HHS awards $321M for IT infrastructure management, with Peraton Enterprise Solutions LLC managing data centers

Contract Overview

Contract Amount: $321,340,269 ($321.3M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2008-09-29

End Date: 2014-11-28

Contract Duration: 2,251 days

Daily Burn Rate: $142.8K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 4

Pricing Type: OTHER (APPLIES TO AWARDS WHERE NONE OF THE ABOVE APPLY)

Sector: IT

Official Description: EDS TO#3, CONTRACTOR OWNED, CONTRACTOR OPERATED HOSTED DATA CENTER

Place of Performance

Location: SILVER SPRING, MONTGOMERY County, MARYLAND, 20993

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $321.3 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: EDS TO#3, CONTRACTOR OWNED, CONTRACTOR OPERATED HOSTED DATA CENTER Key points: 1. Contract value of $321.3 million over its period of performance suggests a significant investment in IT infrastructure. 2. The contract was awarded as a competitive delivery order, indicating a degree of market vetting. 3. The duration of the contract (2251 days) points to a long-term need for these services. 4. The primary service area, Computer Facilities Management Services, is critical for maintaining government IT operations. 5. The contract's focus on hosted data centers highlights the shift towards centralized and managed IT environments. 6. The absence of small business set-aside flags suggests this was not specifically targeted for small business participation.

Value Assessment

Rating: good

The contract value of over $321 million for IT infrastructure management over approximately six years indicates a substantial investment. Benchmarking this against similar large-scale IT service contracts within the federal government would be necessary for a precise value-for-money assessment. However, the competitive nature of the award suggests that pricing was subject to market forces, potentially leading to a reasonable outcome. The specific services provided, such as data center operations, are essential and often command significant budgets.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a 'COMPETITIVE DELIVERY ORDER,' which implies it was competed under a broader indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar vehicle that allowed for full and open competition. The presence of 4 bidders (no) indicates that there was a reasonable level of competition for this specific delivery order. This level of competition is generally positive for price discovery and ensuring that the government receives competitive pricing.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down costs through market competition.

Public Impact

The Food and Drug Administration (FDA) benefits from reliable and managed IT infrastructure, crucial for its mission. Services delivered include the operation and management of hosted data centers, ensuring continuity of IT operations. The primary geographic impact is in Maryland (MD), where the contract is managed or services are primarily delivered. The contract supports IT professionals and potentially other roles involved in data center management and operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in given the long contract duration and specialized nature of data center management.
Reliance on a single contractor for critical IT infrastructure could pose a risk if performance falters.
The specific details of the 'hosted data center' arrangement are not fully elaborated, which could hide additional risks or costs.

Positive Signals

Competitive award process suggests a vetted contractor and potentially competitive pricing.
The contract addresses a core IT need for a major federal agency (HHS/FDA).
The long duration indicates a stable and ongoing requirement, allowing for efficient resource planning by the contractor.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on Computer Facilities Management Services. The federal IT services market is vast, with agencies increasingly relying on managed services and cloud solutions for data center operations. Spending in this area is driven by the need for secure, reliable, and scalable IT infrastructure to support agency missions. Comparable spending benchmarks would typically involve analyzing other large-scale data center management contracts awarded by agencies like HHS, DOD, or GSA.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the scope and requirements of the contract were likely beyond the typical capacity or focus of small businesses, or that larger, established prime contractors were deemed more suitable. There is no direct information on subcontracting plans, but in the absence of a small business set-aside, the prime contractor may have discretion in engaging small businesses, though it's not a mandated requirement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Health and Human Services (HHS) and its Food and Drug Administration (FDA) contracting and program management offices. Specific oversight mechanisms would likely include regular performance reviews, service level agreement (SLA) monitoring, and financial audits. Transparency is generally facilitated through contract award databases like FPDS-NG. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

HHS IT Infrastructure Support Contracts
FDA Data Center Modernization Programs
Federal Cloud Computing Strategy Initiatives
General Services Administration (GSA) IT Schedule Contracts
Department of Defense (DoD) IT Services Contracts

Risk Flags

Long-term reliance on a single vendor for critical infrastructure.
Potential for cost overruns if scope creep occurs or efficiencies are not realized.
Dependency on contractor's cybersecurity posture for hosted data centers.
Risk of service disruption due to contractor performance issues or financial instability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $321.3 million to PERATON ENTERPRISE SOLUTIONS LLC. EDS TO#3, CONTRACTOR OWNED, CONTRACTOR OPERATED HOSTED DATA CENTER

Who is the contractor on this award?

