DoD's $35.3M HP ArcSight Software Contract Awarded to Blue Tech Inc. Raises Value Concerns

Contract Overview

Contract Amount: $35,345,181 ($35.3M)

Contractor: Blue Tech Inc.

Awarding Agency: Department of Defense

Start Date: 2014-08-26

End Date: 2019-08-25

Contract Duration: 1,825 days

Daily Burn Rate: $19.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: HP ARCSIGHT SOFTWARE HARDWARE&WARRANTY

Place of Performance

Location: FORT GEORGE G MEADE, ANNE ARUNDEL County, MARYLAND, 20755

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $35.3 million to BLUE TECH INC. for work described as: HP ARCSIGHT SOFTWARE HARDWARE&WARRANTY Key points: 1. The contract's value appears high relative to its duration and the services provided. 2. Limited public information makes it difficult to assess the competitive landscape thoroughly. 3. The contract's duration and fixed-price nature may present risks if requirements evolve. 4. Performance context is lacking, hindering a clear understanding of the software's impact. 5. This contract falls within the broader IT services sector, specifically focusing on software and related services. 6. The award method, while excluding sources, warrants further scrutiny regarding its necessity.

Value Assessment

Rating: questionable

The total award of $35.3 million over five years, averaging approximately $7 million annually, seems substantial for software licensing and support. Benchmarking against similar cybersecurity software contracts is challenging due to proprietary pricing and specific feature sets. However, the lack of detailed service breakdowns or performance metrics makes it difficult to ascertain if the price reflects fair market value for the capabilities delivered. The fixed-price nature suggests a defined scope, but the overall cost warrants closer examination for potential overvaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were intentionally excluded. The specific reasons for this exclusion are not detailed in the provided data. The presence of only one bidder (Blue Tech Inc.) under these conditions suggests a potentially narrow competitive field, which could limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: The limited competition raises concerns for taxpayers, as it may have resulted in a higher price than what could have been achieved through broader, unrestricted competition. This situation necessitates a strong justification for the source exclusion to ensure public funds are used efficiently.

Public Impact

The primary beneficiaries are the Department of Defense agencies utilizing the HP ArcSight software for security information and event management. The services delivered include software licenses, hardware, and warranty support for the ArcSight platform. The geographic impact is likely concentrated within DoD facilities where the software is deployed, primarily in Maryland. Workforce implications may involve IT security personnel responsible for managing and operating the ArcSight system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency regarding the exclusion of sources limits understanding of competitive fairness.
The substantial cost over a five-year period requires robust justification for value for money.
Absence of detailed performance metrics makes it hard to gauge the effectiveness of the software and support.

Positive Signals

The contract provides critical cybersecurity capabilities for national defense.
A fixed-price contract structure can offer cost predictability if the scope is well-defined.
The award to a single entity may streamline management and support for the ArcSight system.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically the cybersecurity and software solutions sub-sector. The market for Security Information and Event Management (SIEM) software, like HP ArcSight, is competitive, with several major players offering similar capabilities. Government spending in this area is substantial, driven by the increasing need for advanced threat detection and response. Comparable spending benchmarks are difficult to establish precisely due to variations in software versions, support levels, and contract terms, but the scale of this award suggests a significant deployment.

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 or specific impacts on the small business ecosystem stemming from a small business set-aside. The primary contractor, Blue Tech Inc., is not identified as a small business in the provided snippet.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Information Systems Agency (DISA) and the Department of Defense's contracting and financial management offices. Accountability measures are inherent in the fixed-price contract structure, requiring delivery of specified goods and services. Transparency is limited by the 'exclusion of sources' clause and the proprietary nature of software pricing. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Cybersecurity Software Procurement
Information Security Services
IT Hardware and Maintenance
Defense Information Systems Agency Contracts
Software Licensing Agreements

Risk Flags

Limited competition raises concerns about price fairness.
Lack of detailed performance metrics hinders value assessment.
Justification for source exclusion requires further review.
Potential for high cost relative to service duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.3 million to BLUE TECH INC.. HP ARCSIGHT SOFTWARE HARDWARE&WARRANTY

Who is the contractor on this award?

The obligated recipient is BLUE TECH INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $35.3 million.

What is the period of performance?

