individual contracts are not always publicly detailed, CGI Federal's continued success in winning and executing large federal contracts suggests a generally positive performance history. However, like any large contractor, they may have faced challenges or criticisms on specific projects, which would typically be documented in past performance reviews or IG reports.

What are the potential risks associated with a sole-source award for a critical system like the financial management system?

The primary risks associated with a sole-source award for a critical system like the financial management system are related to cost, innovation, and vendor dependency. Without competition, the government loses the leverage to negotiate the lowest possible price, potentially leading to higher costs for taxpayers. The lack of multiple bidders can also stifle innovation, as there's less incentive for the incumbent contractor to proactively introduce cutting-edge solutions or efficiencies. Furthermore, a sole-source award can create vendor lock-in, making it difficult and costly to switch providers in the future, even if performance or pricing becomes unsatisfactory. This dependency can weaken the government's bargaining position over the long term.

How does the 'Computer Systems Design Services' NAICS code relate to the services provided under this contract?

The North American Industry Classification System (NAICS) code 541512, 'Computer Systems Design Services,' is a broad category that encompasses a wide range of IT services, including the design, development, integration, and support of computer systems. The services described for this contract – 'SOFTWARE OPERATIONS & MAINTENANCE, HOSTING AND REPORTING' – fall squarely within this classification. While 'design' is in the title, the code also covers the ongoing management, maintenance, and operational support of these systems. Therefore, providing hosting, maintenance, and reporting for a financial management system is a typical service offered by companies classified under NAICS 541512, reflecting the integration and ongoing support of complex IT solutions.

Industry Classification

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

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › OTHER QUALITY, TEST, INSPECT SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: AG-3144-S-16-0001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12601 FAIR LAKES CIR, FAIRFAX, VA, 22033

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

Financial Breakdown

Contract Ceiling: $167,792,846

Exercised Options: $167,792,846

Current Obligation: $167,792,846

Actual Outlays: $77,749,966

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $3,768,564

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSN316201200011W

IDV Type: GWAC

Timeline