DoD's $675M IT Services Contract Awarded to Peraton Enterprise Solutions LLC Under Full and Open Competition

Contract Overview

Contract Amount: $674,723,776 ($674.7M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2009-09-30

End Date: 2009-09-30

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: OTHER ADP & TELECOMMUNICATIONS SERVICES

Place of Performance

Location: NEW ORLEANS, ORLEANS County, LOUISIANA, 70146

State: Louisiana Government Spending

Plain-Language Summary

Department of Defense obligated $674.7 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: OTHER ADP & TELECOMMUNICATIONS SERVICES Key points: 1. Contract awarded for broad IT and telecommunications services, indicating a significant need for foundational technology support. 2. The full and open competition suggests a robust market for these services, potentially leading to competitive pricing. 3. The contract's duration and scope will be key to assessing long-term value and performance. 4. Analysis of Peraton's past performance and pricing against benchmarks is crucial for evaluating value for money. 5. The contract's focus on 'Other Computer Related Services' highlights the diverse and evolving nature of IT needs. 6. Geographic focus on Louisiana may indicate specific regional infrastructure or operational requirements.

Value Assessment

Rating: fair

Benchmarking the value of this $674.7 million contract requires detailed analysis of the specific services rendered and their duration. Without comparable contract data for similar scope and duration, assessing whether the pricing represents good value is challenging. The firm fixed-price structure offers some cost certainty, but the overall value hinges on the effective delivery of essential IT and telecommunications services over the contract's life. Further investigation into the specific deliverables and performance metrics would be needed for a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of a competitive bidding process generally promotes price discovery and encourages contractors to offer competitive terms. The number of bidders and the specific evaluation criteria used would provide further insight into the intensity of the competition and its impact on the final award price.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it increases the likelihood of obtaining services at competitive market rates, thereby maximizing the value of federal spending.

Public Impact

The Department of Defense benefits from enhanced IT and telecommunications infrastructure and services, crucial for operational effectiveness. This contract supports the delivery of a wide range of IT services, potentially including network management, cybersecurity, and data processing. The primary geographic impact appears to be Louisiana, suggesting support for specific military installations or operations within that state. The contract likely supports a workforce of IT professionals, both within the contractor's organization and potentially within government roles overseeing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to assess the effectiveness and efficiency of the services provided.
The broad categorization of 'Other Computer Related Services' could mask inefficiencies or a lack of specialized focus.
Without detailed breakdowns of service costs, it's challenging to determine if the firm fixed-price is truly optimal.
The contract's long-term value is contingent on evolving technological needs and potential for scope creep.
Limited information on the specific IT challenges being addressed hinders a full understanding of the contract's necessity.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that should yield reasonable pricing.
The firm fixed-price contract type provides cost certainty for the government.
The contract addresses fundamental IT and telecommunications needs essential for military operations.
The award to Peraton Enterprise Solutions LLC indicates a selection based on perceived capability to meet DoD requirements.
The contract's scale suggests a significant commitment to modernizing or maintaining critical IT infrastructure.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on telecommunications and other computer-related services. The IT services market is vast and highly competitive, with government contracts forming a significant portion of overall spending. Comparable spending benchmarks would involve analyzing other large-scale IT service contracts awarded by the Department of Defense or other federal agencies for similar types of services, considering factors like contract duration, scope, and the specific technologies involved.

Small Business Impact

The data indicates that 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 specific set-aside requirement. However, the prime contractor, Peraton Enterprise Solutions LLC, may choose to subcontract portions of the work to small businesses as part of their overall business strategy, which could indirectly benefit the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the contracting officer's representative (COR) within the Department of the Navy. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified services. Transparency is generally facilitated through contract award databases like FPDS, though detailed performance reports are often internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense-wide IT Services
IT Professional Services
Telecommunications Services
Computer Systems Design Services
Information Technology Infrastructure Support

Risk Flags

Potential for scope creep in 'Other Computer Related Services'.
Risk of technological obsolescence given the dynamic IT landscape.
Dependency on contractor performance for critical DoD IT functions.
Need for robust oversight to ensure value for money in a large FFP contract.
Cybersecurity risks inherent in IT service provision.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $674.7 million to PERATON ENTERPRISE SOLUTIONS LLC. OTHER ADP & TELECOMMUNICATIONS SERVICES

Who is the contractor on this award?

The obligated recipient is PERATON ENTERPRISE SOLUTIONS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $674.7 million.

What is the period of performance?

Start: 2009-09-30. End: 2009-09-30.

