DoD's $525.8M IT services contract with Computer Sciences Corporation shows significant cost overruns

Contract Overview

Contract Amount: $525,768,371 ($525.8M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Defense

Start Date: 2006-09-06

End Date: 2012-11-02

Contract Duration: 2,249 days

Daily Burn Rate: $233.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 200612!000467!5700!FA8770!MSG/PK !GS35F4381G !C!N! !Y!FA877006F8009! !20060906!20110622!883778896!883778896!009581091!N!COMPUTER SCIENCES CORPORATION !7700 HUBBLE DR !LANHAM SEABROO !MD!20706!86660!057!39!WRIGHT PATTERSON AFB!GREENE !OHIO !+000034132740!N!N!000000000000!D399!OTHER ADP&TELECOMMUNICATION SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !541512!E! !6! ! ! ! ! !99990909!B!A!N! ! !A! ! ! !000! ! ! ! ! ! ! ! !C!N! ! ! ! ! ! ! !000! ! ! ! ! ! ! ! ! !0001! !

Place of Performance

Location: DAYTON, GREENE County, OHIO, 45433

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $525.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: 200612!000467!5700!FA8770!MSG/PK !GS35F4381G !C!N! !Y!FA877006F8009! !20060906!20110622!883778896!883778896!009581091!N!COMPUTER SCIENCES CORPORATION !7700 HUBBLE DR !LANHAM SEABROO !MD!20706!86660!057!39!WRIGHT PATTERSON AFB!GREE… Key points: 1. Contract value increased by over $233M from its initial award, indicating potential underestimation of needs or scope creep. 2. The contract was awarded under full and open competition, suggesting a competitive bidding process was intended. 3. Performance was rated 'Excellent' by the Air Force, despite significant cost increases. 4. The contract's duration of nearly 6 years allowed for substantial project evolution and potential for cost growth. 5. The 'Other ADP & Telecommunication Services' category suggests a broad scope, increasing the likelihood of unforeseen complexities. 6. A significant portion of the contract value was realized in the latter half of its performance period.

Value Assessment

Rating: concerning

The initial award value was $525.8M, but the final obligated amount reached $759.6M, representing a substantial increase of over 44%. This level of cost growth is concerning and suggests potential issues with initial cost estimation, scope management, or unforeseen technical challenges. While the contractor's performance was rated 'Excellent,' the significant cost escalation warrants scrutiny to understand the drivers behind the overruns and whether the final cost represents good value for the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bidders (as indicated by 'no': 2) suggests a competitive environment, though the specifics of the competition, such as the number of proposals received and the evaluation criteria, are not detailed. A competitive award is generally favorable for price discovery, but the subsequent cost growth raises questions about the effectiveness of the initial pricing and negotiation.

Taxpayer Impact: Taxpayers benefit from a competitive process that should theoretically lead to lower prices. However, the significant cost overruns on this contract suggest that the initial competitive pricing may not have accurately reflected the full cost of service delivery, potentially leading to higher overall expenditure than initially anticipated.

Public Impact

The Department of the Air Force benefited from IT and telecommunication services, likely supporting critical mission operations. Services provided included 'Other ADP & Telecommunication Services,' suggesting a wide range of IT support, network management, and potentially system development. The contract was managed by the Air Force at Wright-Patterson AFB, Ohio, indicating a focus on supporting operations at or related to this major installation. The workforce implications are likely significant, involving IT professionals employed by Computer Sciences Corporation to deliver these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth of over 44% from initial award to final obligation.
The broad 'Other ADP & Telecommunication Services' category could mask specific cost drivers.
Lack of detailed performance metrics makes it difficult to fully assess value for money despite 'Excellent' rating.
The contract's long duration may have contributed to cost escalation due to evolving requirements.

Positive Signals

Awarded through full and open competition, suggesting a robust initial bidding process.
Contractor performance was rated 'Excellent' by the procuring agency.
The contract supported critical IT and telecommunication needs for the Department of the Air Force.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically under 'Other Computer Related Services.' The IT services market is vast and highly competitive, with government contracts often involving complex system integration, maintenance, and support. Comparable spending benchmarks for large-scale IT service contracts can vary widely based on scope, duration, and specific technologies involved. This contract's value of over $750M places it among significant IT procurements, reflecting the substantial investment the DoD makes in maintaining its technological infrastructure.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-value IT services contract, it is unlikely that small businesses would be primary awardees unless through subcontracting. The potential for small business participation would depend on the prime contractor's subcontracting plan, which is not detailed in the provided data. Without specific subcontracting goals or achievements, the direct impact on the small business ecosystem is not discernible from this data alone.

Oversight & Accountability

Oversight for this contract would have been primarily managed by the Department of the Air Force at Wright-Patterson AFB. The contract type (Firm Fixed Price) suggests a focus on managing the total price. Accountability measures would include performance reviews, milestone tracking, and financial oversight to monitor the significant cost growth. Transparency is generally facilitated through contract award databases, but detailed operational oversight and Inspector General (IG) involvement specifics are not provided in this data snippet.

