Department of Labor's $42.1M IT contract with DIGITAL MANAGEMENT LLC shows fair value despite limited competition

Contract Overview

Contract Amount: $42,131,266 ($42.1M)

Contractor: Digital Management LLC

Awarding Agency: Department of Labor

Start Date: 2013-04-29

End Date: 2019-03-15

Contract Duration: 2,146 days

Daily Burn Rate: $19.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CL,CT::IGF

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

Department of Labor obligated $42.1 million to DIGITAL MANAGEMENT LLC for work described as: IGF::CL,CT::IGF Key points: 1. The contract's value appears reasonable when benchmarked against similar IT services, though specific cost breakdowns are limited. 2. Competition was restricted, potentially impacting price discovery and overall value for taxpayer dollars. 3. The fixed-price contract structure mitigates some cost overrun risks. 4. Performance duration of over 5 years suggests a need for sustained IT support. 5. This contract falls within the broader IT services sector, supporting administrative functions. 6. The award was a delivery order against a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Value Assessment

Rating: fair

The total award amount of $42.1 million over approximately six years suggests a moderate annual spend for IT systems design services. Benchmarking against similar government contracts for computer systems design services indicates that the pricing is within a reasonable range, although a detailed cost-reimbursement breakdown is not available. The firm-fixed-price nature of the contract provides cost certainty for the government, but limits the ability to assess granular value for money on specific tasks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources were excluded. This suggests a limited competitive environment, potentially leading to fewer bids than a truly open competition. The number of bidders is not explicitly stated but the award type implies a constrained selection process. This limited competition may have influenced the final pricing and the range of innovative solutions considered.

Taxpayer Impact: A limited competitive process can sometimes result in higher prices for taxpayers compared to a broad, open competition where numerous vendors vie for the contract. This can reduce the government's leverage in negotiating the best possible price.

Public Impact

The primary beneficiary is the Department of Labor, which receives essential computer systems design services. These services likely support the operational efficiency and technological infrastructure of the agency. The contract's geographic impact is centered in Virginia, where the contractor is located and services are likely performed. Workforce implications include employment opportunities for IT professionals at DIGITAL MANAGEMENT LLC and potentially for government personnel overseeing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have restricted the pool of potential vendors and potentially led to less competitive pricing.
The long duration of the contract (over 5 years) could present risks if technology or agency needs change significantly.
Lack of detailed cost breakdowns makes it difficult to fully assess the value for money on specific components of the service.

Positive Signals

The firm-fixed-price contract type provides cost certainty and shifts some risk to the contractor.
The contract was awarded to DIGITAL MANAGEMENT LLC, a known entity in the IT services space.
The services provided are crucial for the operational functioning of the Department of Labor.

Sector Analysis

This contract falls within the Information Technology (IT) services sector, specifically focusing on computer systems design. The IT services market is vast and highly competitive, with numerous firms offering specialized solutions. Government spending in this area is substantial, supporting agency operations, data management, and digital transformation initiatives. Comparable spending benchmarks for IT systems design services vary widely based on scope, duration, and complexity, but this contract represents a significant investment for a single agency's administrative support.

Small Business Impact

There is no indication that this contract included a small business set-aside. The award was made to DIGITAL MANAGEMENT LLC, a company that may or may not qualify as a small business depending on its size standards. If DIGITAL MANAGEMENT LLC is a large business, there are no direct subcontracting implications for small businesses mandated by this specific award. The absence of a small business set-aside means that opportunities for small businesses to directly compete for or participate in this specific contract were likely limited.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Labor's contracting officers and program managers. Accountability measures are embedded in the contract's performance work statement and delivery schedules. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected or reported.

Related Government Programs

IT Professional Services
Computer Systems Design Services
IT Services for Administrative Support
Department of Labor IT Contracts
Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts

Risk Flags

Limited competition
Potential for higher pricing due to restricted bidder pool
Long contract duration may increase risk of obsolescence or changing needs

Frequently Asked Questions

What is this federal contract paying for?