Start: 2014-08-26. End: 2019-08-25.

What specific capabilities does HP ArcSight software provide to the Department of Defense under this contract?

The HP ArcSight software, in this context, functions as a Security Information and Event Management (SIEM) solution. Its primary role is to collect, aggregate, and analyze log data from various sources across the DoD's network infrastructure. This enables the identification of security threats, anomalies, and potential policy violations in near real-time. Key capabilities include threat detection, incident response support, compliance monitoring, and security analytics. The hardware and warranty components ensure the operational readiness and maintainability of the deployed ArcSight platform, supporting the DoD's critical cybersecurity mission.

How does the $35.3 million award compare to typical spending on similar SIEM solutions by federal agencies?

Comparing the $35.3 million award for HP ArcSight software, hardware, and warranty over five years requires context regarding the scale of deployment and specific features. Federal agencies often invest heavily in SIEM solutions due to the critical nature of cybersecurity. Annual spending can range from hundreds of thousands to several million dollars, depending on the agency's size, the complexity of its network, and the chosen vendor. While $7 million annually (average of the total award) is significant, it may be within the expected range for a large-scale DoD deployment. However, without knowing the exact number of nodes, features licensed, and support levels, a precise benchmark is difficult. The 'exclusion of sources' and single bidder aspect further complicates a direct value-for-money comparison.

What are the potential risks associated with the 'Full and Open Competition After Exclusion of Sources' award method?

The 'Full and Open Competition After Exclusion of Sources' method, while intended to allow for competition, carries inherent risks. The primary risk is that excluding specific sources may arbitrarily limit the pool of qualified vendors, potentially preventing the government from obtaining the best possible price or solution. If the exclusion is not well-justified and documented, it can lead to perceptions of unfairness or a lack of true competition. This can result in higher costs for the government and taxpayers, as the remaining bidders may face less pressure to offer competitive pricing. Furthermore, it raises questions about whether the most innovative or cost-effective solutions were overlooked due to the exclusion criteria.

What does the duration of the contract (1825 days) imply about the expected lifecycle of the HP ArcSight software within the DoD?

A contract duration of 1825 days, equivalent to five years, suggests that the Department of Defense anticipates a medium-to-long-term need for the HP ArcSight software and its associated support. This duration implies that the software is considered a strategic asset for the DoD's cybersecurity infrastructure, rather than a short-term solution. It indicates a commitment to the ArcSight platform, potentially involving significant integration into existing systems and workflows. Such a duration also suggests that the DoD expects the software to remain relevant and effective against evolving cyber threats for the contract's term, or that the cost and effort of switching vendors within this period are deemed prohibitive.

Given the firm fixed-price (FFP) contract type, what are the implications for cost control and potential scope creep?

A Firm Fixed-Price (FFP) contract type is generally favorable for the government in terms of cost control, as the price is set regardless of the contractor's actual costs. This shifts the risk of cost overruns to the contractor, Blue Tech Inc. For the DoD, this means predictable budgeting for the software, hardware, and warranty. However, the risk of scope creep still exists if the requirements are not clearly defined or if the DoD requests modifications beyond the original scope. In an FFP contract, any changes or additions typically require a formal contract modification, which would likely involve a price adjustment. The effectiveness of cost control hinges on the clarity of the initial SOW and the DoD's discipline in managing contract modifications.

What is the significance of the 'na': '541519' (Other Computer Related Services) classification for this contract?

The NAICS code '541519 - Other Computer Related Services' indicates the primary business activity associated with this contract. This broad classification covers a range of IT services not specified under more precise categories. For this contract, it likely encompasses the provision, integration, maintenance, and support of the HP ArcSight software and potentially related hardware. It suggests that the service component, beyond just the software license, is a significant aspect of the contract. This classification allows for flexibility in the types of computer-related services the contractor can provide to meet the DoD's evolving cybersecurity needs within the ArcSight ecosystem.

Industry Classification

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

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2251 SAN DIEGO AVE STE B155, SAN DIEGO, CA, 92110

Business Categories: 8(a) Program Participant, Category Business, HUBZone Firm, Minority Owned Business, Other Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $35,345,181

Exercised Options: $35,345,181

Current Obligation: $35,345,181

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: NNG07DA22B

IDV Type: GWAC

Timeline