DoD's $181M IT support contract to SAIC shows strong competition and fair value

Contract Overview

Contract Amount: $181,130,960 ($181.1M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of Defense

Start Date: 2012-09-21

End Date: 2018-05-31

Contract Duration: 2,078 days

Daily Burn Rate: $87.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: LABOR HOURS

Sector: IT

Official Description: INFORMATION TECHNOLOGY SUPPORT SERVICES IGF::OT::IGF

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $181.1 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: INFORMATION TECHNOLOGY SUPPORT SERVICES IGF::OT::IGF Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. Value for money appears reasonable given the extensive duration and scope of services. 3. Risk indicators are low, with a clear performance period and established contractor. 4. Sector positioning places this within the broad IT support services for defense. 5. Performance context suggests a long-term engagement for critical infrastructure support.

Value Assessment

Rating: good

The contract's total value of $181 million over approximately six years suggests a significant investment in IT support. Benchmarking against similar large-scale IT service contracts within the Department of Defense indicates that the overall pricing is within a reasonable range, especially considering the scope and duration. The 'labor hours' contract type allows for flexibility but requires diligent oversight to ensure efficiency and prevent cost overruns. Without specific per-unit labor rates or detailed service breakdowns, a precise value-for-money assessment is challenging, but the competitive award process provides some assurance of fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' meaning all responsible sources were permitted to submit bids. The presence of 4 bids (no) suggests a healthy level of competition for this significant IT support requirement. A competitive environment generally leads to better price discovery and encourages contractors to offer more favorable terms and innovative solutions to win the award. The multiple bidders indicate that the market has sufficient capacity and interest in providing these services to the Department of the Army.

Taxpayer Impact: The full and open competition likely resulted in a more competitive price for taxpayers compared to a sole-source or limited competition award. This process helps ensure that government funds are used efficiently by driving down costs through market forces.

Public Impact

The Department of the Army benefits from sustained and reliable information technology support services. End-users within the Army receive essential IT services, enabling mission operations. The contract supports IT infrastructure and operations primarily within Alabama (st, sn). The duration of the contract implies a stable demand for IT support labor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep given the 'labor hours' contract type and long duration.
Ensuring consistent service quality across all delivery orders over the contract's lifespan.
Managing contractor performance effectively to meet evolving IT needs of the Army.

Positive Signals

Awarded through full and open competition, indicating a competitive pricing environment.
Long-term contract provides stability for IT support services.
Established contractor (SAIC) likely has a proven track record with the DoD.

Sector Analysis

This contract falls within the Information Technology (IT) services sector, specifically focusing on telecommunications and IT support. The market for IT services to the federal government is substantial, with agencies like the Department of Defense being major consumers. This contract represents a significant portion of spending within the IT support sub-sector, contributing to the overall IT services market size. Comparable spending benchmarks would involve looking at other large-scale IT support and telecommunications contracts awarded by various federal agencies.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside provisions (ss: false, sb: false). While SAIC is a large business, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on SAIC's own subcontracting plan and the specific requirements of the delivery orders issued under this contract.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Army contracting officers and program managers. They are responsible for monitoring contractor performance, approving delivery orders, and ensuring compliance with contract terms. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IT Professional Services
Telecommunications Services
Information Technology Support
Department of Defense IT Contracts
Army IT Services

Risk Flags

Potential for cost overruns due to 'labor hours' contract type.
Need for robust oversight to manage performance and prevent scope creep.
Ensuring consistent service quality over a long contract duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $181.1 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. INFORMATION TECHNOLOGY SUPPORT SERVICES IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $181.1 million.

What is the period of performance?

Start: 2012-09-21. End: 2018-05-31.

What is SAIC's track record with the Department of Defense for IT support services?