The obligated recipient is PERATON ENTERPRISE SOLUTIONS LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Food and Drug Administration).

What is the total obligated amount?

The obligated amount is $321.3 million.

What is the period of performance?

Start: 2008-09-29. End: 2014-11-28.

What is the specific nature of the 'hosted data center' services provided under this contract?

The term 'hosted data center' typically refers to a data center facility that is owned and operated by a third-party provider, which then rents out space, power, cooling, and connectivity to its clients. In this context, Peraton Enterprise Solutions LLC is managing a data center facility that hosts the IT infrastructure for the FDA. This could range from colocation services, where the FDA owns its servers but rents the physical space and utilities, to fully managed hosting where Peraton also manages the hardware and potentially the operating systems. Understanding the exact service model is crucial for assessing cost-effectiveness and operational dependencies.

How does the $321.3 million contract value compare to other similar IT infrastructure management contracts awarded by HHS or other large federal agencies?

A direct comparison requires access to detailed data on similar contracts, including their scope, duration, and specific services. However, a $321.3 million award over approximately six years for comprehensive IT infrastructure and data center management is substantial. Large federal agencies like the Department of Defense (DoD) or the General Services Administration (GSA) often award contracts in the hundreds of millions or even billions for similar services, especially those involving large-scale data center consolidation, modernization, or cloud migration. The value suggests a significant operational footprint and criticality of the services provided to the FDA's mission.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

While the provided data does not detail the specific KPIs and SLAs, contracts for computer facilities management services typically include metrics related to system uptime, network availability, response times for incidents, data backup and recovery success rates, and physical security of the data center. These metrics are crucial for ensuring the reliability and performance of the IT infrastructure. The FDA would have established these SLAs to ensure Peraton Enterprise Solutions LLC meets defined performance standards, with potential penalties for non-compliance and incentives for exceeding expectations.

What is Peraton Enterprise Solutions LLC's track record in managing large federal IT infrastructure contracts, particularly data centers?

Peraton Enterprise Solutions LLC has a significant presence in the federal IT services market. The company has a history of managing complex IT infrastructure, cybersecurity, and mission-critical solutions for various government agencies. Their experience often includes large-scale data center operations, network management, and IT support services. Prior performance evaluations and contract history, available through sources like the Contractor Performance Assessment Reporting System (CPARS), would provide a more granular view of their success in delivering similar services, including adherence to schedules, budget, and quality standards on past projects.

What are the potential risks associated with relying on a single contractor for critical data center operations over a multi-year period?

The primary risks associated with relying on a single contractor for critical data center operations over a multi-year period include vendor lock-in, potential degradation of service quality if competition is stifled post-award, and the impact of contractor performance issues. If the contractor faces financial difficulties, operational challenges, or fails to innovate, it could disrupt essential government functions. Furthermore, a long-term sole reliance can reduce the government's leverage in negotiating future contracts or adapting to new technologies. Robust oversight, clear performance metrics, and contingency planning are essential to mitigate these risks.

How does this contract align with broader federal IT modernization and data center consolidation initiatives?

This contract, focusing on managing hosted data centers, likely aligns with federal initiatives aimed at modernizing IT infrastructure and potentially consolidating data centers. Agencies are encouraged to move away from maintaining numerous, often aging, on-premises data centers towards more efficient, secure, and cost-effective solutions, including cloud services and shared infrastructure. By outsourcing the management of hosted data centers, the FDA can potentially achieve economies of scale, improve operational efficiency, and focus its internal resources on mission-specific applications rather than infrastructure maintenance. The specific 'hosted' model chosen would indicate the degree of alignment with full cloud adoption versus managed private infrastructure.

Industry Classification

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

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

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: OTHER (APPLIES TO AWARDS WHERE NONE OF THE ABOVE APPLY) (3)

Evaluated Preference: NONE

Contractor Details

Parent Company: HP, Inc. (UEI: 009122532)

Address: 13600 EDS DR, HERNDON, VA, 20171

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $901,761,901

Exercised Options: $631,203,575

Current Obligation: $321,340,269

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSF223200850014I

IDV Type: IDC

Timeline