What is Peraton Enterprise Solutions LLC's track record with large federal IT contracts, particularly with the Department of Defense?

Peraton Enterprise Solutions LLC, and its predecessor entities, have a significant history of performing large federal IT contracts. Their experience often spans a wide range of services including network operations, cybersecurity, enterprise IT, and mission-critical systems support. For the Department of Defense specifically, Peraton has been a consistent awardee of major contracts, often involving complex systems integration and sustainment. Analyzing their past performance on similar-sized contracts, including on-time delivery, budget adherence, and customer satisfaction ratings, is crucial for assessing their capability to successfully execute this $674.7 million award. Publicly available data and past performance reviews can offer insights into their reliability and expertise in managing large-scale IT service delivery.

How does the $674.7 million value of this contract compare to other similar IT services contracts awarded by the DoD in recent years?

The $674.7 million value places this contract among significant IT services awards. To benchmark it effectively, one would compare it against other firm-fixed-price contracts for 'Other Computer Related Services' or broader IT support awarded by the DoD or its components (like the Department of the Navy) over the last 3-5 years. Key comparison points include the contract duration, the specific services included (e.g., network management, cloud services, cybersecurity), and the number of bidders. Contracts of similar magnitude often involve multi-year durations and extensive service level agreements. If this contract is for a shorter period or a narrower scope than comparable awards, its value might be considered higher on an annualized basis, and vice-versa. The 'full and open competition' aspect is also a positive indicator for value, assuming a robust bidding process.

What are the primary risks associated with a contract of this size and scope for IT and telecommunications services?

A contract of this magnitude ($674.7 million) for IT and telecommunications services carries several inherent risks. A primary risk is performance failure, where the contractor may not deliver the required services to the agreed-upon standards, impacting DoD operations. Technological obsolescence is another significant risk; IT landscapes evolve rapidly, and services procured today might be outdated tomorrow, requiring continuous adaptation and potential contract modifications. Cost overruns, despite the firm-fixed-price structure, can occur through scope creep or unforeseen technical challenges, potentially leading to disputes or requests for equitable adjustments. Security vulnerabilities are also a major concern, as a breach in IT systems could have severe national security implications. Finally, contractor dependency risk exists, where the DoD becomes overly reliant on a single provider, potentially limiting future flexibility.

How effective are firm-fixed-price contracts in ensuring value for money for complex IT services like these?

Firm-fixed-price (FFP) contracts are generally preferred when the scope of work is well-defined and the risks can be reasonably assessed upfront, aiming to provide cost certainty for the government. For complex IT services, FFP can be effective in controlling costs if the requirements are clearly articulated and stable throughout the contract period. The contractor assumes most of the cost risk, incentivizing efficiency. However, if the scope is poorly defined or subject to frequent changes (scope creep), FFP contracts can become problematic. This might lead to contractor requests for additional funding or, conversely, the contractor cutting corners to maintain profitability, potentially sacrificing quality. In such dynamic environments, hybrid contract types or robust change management processes are often necessary to ensure true value for money.

What is the historical spending trend for 'Other Computer Related Services' within the Department of the Navy or the broader DoD?

Historical spending trends for 'Other Computer Related Services' (NAICS code 541519) within the Department of the Navy and the broader DoD have generally shown a consistent and often increasing demand. As technology rapidly evolves and military operations become increasingly reliant on sophisticated IT infrastructure, agencies like the DoD allocate substantial budgets to these services. This includes areas like IT support, system integration, data management, and specialized software development. Analyzing past spending patterns reveals a growing reliance on external contractors for these specialized capabilities. Factors driving this trend include the need for specialized expertise not always available in-house, the desire for flexibility, and the continuous need to upgrade and maintain complex systems. This particular $674.7 million award aligns with this broader trend of significant investment in IT services.

What does the 'LA' (Louisiana) designation signify in the contract details, and what is its potential impact?

The 'LA' designation indicates that the primary place of performance or the location associated with this contract is Louisiana. For a large IT and telecommunications services contract awarded to the Department of the Navy, this could signify that the services are being provided to support specific military installations, bases, or operational units located within Louisiana. The impact could include direct economic benefits to the state through contractor employment and spending. It also suggests that the IT infrastructure and services being procured are critical for operations conducted in or managed from that geographic region. Understanding the specific DoD activities in Louisiana that this contract supports would provide further context on its strategic importance.

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

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: HP, Inc.

Address: 13600 EDS DRIVE, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $674,723,776

Exercised Options: $674,723,776

Current Obligation: $674,723,776

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002400D6000

IDV Type: IDC

Timeline