Department of Education's $46.5M virtual data center contract awarded to NTT DATA Services without competition

Contract Overview

Contract Amount: $46,452,653 ($46.5M)

Contractor: NTT Data Services Federal Government, LLC

Awarding Agency: Department of Education

Start Date: 2017-08-29

End Date: 2018-08-31

Contract Duration: 367 days

Daily Burn Rate: $126.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: :IGF::OT::IGF: THIS CONTRACT PROVIDES FEDERAL STUDENT AID'S VIRTUAL DATA CENTER OPERATIONS, MAINTENANCE, AND ENHANCEMENTS SERVICES. THE PERIOD OF PERFORMANCE IS 9/2017 TO 8/31/2018.

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Education obligated $46.5 million to NTT DATA SERVICES FEDERAL GOVERNMENT, LLC for work described as: :IGF::OT::IGF: THIS CONTRACT PROVIDES FEDERAL STUDENT AID'S VIRTUAL DATA CENTER OPERATIONS, MAINTENANCE, AND ENHANCEMENTS SERVICES. THE PERIOD OF PERFORMANCE IS 9/2017 TO 8/31/2018. Key points: 1. The contract's value of $46.5M for a single year of virtual data center operations and maintenance represents a significant investment in IT infrastructure. 2. Awarded as a definitive contract with a firm-fixed-price structure, it aims to provide cost certainty for the Department of Education. 3. The lack of competition raises questions about potential price overruns and the absence of market-driven cost efficiencies. 4. Performance is benchmarked against similar IT service contracts, with a focus on operational uptime and service level agreements. 5. This contract positions NTT DATA Services as a key provider for essential federal IT infrastructure, specifically within the student aid domain. 6. The contract's duration of approximately one year (367 days) suggests a focus on immediate operational needs or a bridge to a larger, future requirement.

Value Assessment

Rating: fair

The contract's value of over $46 million for a single year of virtual data center operations and maintenance is substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar government contracts. The firm-fixed-price structure provides some cost certainty, but the absence of competition may have led to a higher price than could have been achieved through a more open process. Further analysis would require access to detailed cost breakdowns and comparisons with industry standards for similar services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The justification for this approach is not provided in the available data. Sole-source awards can sometimes be necessary for specialized services or when a specific contractor possesses unique capabilities. However, they typically result in less price competition and may not achieve the best value for the government compared to fully competed contracts. The lack of multiple bidders means there was no opportunity for market forces to drive down costs or encourage innovative solutions.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without a bidding process, there is less assurance that the price reflects the most economical option available in the market.

Public Impact

The primary beneficiaries are the Department of Education, which receives essential IT infrastructure support for its virtual data center. The services delivered include operations, maintenance, and enhancements for the virtual data center, crucial for the functioning of federal student aid programs. The geographic impact is primarily within the operational sphere of the Department of Education's IT infrastructure, likely supporting national student aid services. Workforce implications may include the direct employment of IT professionals by NTT DATA SERVICES FEDERAL GOVERNMENT, LLC to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award limits opportunities for other vendors and potential innovation.
Absence of performance metrics or detailed outcomes makes value assessment challenging.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
NTT DATA SERVICES FEDERAL GOVERNMENT, LLC is an established federal IT contractor.
Contract supports critical federal student aid operations.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader IT services industry. The federal government is a major consumer of these services, relying on them for everything from data center operations to software development and cybersecurity. The market for IT services is highly competitive, with numerous large and small businesses vying for government contracts. This specific contract addresses the operational needs of a federal agency's virtual data center, a common requirement across many government departments. Comparable spending benchmarks would typically involve analyzing other contracts for similar data center operations and maintenance services, considering factors like scope, duration, and service level agreements.

Small Business Impact

This contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to NTT DATA SERVICES FEDERAL GOVERNMENT, LLC, a large business, suggests that the primary focus was on the capabilities and capacity of the awarded contractor rather than promoting small business participation. This could limit opportunities for small businesses to engage in this specific area of federal IT support.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Education's contracting officers and program managers. As a definitive contract, it is subject to standard federal procurement regulations and oversight. Transparency regarding the specific oversight mechanisms, performance reviews, and any Inspector General involvement would require further investigation into the contract's administration and reporting. The firm-fixed-price nature of the contract implies that the government is primarily concerned with the delivery of specified services at an agreed-upon price.

Related Government Programs

Federal Student Aid IT Services
Virtual Data Center Operations
IT Infrastructure Support Contracts
Department of Education IT Modernization

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency on justification for sole-source

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $46.5 million to NTT DATA SERVICES FEDERAL GOVERNMENT, LLC. :IGF::OT::IGF: THIS CONTRACT PROVIDES FEDERAL STUDENT AID'S VIRTUAL DATA CENTER OPERATIONS, MAINTENANCE, AND ENHANCEMENTS SERVICES. THE PERIOD OF PERFORMANCE IS 9/2017 TO 8/31/2018.