Science Applications International Corporation (SAIC) has a long-standing and extensive history of providing IT and technical services to the Department of Defense (DoD). They are a major government contractor frequently awarded large-scale contracts across various branches of the military and defense agencies. Their portfolio typically includes areas such as enterprise IT, cybersecurity, cloud computing, data analytics, and systems engineering. For IT support services specifically, SAIC has demonstrated capability in managing complex networks, providing help desk support, maintaining hardware and software, and implementing new technologies. Their consistent presence and significant contract awards suggest a strong working relationship and a perceived ability to meet the demanding requirements of the DoD. However, like any large contractor, performance can vary across individual contracts, and specific oversight reports or performance evaluations would provide a more granular view.

How does the $181 million value compare to similar IT support contracts within the DoD?

The $181 million total value for this IT support services contract, awarded over approximately six years (2012-2018), positions it as a substantial, but not exceptionally large, contract within the Department of Defense (DoD) IT spending landscape. The DoD awards numerous IT contracts annually, many of which exceed this value, particularly those involving major system integrations, cybersecurity initiatives, or large-scale cloud migrations. However, for a contract focused on 'Wired Telecommunications Carriers' and general IT support services, $181 million represents a significant investment. When compared to similar contracts for IT support and telecommunications services awarded during the same period, this contract's value appears to be within a common range for multi-year, comprehensive service agreements supporting a specific agency or command, like the Department of the Army. The 'labor hours' pricing model also influences how value is perceived, as it is directly tied to the effort expended.

What are the primary risks associated with a 'labor hours' contract of this magnitude and duration?

A 'labor hours' contract, especially one valued at $181 million and spanning nearly six years, carries inherent risks primarily related to cost control and performance management. The main risk is the potential for cost overruns if labor hours are not efficiently utilized or if the scope of work expands without adequate adjustments. Unlike fixed-price contracts, the government pays for the time and effort expended, making diligent oversight crucial. There's a risk of 'scope creep,' where tasks not originally envisioned are performed under the guise of labor hours, potentially inflating costs. Furthermore, ensuring consistent quality and productivity from contractor personnel over an extended period requires robust performance metrics and active management. The government must actively monitor the hours billed against the work accomplished to ensure value for money and prevent contractor inefficiency from being rewarded. Effective management requires detailed tracking, regular performance reviews, and clear communication channels.

How effective is 'full and open competition' in ensuring value for money for IT services?

Full and open competition is generally considered the most effective method for ensuring value for money in government contracting, including for IT services. By allowing all responsible sources to bid, it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive pricing and innovative solutions. This broad competition drives down costs as contractors vie for the award. It also provides the government with a wider range of technical approaches and service offerings to choose from, enabling selection of the best overall value, not just the lowest price. For IT services, where technology evolves rapidly, open competition can encourage contractors to propose more modern and efficient solutions. The presence of multiple bidders, as indicated by the 4 bids received for this contract, further strengthens the competitive dynamic and provides a strong basis for believing that the awarded price reflects fair market value.

What are the implications of this contract being awarded to a large business like SAIC for small businesses?

When a large contract like this $181 million IT support services award goes to a large business prime contractor such as SAIC, the primary implication for small businesses is the potential for subcontracting opportunities. Large federal contractors are often required to meet small business subcontracting goals as part of their contract terms. Therefore, SAIC would likely seek to engage small businesses to perform specific portions of the work, such as specialized IT support, niche technology services, or regional support. This provides revenue streams and opportunities for small businesses to gain experience and build their track record within the federal contracting space. However, the extent to which small businesses benefit depends on SAIC's subcontracting plan, the specific tasks delegated, and the competitive landscape among small businesses seeking those subcontracts. Without explicit set-aside provisions for small businesses in the prime contract, direct award opportunities are limited.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

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

Offers Received: 4

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 12010 SUNSET HILLS RD, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $547,943,824

Exercised Options: $181,130,960

Current Obligation: $181,130,960

Subaward Activity

Number of Subawards: 134

Total Subaward Amount: $20,189,169

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ06D0016

IDV Type: IDC

Timeline