DoD's $304M IT Services Contract with PERATON INC. Awarded in 2002, Extended Through 2012
Contract Overview
Contract Amount: $304,650,735 ($304.7M)
Contractor: Peraton Inc.
Awarding Agency: Department of Defense
Start Date: 2002-07-26
End Date: 2012-09-28
Contract Duration: 3,717 days
Daily Burn Rate: $82.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Place of Performance
Location: HERNDON, FAIRFAX County, VIRGINIA, 20170
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $304.7 million to PERATON INC. for work described as: Key points: 1. Contract value of over $304 million suggests a significant, long-term IT services requirement for the Department of Defense. 2. The contract's duration of nearly 10 years indicates a stable, ongoing relationship for essential IT support. 3. Awarded under full and open competition, this suggests a robust bidding process that likely yielded competitive pricing. 4. The 'Cost Plus Award Fee' (CPAF) structure incentivizes performance while allowing for cost reimbursement, a common approach for complex IT services. 5. The absence of small business set-aside flags suggests the primary contractor is likely a large business, with potential subcontracting opportunities. 6. The contract's focus on 'Other Computer Related Services' points to a broad range of IT support, potentially including infrastructure, software, and consulting.
Value Assessment
Rating: good
Benchmarking the value of this contract is challenging without specific deliverables and performance metrics. However, a $304 million spend over nearly a decade for IT services within the Department of Defense is substantial and suggests a significant investment. The CPAF structure, while common, can lead to higher costs if award fees are consistently met. Further analysis would require comparing the per-unit cost of services rendered against industry benchmarks for similar IT support contracts within the federal government.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This typically leads to a more competitive environment, potentially driving down prices and ensuring the government receives the best value. The presence of 4 bids suggests a healthy level of interest from potential contractors for this significant IT services requirement.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive marketplace that can lead to more cost-effective solutions and better pricing for government services.
Public Impact
The Department of Defense benefits from sustained and comprehensive IT services, crucial for its operational effectiveness. Personnel within the DoD likely receive enhanced IT support, potentially improving productivity and access to critical systems. The contract supports IT infrastructure and services across various DoD components, ensuring continuity and modernization. The IT sector, particularly large service providers, benefits from significant contract awards, fostering job creation and technological advancement within the industry.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The Cost Plus Award Fee (CPAF) structure, while incentivizing performance, can sometimes lead to higher overall costs if award criteria are broadly met without strict cost controls.
- The long duration of the contract (nearly 10 years) could potentially lead to vendor lock-in or a decrease in competitive pressure over time if not managed proactively.
- Without detailed performance metrics and outcomes, it's difficult to definitively assess the 'award fee' component and whether it truly reflects exceptional value for money.
- The broad category of 'Other Computer Related Services' might obscure specific areas where costs could be scrutinized more closely.
- The contract's significant value could represent a substantial portion of a specific IT service budget, making any inefficiencies particularly impactful.
Positive Signals
- Awarded under full and open competition, indicating a robust and competitive bidding process.
- The contract's long-term nature suggests a stable and reliable IT support solution for the Department of Defense.
- The Cost Plus Award Fee (CPAF) structure is designed to incentivize high performance and achieve specific program objectives.
- The contract's substantial value signifies a critical need for IT services within the DoD, likely supporting essential functions.
- The existence of 4 bids suggests a competitive market for these types of IT services, potentially leading to better service delivery.
Sector Analysis
This contract falls within the Information Technology (IT) sector, specifically focusing on computer-related services. The federal IT services market is vast, with agencies consistently investing in maintaining and upgrading their technological infrastructure. Contracts of this magnitude are typical for large federal agencies like the Department of Defense, which require extensive and ongoing IT support. Comparable spending benchmarks would involve analyzing other large-scale IT service contracts awarded to prime contractors by major federal departments over similar timeframes.
Small Business Impact
The contract does not indicate any specific small business set-aside provisions. This suggests that the primary focus was on securing the best overall solution, likely from larger, established IT service providers. While the prime contract may not have been set aside, there is potential for significant subcontracting opportunities for small businesses within the 'Other Computer Related Services' domain, depending on the prime contractor's subcontracting plan and the specific services required.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA) and the contracting officer within the Department of Defense. The 'Cost Plus Award Fee' structure implies performance monitoring against defined criteria to determine award fees. Transparency would be enhanced through contract award databases and potentially through Inspector General reviews if performance or cost issues arise. Accountability rests with the contractor to meet performance standards and with the agency to ensure fair administration and oversight.
Related Government Programs
- DoD IT Modernization Programs
- Defense Information Systems Agency (DISA) Contracts
- Federal Civilian IT Services Spending
- IT Services for National Security Agencies
Risk Flags
- Long contract duration may reduce competitive pressure over time.
- CPAF structure requires diligent oversight to manage costs and ensure value.