Who is the contractor on this award?

The obligated recipient is NTT DATA SERVICES FEDERAL GOVERNMENT, LLC.

Which agency awarded this contract?

Awarding agency: Department of Education (Department of Education).

What is the total obligated amount?

The obligated amount is $46.5 million.

What is the period of performance?

Start: 2017-08-29. End: 2018-08-31.

What is the track record of NTT DATA SERVICES FEDERAL GOVERNMENT, LLC with the Department of Education and other federal agencies?

NTT DATA SERVICES FEDERAL GOVERNMENT, LLC has a significant track record of serving federal agencies, including the Department of Education. As a large federal IT contractor, they have been involved in numerous contracts across various departments, providing a wide range of IT services. Their experience often includes managing complex IT infrastructure, developing software solutions, and providing operational support. Specific to the Department of Education, their past performance would likely include contracts related to student financial aid systems and IT infrastructure. A detailed review of their contract history with the agency and others would reveal their performance ratings, any past issues or commendations, and the types of services they have successfully delivered. This information is crucial for assessing their capability to fulfill the current contract's requirements effectively and reliably.

How does the cost of this contract compare to similar virtual data center operations and maintenance contracts awarded by the federal government?

Benchmarking the cost of this $46.5 million contract against similar federal contracts is challenging without more specific details on the scope of services, performance metrics, and the duration of comparison contracts. However, given that this is a sole-source award for approximately one year of service, the absence of competition is a significant factor. Typically, competitive solicitations result in lower prices due to market pressures. If comparable contracts for similar virtual data center operations and maintenance services were awarded through full and open competition, they might reveal a lower per-unit cost or a more favorable price-to-performance ratio. Further analysis would require identifying contracts with similar service level agreements (SLAs), infrastructure scope (e.g., number of servers, storage capacity, network complexity), and geographic reach, while also accounting for inflation and market trends over time.

What are the specific risks associated with awarding a contract of this magnitude on a sole-source basis?

Awarding a contract of this magnitude ($46.5 million) on a sole-source basis carries several inherent risks. Firstly, there is a significant risk of paying a premium price, as the absence of competition eliminates the downward pressure that multiple bids would typically exert. This can lead to suboptimal value for taxpayer dollars. Secondly, sole-source awards can stifle innovation; without the need to compete, the contractor may have less incentive to introduce novel or more efficient solutions. Thirdly, it limits the government's options and flexibility. If the contractor underperforms or if market conditions change, switching providers could be difficult and costly. Finally, it raises concerns about transparency and fairness in the procurement process, potentially discouraging other capable vendors from pursuing future opportunities if they perceive the playing field as uneven.

What is the expected effectiveness of NTT DATA SERVICES FEDERAL GOVERNMENT, LLC in managing the Department of Education's virtual data center operations and maintenance?

The expected effectiveness of NTT DATA SERVICES FEDERAL GOVERNMENT, LLC in managing the Department of Education's virtual data center operations and maintenance hinges on their past performance, technical capabilities, and the clarity of the contract's performance work statement (PWS). As an established federal IT contractor, NTT DATA likely possesses the necessary expertise and resources. However, the effectiveness will be measured against specific performance metrics and service level agreements (SLAs) outlined in the contract, such as uptime percentages, response times for maintenance, and successful implementation of enhancements. Without access to these detailed performance expectations and historical data on their performance with similar critical infrastructure, a definitive assessment of effectiveness is difficult. The Department of Education's own oversight and contract management will play a crucial role in ensuring the contractor meets its obligations.

How has the Department of Education's spending on virtual data center operations and maintenance evolved over the past five years?

Analyzing the Department of Education's spending on virtual data center operations and maintenance over the past five years would provide crucial context for this $46.5 million contract. This historical spending data could reveal trends in IT infrastructure investment, whether spending has increased, decreased, or remained stable. It could also indicate shifts in strategy, such as a move towards cloud-based solutions or consolidation of data centers. Understanding this evolution helps in assessing whether the current contract's value is consistent with historical patterns or represents a significant departure. For instance, a steady increase in spending might suggest growing demand for services or rising costs, while a decrease could indicate efficiency gains or outsourcing shifts. Without this historical data, it's difficult to determine if this contract represents a typical investment or an anomaly.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Nippon Telegraph and Telephone Corporation (UEI: 690626718)

Address: 13880 DULLES CORNER LN STE 200, HERNDON, VA, 20171

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

Financial Breakdown

Contract Ceiling: $140,977,638

Exercised Options: $49,215,145

Current Obligation: $46,452,653

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $1,132,845

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline