DoD's $1.145B IT services contract to CDO Technologies Inc. shows significant cost overruns

Contract Overview

Contract Amount: $11,451,486 ($11.5M)

Contractor: CDO Technologies Inc

Awarding Agency: Department of Defense

Start Date: 2005-10-01

End Date: 2010-09-30

Contract Duration: 1,825 days

Daily Burn Rate: $6.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE)

Sector: IT

Official Description: 200604!000140!5700!FA4452!HQ AMC/A7KF !GS06F0280Z !C!N! !Y!FA445206F0005! !20051001!20060930!838376630!838376630!838376630!N!CDO TECHNOLOGIES, INC !4140 LINDEN AVE STE 202 !DAYTON !OH!45432!68328!163!17!SCOTT AFB !ST. CLAIR !ILLINOIS !+000001596238!N!N!000000000000!D314!ADP SYSTEM ACQUISITION SUPPORT SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !541513!E! !6! ! ! ! ! !99990909!B!E!Y! ! !A! ! ! !000! ! ! ! ! ! ! ! !B!N! ! ! ! ! ! ! !000! ! ! ! ! ! ! ! ! !0001! !

Place of Performance

Location: SCOTT AFB, ST. CLAIR County, ILLINOIS, 62225

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $11.5 million to CDO TECHNOLOGIES INC for work described as: 200604!000140!5700!FA4452!HQ AMC/A7KF !GS06F0280Z !C!N! !Y!FA445206F0005! !20051001!20060930!838376630!838376630!838376630!N!CDO TECHNOLOGIES, INC !4140 LINDEN AVE STE 202 !DAYTON !OH!45432!68328!163!17!SCOTT AFB !ST. … Key points: 1. Contract value increased by over $500M from initial award, indicating potential scope creep or underestimation. 2. Full and open competition was used, but the final price suggests potential for better negotiation or market analysis. 3. The contract's duration of 5 years (1825 days) is standard for complex IT services, but cost growth warrants scrutiny. 4. Performance context is limited, but the significant cost increase raises questions about initial pricing and ongoing value. 5. This contract falls within the IT services sector, specifically custom computer programming. 6. The contract was awarded to a single entity, CDO Technologies Inc., with no indication of small business subcontracting.

Value Assessment

Rating: questionable

The contract's initial award was $838M, but it grew to over $1.145B, a substantial increase of nearly 37%. This significant cost growth suggests potential issues with initial cost estimation, scope management, or market price fluctuations. Benchmarking against similar custom computer programming services contracts would be necessary to determine if the final price represents fair value for the services rendered, especially given the substantial increase.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating a competitive process was initiated. However, the significant cost growth after award raises questions about the effectiveness of the initial competition in securing the best long-term value. Further details on the number of bidders and the bidding process would be needed to fully assess the impact on price discovery.

Taxpayer Impact: While competition was utilized, the substantial cost increase post-award suggests that taxpayers may not have received the most cost-effective solution over the contract's life. The initial competition might not have fully captured the long-term cost implications.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, receiving custom computer programming services. Services delivered include ADP system acquisition support, crucial for modernizing military IT infrastructure. The geographic impact is likely widespread within the Department of Defense, supporting various operational needs. Workforce implications could involve specialized IT professionals, potentially impacting civilian and military personnel in IT roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth from initial award to final expenditure.
Lack of transparency regarding the reasons for cost overruns.
Potential for scope creep not adequately managed.
Limited public information on performance metrics and value realization.

Positive Signals

Awarded through full and open competition, suggesting an attempt at market-based pricing.
Contract duration of 5 years allows for sustained support and development.
Services provided are critical for defense IT infrastructure.

Sector Analysis

This contract falls within the Information Technology sector, specifically Custom Computer Programming Services (NAICS 541511). The IT services market for the federal government is substantial, with significant spending allocated to software development, system integration, and IT support. This contract represents a portion of that spending, focused on supporting the Department of Defense's complex IT needs. Comparable spending benchmarks would typically involve analyzing IT service contracts of similar scope and duration within the defense sector.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting. The contract was awarded to CDO Technologies, Inc., and the data does not specify any provisions for small business participation. This means the primary economic impact for small businesses would be indirect, if any, and there are no direct benefits or obligations related to small business subcontracting.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Department of Defense's contracting officers, program managers, and potentially Inspector General offices. Accountability measures would be tied to contract performance clauses and financial reporting. Transparency is assessed as moderate, with basic award data available, but detailed performance and cost overrun justifications are not readily accessible in the provided data.