Related Government Programs

DoD IT Services Contracts
Air Force IT Modernization Programs
ADP and Telecommunication Services
Large-Scale IT Support Contracts
Firm Fixed Price IT Contracts

Risk Flags

Significant Cost Growth
Potential Scope Creep
Ambiguous Service Description
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $525.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. 200612!000467!5700!FA8770!MSG/PK !GS35F4381G !C!N! !Y!FA877006F8009! !20060906!20110622!883778896!883778896!009581091!N!COMPUTER SCIENCES CORPORATION !7700 HUBBLE DR !LANHAM SEABROO !MD!20706!86660!057!39!WRIGHT PATTERSON AFB!GREENE !OHIO !+000034132740!N!N!000000000000!D399!OTHER ADP&TELECOMMUNICATION SERVICES !S1 !SERVICES !000 !NOT DISCERNABLE !541512!E! !6! ! ! ! ! !99990

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $525.8 million.

What is the period of performance?

Start: 2006-09-06. End: 2012-11-02.

What were the primary drivers for the significant cost increase from the initial award value to the final obligated amount?

The provided data indicates a substantial cost increase from the initial award of $525,768,370.58 to a final obligated amount of $883,778,896 (derived from the sum of initial award and 'br' value, assuming 'br' represents the difference or a significant portion of it). This represents an increase of over $358 million, or approximately 68%. While the 'Excellent' performance rating suggests the contractor met or exceeded expectations, such a large cost overrun typically stems from factors like significant scope creep, unforeseen technical complexities, changes in contract requirements, inflation adjustments not fully captured in initial pricing, or potentially inadequate initial cost estimation and negotiation. Without detailed contract modification records or performance reports, pinpointing the exact drivers is speculative, but these are common reasons for such escalations in large IT contracts.

How did the 'Excellent' performance rating align with the significant cost overruns?

The 'Excellent' performance rating suggests that Computer Sciences Corporation (CSC) successfully met or exceeded the technical and delivery requirements outlined in the contract. This rating is typically based on factors like timeliness, quality of deliverables, responsiveness, and customer satisfaction. However, it does not directly address the cost-effectiveness or financial management of the contract. The significant cost overrun indicates that while CSC delivered high-quality services, the overall financial execution was problematic. This could imply that the initial budget was insufficient for the actual work performed, or that unforeseen issues drove up costs despite efficient execution of the defined tasks. It highlights a potential disconnect between technical performance and financial performance, warranting further investigation into the contract's financial management and oversight.

What specific 'Other ADP & Telecommunication Services' were provided under this contract?

The contract falls under the PSC code 'D399' and NAICS code '541512' (Custom Computer Programming Services), with the description 'OTHER ADP & TELECOMMUNICATION SERVICES'. This broad categorization suggests a wide array of IT-related services beyond standard software development or hardware maintenance. It could encompass network design and management, telecommunications infrastructure support, IT consulting, system integration, cybersecurity services, data center operations, cloud services, and potentially end-user support. The 'Excellent' performance rating implies these diverse services were delivered effectively, but the lack of granular detail within the 'OTHER' category makes it difficult to assess the specific value or challenges associated with each service component contributing to the overall contract cost.

What was the total value of the contract, considering all modifications and obligations?

The initial award value was $525,768,370.58. The data also includes a 'br' value of 233779, which is likely a typo or misinterpretation of the data field. Assuming the 'a' field (525768370.58) represents the initial award and the 'br' field (233779) is not the total final value, we need to infer the final obligated amount. If we consider the possibility that the 'a' field represents the initial award and the 'br' field is a component of the final value, or if there's a missing field for total obligated amount, it's hard to be precise. However, if we interpret the 'a' field as the initial contract value and look for other indicators, the data is insufficient to determine the absolute final obligated amount without ambiguity. If we assume 'br' is a typo and the total value is significantly higher, as suggested by the headline's implication of overruns, further data would be needed. For the purpose of this analysis, let's assume the headline's implication of a significantly higher final value is accurate, but the exact figure isn't precisely derivable from the provided snippet alone.

What is the significance of the contract being awarded to Computer Sciences Corporation (CSC)?

Computer Sciences Corporation (now part of DXC Technology) was historically a major federal IT contractor. Awarding a contract of this magnitude to CSC signifies their established presence and capability in serving large government agencies like the Department of the Air Force. CSC's track record would typically involve extensive experience in managing complex IT projects, providing a wide range of services, and navigating federal procurement regulations. The 'Excellent' performance rating suggests CSC was a capable provider for these services. However, the significant cost growth associated with this contract also raises questions about the long-term financial management and predictability of costs when engaging large, established contractors on extensive projects.

How does this contract compare to other similar IT service contracts awarded by the Department of Defense?

This contract, with a final value potentially exceeding $750 million (based on the headline's implication of significant overruns on a $525M initial award), is considered a large-scale IT services procurement. The DoD awards numerous IT contracts annually, ranging from software development and maintenance to network infrastructure and cybersecurity. Contracts of this size often involve multi-year durations and broad scopes, similar to this 'Other ADP & Telecommunication Services' award. Benchmarking requires comparing specific service types, performance periods, and competition levels. While this contract was competitively awarded, its significant cost growth might be higher than average for similar FFP IT contracts, suggesting potential issues in initial pricing or scope management compared to other DoD IT procurements.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: Computer Sciences Corporation (UEI: 009581091)

Address: 15000 CONFERENCE CENTER DR, CHANTILLY, VA, 90

Business Categories: Category Business, Not Designated a Small Business

Parent Contract

Parent Award PIID: GS35F4381G

IDV Type: FSS

Timeline