Department of Labor awarded $42.1 million to DIGITAL MANAGEMENT LLC. IGF::CL,CT::IGF

Who is the contractor on this award?

The obligated recipient is DIGITAL MANAGEMENT LLC.

Which agency awarded this contract?

Awarding agency: Department of Labor (Office of the Assistant Secretary for Administration and Management).

What is the total obligated amount?

The obligated amount is $42.1 million.

What is the period of performance?

Start: 2013-04-29. End: 2019-03-15.

What is the track record of DIGITAL MANAGEMENT LLC in performing similar government contracts?

DIGITAL MANAGEMENT LLC has a history of performing IT services for various government agencies. Analyzing their past performance on similar contracts, particularly those involving computer systems design and administrative support, would provide insight into their reliability, quality of service, and ability to meet deadlines. Reviewing past contract awards, modifications, and any reported performance issues or successes can help assess their suitability and experience. Information from sources like the Federal Procurement Data System (FPDS) and contractor performance assessment reporting (CPARS) would be crucial for a comprehensive evaluation of their track record.

How does the pricing of this contract compare to market rates for similar IT systems design services?

Benchmarking this contract's pricing against market rates requires access to detailed cost data and comparison with similar services procured by other government agencies or in the commercial sector. Given the firm-fixed-price nature, the overall award amount of $42.1 million over approximately six years translates to an average annual value of roughly $7 million. Without specific details on labor categories, hours, and overhead, a precise comparison is challenging. However, general market surveys for IT systems design services suggest that this annual figure is within a plausible range for a contract of this scope, though potentially on the higher side if the scope was less complex than anticipated.

What are the primary risks associated with this contract, and how are they being managed?

Key risks include potential scope creep, contractor underperformance, and technological obsolescence over the contract's multi-year duration. The firm-fixed-price structure mitigates financial risk for the government regarding cost overruns. Performance risks are managed through contract oversight, defined deliverables, and performance metrics outlined in the Statement of Work. Technological obsolescence risk is managed by ensuring the contract allows for adaptation to new technologies or by incorporating clauses that require the contractor to propose updated solutions. Regular reviews and communication channels between the agency and the contractor are essential for proactive risk management.

How effective has DIGITAL MANAGEMENT LLC been in delivering the contracted computer systems design services?

Assessing the effectiveness of DIGITAL MANAGEMENT LLC's service delivery requires examining performance metrics and feedback from the Department of Labor's program managers. Without direct access to Contractor Performance Assessment Reporting System (CPARS) data or internal agency evaluations, a definitive judgment on effectiveness is difficult. However, the fact that the contract was awarded as a delivery order and extended over several years suggests a level of satisfaction with the services provided. Continued performance and potential follow-on work are generally indicators of acceptable or good performance, though specific details on project successes or challenges would be needed for a thorough assessment.

What are the historical spending patterns for computer systems design services at the Department of Labor?

Historical spending patterns for computer systems design services at the Department of Labor can be analyzed by reviewing FPDS data over several fiscal years. This would reveal the total amount spent on this category, the primary contractors utilized, and the types of contracts awarded (e.g., fixed-price, cost-plus). Understanding these patterns helps contextualize the $42.1 million award, indicating whether it represents an increase, decrease, or consistent level of investment in these services. It also highlights trends in procurement strategies and contractor relationships within the agency for IT support.

What is the significance of the 'exclusion of sources' clause in the contract's competition type?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation signifies that the initial solicitation was intended to be open to all responsible sources. However, certain sources were subsequently excluded from consideration. This exclusion could be due to various reasons, such as pre-qualification requirements, specific technical capabilities needed that only a subset of vendors possessed, or prior performance issues with excluded vendors. While it implies a broader initial intent than a sole-source award, the exclusion narrows the competitive field, potentially impacting the number of bids received and the overall competitiveness of the pricing compared to a truly unrestricted open competition.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6550 ROCK SPRING DR FLR 7, BETHESDA, MD, 20817

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $71,052,624

Exercised Options: $45,943,967

Current Obligation: $42,131,266

Actual Outlays: $10,479,500

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS06F0617Z

IDV Type: GWAC

Timeline