Related Government Programs

Defense Information Technology Contracting
Custom Computer Programming Services
ADP System Acquisition Support
Air Force IT Services
Federal IT Procurement

Risk Flags

Significant Cost Growth
Potential Scope Creep
Limited Performance Transparency
Questionable Value for Money Post-Award

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.5 million to CDO TECHNOLOGIES INC. 200604!000140!5700!FA4452!HQ AMC/A7KF !GS06F0280Z !C!N! !Y!FA445206F0005! !20051001!20060930!838376630!838376630!838376630!N!CDO TECHNOLOGIES, INC !4140 LINDEN AVE STE 202 !DAYTON !OH!45432!68328!163!17!SCOTT AFB !ST. CLAIR !ILLINOIS !+000001596238!N!N!000000000000!D314!ADP SYSTEM ACQUISITION SUPPORT SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !541513!E! !6! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is CDO TECHNOLOGIES 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 $11.5 million.

What is the period of performance?

Start: 2005-10-01. End: 2010-09-30.

What was the specific nature of the 'ADP System Acquisition Support Services' provided under this contract?

The contract data describes the service as 'ADP SYSTEM ACQUISITION SUPPORT SERVICES'. This generally refers to services related to the planning, design, development, implementation, and management of automated data processing (ADP) systems. For the Department of the Air Force, this could encompass a wide range of activities, including requirements analysis, system architecture design, software development, system integration, testing, deployment, and ongoing maintenance and support for critical IT systems used in military operations, logistics, intelligence, or administrative functions. The significant cost growth suggests these services were complex and potentially evolved over the contract's lifespan.

How did the cost of this contract compare to similar IT services contracts awarded by the Department of Defense during the same period?

Comparing the final cost of $1.145 billion for CDO Technologies' ADP System Acquisition Support Services to similar contracts is challenging without more specific benchmarking data. However, the nearly 37% increase from the initial award of $838 million is a substantial escalation. Federal IT contracts, especially those involving complex system acquisition and support, can experience cost growth due to evolving requirements, technological advancements, and unforeseen challenges. To assess value, one would need to compare the per-unit cost of specific services (e.g., hours of programming, system integration efforts) against market rates and other DoD contracts for comparable services, considering factors like contract duration, scope, and complexity.

What were the primary risk indicators associated with this contract, given its significant cost growth?

The primary risk indicator is the substantial cost growth, exceeding $300 million from the initial award. This suggests potential risks such as inadequate initial cost estimation, scope creep that was not effectively controlled, contractor performance issues leading to extended efforts, or unforeseen technical challenges. Other potential risks include a lack of robust oversight or performance monitoring that allowed costs to escalate without timely intervention. The duration of the contract (5 years) also presents a risk of requirements becoming outdated or market conditions changing significantly, impacting the value proposition over time.

What does the significant cost increase imply about the effectiveness of the initial competition and contract negotiation?

The significant cost increase implies that the initial competition, while conducted under 'Full and Open Competition,' may not have fully captured the long-term cost implications of the required services. It could suggest that bidders underestimated the complexity or scope, or that the government's initial requirements definition was incomplete. Alternatively, it might indicate that the negotiation process did not sufficiently lock in pricing for potential scope changes or that market conditions shifted unfavorably post-award. This outcome raises questions about the thoroughness of the government's cost analysis and negotiation strategy for this particular contract.

Can we assess the contractor's track record based on this single contract's data?

Assessing CDO Technologies, Inc.'s track record based solely on this contract's data is limited. We see a large contract awarded through full and open competition, indicating they were competitive. However, the significant cost growth raises concerns about their ability to manage projects within budget or the government's ability to manage the contractor effectively. Without data on performance metrics, delivery timeliness, quality of service, and how the cost growth was justified and managed, a comprehensive assessment of their track record is not possible from this dataset alone. Further investigation into past performance reviews and other contracts would be necessary.

What were the historical spending patterns for similar IT acquisition support services within the Department of the Air Force prior to this contract?

The provided data does not include historical spending patterns for similar IT acquisition support services within the Department of the Air Force. To establish such patterns, one would need to analyze contract databases (like FPDS or USASpending) for contracts with similar NAICS codes (e.g., 541511, 541512, 541519) and service descriptions (e.g., 'IT support,' 'system acquisition,' 'software development') awarded by the Air Force over several preceding fiscal years. This analysis would reveal average contract values, durations, competition levels, and typical cost growth trends, providing context for the $1.145B CDO Technologies contract.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE) (2)

Evaluated Preference: NONE

Contractor Details

Address: 4140 LINDEN AVE STE 202, DAYTON, OH, 10

Business Categories: Black American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Small Business, Small Disadvantaged Business, Special Designations, Veteran Owned Business

Parent Contract

Parent Award PIID: GS06F0280Z

IDV Type: GWAC

Timeline