- Broad service category ('Other Computer Related Services') could obscure specific cost drivers.
- Potential for vendor lock-in due to long-term relationship.
Tags
it-services, department-of-defense, cost-plus-award-fee, definitive-contract, full-and-open-competition, large-contract, it-support, defense-contract-management-agency, virginia, computer-related-services, long-term-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $304.7 million to PERATON INC.. See the official description on USAspending.
Who is the contractor on this award?
The obligated recipient is PERATON 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 $304.7 million.
What is the period of performance?
Start: 2002-07-26. End: 2012-09-28.
What specific types of 'Other Computer Related Services' were included under this contract, and how did their scope evolve over its nearly 10-year duration?
The 'Other Computer Related Services' category is broad and can encompass a wide array of IT functions. For this specific contract, it likely included services such as IT infrastructure management, network support, cybersecurity, software development and maintenance, help desk support, and potentially IT consulting. Over its nearly 10-year duration (2002-2012), the scope likely evolved to incorporate emerging technologies and changing defense requirements. For instance, early years might have focused on maintaining legacy systems, while later years could have seen a shift towards cloud computing integration, data analytics, or enhanced cybersecurity measures in response to evolving threats. Without access to the detailed contract modifications and statements of work, the precise evolution of services remains speculative, but the long timeframe suggests adaptation to technological advancements and DoD strategic priorities.
How did the 'Award Fee' component of the contract function, and what were the typical performance metrics used to determine fee payouts?
The Cost Plus Award Fee (CPAF) structure involves the government reimbursing the contractor for allowable costs plus a fee that is composed of a base fee and an award fee. The award fee is earned based on the contractor's performance against pre-defined criteria, often outlined in a Performance Evaluation Plan (PEP). For this DoD contract, typical performance metrics could have included system uptime and availability, response times for IT support tickets, successful project completion rates, adherence to security protocols, user satisfaction surveys, and innovation in service delivery. The contracting officer or a designated representative would evaluate the contractor's performance against these metrics, typically on a periodic basis (e.g., quarterly or annually), and determine the amount of award fee earned. The goal is to incentivize superior performance beyond basic contract requirements.
Given the contract's value and duration, what was the potential impact on small businesses through subcontracting opportunities?
While this contract was awarded under full and open competition and does not appear to have had a small business set-aside, large federal contracts often involve significant subcontracting. PERATON INC., as the prime contractor, would likely have had opportunities to subcontract portions of the work to small businesses, particularly in specialized IT service areas. The extent of small business participation would depend on the prime contractor's subcontracting goals and performance, as well as the specific needs of the IT services required. Agencies often encourage or mandate small business subcontracting plans for large prime contracts. Without specific subcontracting reports for this contract, it's difficult to quantify the exact impact, but historically, large IT service contracts can generate substantial opportunities for small businesses in areas like software development, cybersecurity, or specialized IT support.
How does the $304 million total value compare to other large IT service contracts awarded by the Department of Defense during the 2002-2012 period?
A total contract value of $304 million spread over nearly a decade (approximately $30 million per year) is a substantial, but not extraordinary, figure for IT services within the Department of Defense during the 2002-2012 timeframe. This era saw significant federal IT spending, driven by modernization efforts, the Global War on Terror, and the increasing reliance on technology for command and control. Major IT service contracts awarded by DoD components like the Defense Information Systems Agency (DISA) or various service branches often reached hundreds of millions, and sometimes billions, of dollars. Therefore, while significant, this contract's value places it within the range of large, long-term IT support agreements rather than being an outlier. Benchmarking would require comparing it against similar scope and duration contracts for IT support services across different DoD entities.
What risks are associated with a 'Cost Plus Award Fee' contract structure for long-term IT services, and how are they typically mitigated?
The primary risks associated with Cost Plus Award Fee (CPAF) contracts include potential cost overruns if cost controls are not robust, and the possibility of the contractor focusing on achieving award fee criteria rather than overall value or efficiency. For long-term IT services, there's also a risk of the contractor becoming complacent or 'coasting' once award fee targets are consistently met. Mitigation strategies employed by the government typically involve: 1) Clearly defining performance metrics that align with mission objectives and encourage efficiency, not just activity. 2) Implementing strong oversight and auditing processes to scrutinize costs and ensure they are allowable and reasonable. 3) Regularly reviewing and updating performance criteria to reflect evolving needs and technological advancements. 4) Negotiating a reasonable base fee and award fee pool that incentivizes performance without being excessive. 5) Maintaining open communication channels with the contractor to address potential issues proactively.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer Related Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 4
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Veritas Capital Fund Management, L.L.C. (UEI: 078628925)
Address: 5009 CENTENNIAL BLVD, COLORADO SPRINGS, CO, 80919
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2002-07-26
Current End Date: 2012-09-28
Potential End Date: 2012-09-28 00:00:00
Last Modified: 2020-02-27
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