DoD's $86.8M IT Services Contract with P E SYSTEMS, INC. faces scrutiny over value and competition

Contract Overview

Contract Amount: $46,501,188 ($46.5M)

Contractor: P E Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2002-04-09

End Date: 2006-02-28

Contract Duration: 1,421 days

Daily Burn Rate: $32.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: 200208!000083!5700!GV68 !ESC/ACK !GS35F4891H !C!N! !N!F1962802F8161 !20020409!20040131!867796989!867796989!867796989!N!PESYSTEMS, INC !9990 LEE HIGHWAY !FAIRFAX !VA!22030!01375!037!24!ANDOVER ESTATES !ST. MARY S !MARYLAND !+000004584228!N!N!000000000000!R499!OTHER PROFESSIONAL SERVICES !A7 !ELECTRONICS AND COMMUNICATION !3000!NOT DISCERNABLE OR CLASSIFIED !334290!E! !6! ! ! ! ! !99990909!B! ! ! ! !A! ! ! !000! ! ! ! ! ! ! !Y!A!N!N! ! ! ! !D! !* ! ! ! ! ! ! ! ! ! !0001!

Place of Performance

Location: FAIRFAX, FAIRFAX CITY County, VIRGINIA, 22030

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $46.5 million to P E SYSTEMS, INC. for work described as: 200208!000083!5700!GV68 !ESC/ACK !GS35F4891H !C!N! !N!F1962802F8161 !20020409!20040131!867796989!867796989!867796989!N!PESYSTEMS, INC !9990 LEE HIGHWAY !FAIRFAX !VA!22030!01375!037!24!ANDOVER ESTATES !ST. M… Key points: 1. The contract awarded to P E SYSTEMS, INC. for IT services is substantial at $86.8M. 2. Competition method was 'FULL AND OPEN', but the specific pricing strategy ('TIME AND MATERIALS') warrants further review. 3. Potential risks include cost overruns due to the 'TIME AND MATERIALS' pricing model and the 'OTHER PROFESSIONAL SERVICES' category. 4. The sector is IT, specifically 'Other Computer Related Services', a common area for significant federal spending.

Value Assessment

Rating: questionable

The contract's total value is $86.8M. Without specific per-unit cost data or benchmarks for 'OTHER PROFESSIONAL SERVICES', it's difficult to definitively assess value. The 'TIME AND MATERIALS' pricing model can also lead to less predictable costs compared to fixed-price contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION', which is generally positive for price discovery. However, the 'TIME AND MATERIALS' pricing structure may not have fully optimized cost savings for the government.

Taxpayer Impact: While competition was open, the 'TIME AND MATERIALS' pricing could lead to higher-than-expected costs for taxpayers if not managed closely.

Public Impact

Taxpayers are funding a significant IT services contract for the Department of Defense. The 'TIME AND MATERIALS' contract type raises concerns about cost control and potential for overspending. The broad 'OTHER PROFESSIONAL SERVICES' category makes it challenging to benchmark against specific, comparable services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific per-unit cost data
Use of 'TIME AND MATERIALS' pricing
Broad service category ('OTHER PROFESSIONAL SERVICES')

Positive Signals

Awarded under 'FULL AND OPEN COMPETITION'

Sector Analysis

This contract falls within the IT sector, specifically 'Other Computer Related Services'. Federal spending in this area is consistently high, with agencies relying on contractors for a wide range of technical support and development. Benchmarks for such broad categories are difficult to establish.

Small Business Impact

The data indicates this contract was not awarded to small businesses (ss: false, sb: false). Larger prime contractors often handle significant IT service contracts, potentially subcontracting to smaller firms, but direct award data is not provided.

Oversight & Accountability

The contract was awarded by the Department of Defense through the Defense Contract Management Agency. Oversight would typically involve monitoring contract performance, expenditures, and adherence to terms, especially crucial given the 'TIME AND MATERIALS' pricing.

Related Government Programs

Other Computer Related Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Potential for cost overruns due to 'TIME AND MATERIALS' pricing.
Broad service category ('OTHER PROFESSIONAL SERVICES') hinders specific value assessment.
Lack of detailed per-unit cost data for benchmarking.
Contract duration (2002-2006) may mean current benchmarks are less relevant.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.5 million to P E SYSTEMS, INC.. 200208!000083!5700!GV68 !ESC/ACK !GS35F4891H !C!N! !N!F1962802F8161 !20020409!20040131!867796989!867796989!867796989!N!PESYSTEMS, INC !9990 LEE HIGHWAY !FAIRFAX !VA!22030!01375!037!24!ANDOVER ESTATES !ST. MARY S !MARYLAND !+000004584228!N!N!000000000000!R499!OTHER PROFESSIONAL SERVICES !A7 !ELECTRONICS AND COMMUNICATION !3000!NOT DISCERNABLE OR CLASSIFIED !334290!E! !6! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is P E SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $46.5 million.

What is the period of performance?

Start: 2002-04-09. End: 2006-02-28.

What specific IT services were provided under this contract, and how do they align with the 'OTHER PROFESSIONAL SERVICES' NAICS code?

The provided data lists the NAICS code as 541519 ('Other Computer Related Services') and the PSC code as R499 ('Architectural and Engineering Services, Other'). This broad categorization makes it difficult to ascertain the exact nature of the IT services rendered. Further details would be needed to understand if the services truly fit the NAICS code or if a more specific classification would have been appropriate.

How effectively did the 'FULL AND OPEN COMPETITION' process mitigate cost risks associated with the 'TIME AND MATERIALS' contract type?

While 'FULL AND OPEN COMPETITION' is a strong indicator of a robust procurement process, the 'TIME AND MATERIALS' (T&M) contract type inherently carries cost risk. T&M contracts pay the contractor for direct labor hours and costs, plus a fee. Effective mitigation relies heavily on stringent oversight, detailed cost tracking, and clear task definitions to prevent scope creep and ensure fair pricing.

What mechanisms were in place to ensure the $86.8M expenditure represented good value for the IT services provided?

Given the 'TIME AND MATERIALS' structure and the broad 'OTHER PROFESSIONAL SERVICES' category, ensuring good value likely depended on robust contract administration. This would include detailed monitoring of labor hours, rates, and direct costs, along with performance metrics. Without specific deliverables or fixed price points, value assessment is challenging and relies heavily on the government's ability to manage and audit the contractor's costs effectively.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 9990 LEE HWY STE 400, FAIRFAX, VA, 22030

Business Categories: 8(a) Program Participant, Category Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, Veteran Owned Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS35F4891H

IDV Type: FSS

Timeline