DoD's $28.7M IT contract with The Centech Group Inc. shows potential value concerns

Contract Overview

Contract Amount: $28,705,459 ($28.7M)

Contractor: THE Centech Group Inc.

Awarding Agency: Department of Defense

Start Date: 2002-12-10

End Date: 2010-03-31

Contract Duration: 2,668 days

Daily Burn Rate: $10.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: 200308!000078!5700!GP03 !AFFTC/PKRA R&D CONTRACTS FTC !GS35F5440H !C!N! !Y!F0461102F0064P00004!20030505!20030930!191341627!191341627!191341627!N!THE CENTECH GROUP, INC !4600 NORTH FAIRFAX DRIVE, !ARLINGTON !VA!22203!21600!029!06!EDWARDS AFB !KERN !CALIFORNIA!+000000653000!N!N!000000000000!D399!OTHER ADP & TELECOMMUNICATION SERVICES !S1 !SERVICES !3000!NOT DISCERNABLE OR CLASSIFIED !518210!E! !6! ! !C! ! !99990909!B!F!N! ! !A! ! ! !000! ! ! ! ! ! ! !Y!A!N!N! ! ! ! ! ! !* ! ! ! ! ! ! ! ! ! !0001! !

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22042

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $28.7 million to THE CENTECH GROUP INC. for work described as: 200308!000078!5700!GP03 !AFFTC/PKRA R&D CONTRACTS FTC !GS35F5440H !C!N! !Y!F0461102F0064P00004!20030505!20030930!191341627!191341627!191341627!N!THE CENTECH GROUP, INC !4600 NORTH FAIRFAX DRIVE, !ARLINGTON !VA!22203!21600!029!06!EDWARDS AFB !KERN … Key points: 1. The contract's duration and total value suggest a significant investment in IT services. 2. Competition was full and open, indicating a potentially competitive pricing environment. 3. The contract was awarded as a delivery order, which can sometimes lead to less predictable costs. 4. The use of Time and Materials pricing introduces risk for cost overruns. 5. The specific services procured fall under Computer Systems Design, a broad category. 6. The contractor has a track record with the Department of Defense, suggesting some familiarity with government requirements.

Value Assessment

Rating: fair

The total award amount of $28.7 million over a period of approximately 8 years (2668 days) for IT services warrants scrutiny. While the contract was competed, the Time and Materials (T&M) pricing structure, coupled with a significant number of modifications (4), raises concerns about cost control and potential for overruns. Benchmarking this against similar IT service contracts for the Department of Defense would be necessary to definitively assess value for money, but the extended duration and T&M pricing suggest a need for close oversight.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The data indicates 4 modifications, which is not excessively high for a contract of this duration, but it's important to understand if these modifications significantly altered the scope or cost. The level of competition is generally positive for price discovery, but the specific details of the bidding process and the number of actual bids received are not provided.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple vendors to offer competitive pricing, potentially leading to lower costs for the government.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, receiving IT services. Services likely include computer systems design, integration, and potentially support, crucial for military operations. The contract's geographic impact is centered around Edwards AFB in Kern County, California. Workforce implications may include direct employment by The Centech Group and potential indirect impacts on the local IT sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials (T&M) pricing can lead to cost overruns if not closely managed.
The extended duration of the contract (over 8 years) increases the risk of scope creep and evolving requirements.
The number of modifications (4) warrants review to ensure they did not significantly inflate costs or alter the original intent.
Lack of specific details on the services procured makes it difficult to benchmark performance and value.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
The contractor, The Centech Group, Inc., has experience with government contracts.
The contract is for essential IT services supporting military operations.

Sector Analysis

This contract falls within the broader IT services sector, specifically Computer Systems Design Services. The federal government is a major consumer of these services, with significant spending across various agencies. The market for IT services is highly competitive, with numerous large and small businesses offering a wide range of capabilities. This contract's value of $28.7 million over its lifespan places it as a moderately sized award within the federal IT landscape. Comparable spending benchmarks would typically look at IT modernization, system integration, and cybersecurity contracts within the Department of Defense.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss=false, sb=false). Therefore, there are no direct subcontracting implications for small businesses arising from a small business set-aside. The primary impact on the small business ecosystem would be through potential subcontracting opportunities if The Centech Group chose to engage them, which is not specified in the provided data. The absence of a set-aside means larger businesses were likely the primary focus of the competition.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force, given its agency. Accountability measures would be embedded in the contract terms, delivery schedules, and performance metrics. Transparency is facilitated by federal procurement databases like FPDS, where this data originates. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

IT Services
Computer Systems Design
Department of Defense Contracts
Air Force IT Procurement
Time and Materials Contracts

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Extended contract duration increases risk of scope creep.
Need for detailed review of contract modifications.
Lack of specific service details hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.7 million to THE CENTECH GROUP INC.. 200308!000078!5700!GP03 !AFFTC/PKRA R&D CONTRACTS FTC !GS35F5440H !C!N! !Y!F0461102F0064P00004!20030505!20030930!191341627!191341627!191341627!N!THE CENTECH GROUP, INC !4600 NORTH FAIRFAX DRIVE, !ARLINGTON !VA!22203!21600!029!06!EDWARDS AFB !KERN !CALIFORNIA!+000000653000!N!N!000000000000!D399!OTHER ADP & TELECOMMUNICATION SERVICES !S1 !SERVICES !3000!NOT DISCERNABLE OR CLASSIFIED !518210!E! !6! ! !C! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is THE CENTECH GROUP INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $28.7 million.

What is the period of performance?

Start: 2002-12-10. End: 2010-03-31.

What is the track record of The Centech Group, Inc. with federal contracts, particularly within the Department of Defense?

The Centech Group, Inc. has a history of receiving federal contracts, primarily with the Department of Defense. The provided data shows this specific contract (GS35F5440H) awarded in 2003 and ending in 2010, with a total value of $28.7 million. This indicates a multi-year engagement for IT services. Further investigation into other contract awards, performance reviews, and any past performance issues or commendations would be necessary for a comprehensive understanding of their track record. Their experience with the Air Force at Edwards AFB suggests a familiarity with the agency's operational environment and procurement processes.

How does the $28.7 million total award value compare to similar IT service contracts for the Department of Defense during the contract period?

Benchmarking the $28.7 million total award value requires context regarding the specific IT services procured and the contract duration. This contract spanned approximately 8 years (2668 days), from 2002 to 2010. Averaged annually, this represents roughly $3.6 million per year. During that era, the Department of Defense was heavily investing in IT modernization and support. While $3.6 million annually might be considered moderate for large-scale IT projects, it could be substantial for specific system design or support functions. Without knowing the precise scope (e.g., network infrastructure, software development, cybersecurity), direct comparison is challenging, but it falls within the range of significant, multi-year IT service engagements for federal agencies.

What are the primary risks associated with the Time and Materials (T&M) pricing structure used in this contract?

The primary risk associated with Time and Materials (T&M) pricing is the potential for cost overruns. Unlike fixed-price contracts, T&M contracts reimburse the contractor for the actual labor hours and material costs incurred. This structure can incentivize longer project durations or less efficient work, as the contractor's profit is directly tied to the amount of time and resources spent. For the government, this necessitates robust oversight, detailed tracking of hours and expenses, and clear definition of work requirements to prevent scope creep and ensure fair pricing. The four modifications on this contract could indicate areas where T&M pricing proved difficult to manage within the initial scope.

How effective was the full and open competition in ensuring competitive pricing for these IT services?

Full and open competition is designed to maximize the number of potential bidders, thereby fostering a competitive environment that ideally leads to better pricing for the government. While the contract was awarded under this mechanism, the effectiveness in ensuring competitive pricing cannot be definitively assessed solely from the provided data. Key factors influencing pricing effectiveness include the number of bids received, the technical qualifications of the bidders, and the specific market conditions at the time of award. The subsequent modifications and the T&M pricing structure might suggest that initial pricing assumptions were either insufficient or that the scope evolved, potentially mitigating some of the benefits of the initial competition.

What does the contract's duration and total value suggest about the nature and importance of the IT services procured?

The contract's duration of approximately 8 years and a total value of $28.7 million indicate that the procured IT services were likely critical, long-term needs for the Department of the Air Force at Edwards AFB. Such extended periods suggest services related to the sustainment, modernization, or integration of complex systems, rather than short-term projects. The significant financial commitment underscores the importance of these IT functions to the base's operations, potentially encompassing areas like command and control, data management, or specialized software development and maintenance. The longevity also implies a stable requirement that the agency sought to fulfill through a single, comprehensive contract.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 4600 FAIRFAX DR FL 4, ARLINGTON, VA, 22203

Business Categories: Category Business, Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F5440H

IDV Type: FSS

Timeline