HHS awarded $27.6M for IT infrastructure, with Safeguard Services LLC managing a significant portion

Contract Overview

Contract Amount: $27,643,307 ($27.6M)

Contractor: Safeguard Services LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2006-09-29

End Date: 2012-07-31

Contract Duration: 2,132 days

Daily Burn Rate: $13.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 10

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: MEDIC - PART D

Place of Performance

Location: PLANO, COLLIN County, TEXAS, 75024

State: Texas Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $27.6 million to SAFEGUARD SERVICES LLC for work described as: MEDIC - PART D Key points: 1. The contract's value of $27.6 million over its period of performance suggests a substantial investment in IT infrastructure. 2. The 'FULL AND OPEN COMPETITION' indicates a broad market solicitation, potentially leading to competitive pricing. 3. The 'COST PLUS AWARD FEE' pricing structure incentivizes performance but requires careful monitoring to ensure cost control. 4. The contract duration of 2132 days (approx. 5.8 years) points to a long-term need for these IT services. 5. The North American Industry Classification System (NAICS) code 518210 signifies a focus on data processing and hosting services. 6. The award was a 'DELIVERY ORDER', implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar framework.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without knowing the specific services rendered under the $27.6 million award. However, the duration and the nature of IT infrastructure services suggest a significant investment. The 'COST PLUS AWARD FEE' structure, while common for complex IT projects, can sometimes lead to higher costs if not managed tightly, as the contractor is reimbursed for costs plus a fee that can be adjusted based on performance. Comparing this to similar large-scale IT infrastructure contracts within HHS or other agencies would provide a clearer picture of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION', suggesting that the agency sought bids from all responsible sources. This approach typically fosters a competitive environment, allowing multiple vendors to propose solutions and pricing. The number of bids received (10 bidders) is a healthy indicator of market interest and competition. A robust competition level generally benefits the government by driving down prices and encouraging innovation.

Taxpayer Impact: A full and open competition with 10 bidders suggests that taxpayers likely received competitive pricing for the IT infrastructure services. This broad solicitation helps ensure that the government isn't overpaying due to a lack of market engagement.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially other agencies relying on its IT infrastructure. Services delivered likely encompass computing, data processing, web hosting, and related IT support critical for healthcare program operations. The geographic impact is primarily within Texas, where the contractor Safeguard Services LLC is located, but the services support national healthcare programs. Workforce implications may include IT specialists employed by Safeguard Services LLC and potentially government personnel overseeing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'COST PLUS AWARD FEE' (CPAF) contract type can incentivize cost overruns if performance metrics are not strictly defined and monitored.
The long contract duration (over 5 years) necessitates ongoing vigilance to ensure the services remain relevant and cost-effective against evolving technology.
Reliance on a single delivery order under a potentially larger IDIQ structure could limit flexibility if needs change significantly.

Positive Signals

The 'FULL AND OPEN COMPETITION' with 10 bidders indicates a competitive award process, likely resulting in a fair market price.
The award to Safeguard Services LLC suggests they possess the capabilities and experience required for complex IT infrastructure services.
The contract's focus on essential IT infrastructure supports critical government functions within CMS.

Sector Analysis

The IT services sector, particularly data processing, web hosting, and related infrastructure, is a critical component of government operations. Spending in this area is substantial across all federal agencies. This contract fits within the broader category of IT support services, which includes everything from cloud computing to managed data centers. Comparable spending benchmarks would typically look at the cost per server, cost per user, or cost per gigabyte of data managed, depending on the specific services provided. The $27.6 million over nearly six years for infrastructure services is a significant but not unusual amount for a federal agency like CMS.

Small Business Impact

The data indicates that this contract was awarded under 'FULL AND OPEN COMPETITION' and does not specify any small business set-aside provisions (ss: false, sb: false). Therefore, it's unlikely that small businesses were specifically targeted for this prime contract. However, Safeguard Services LLC, as the prime contractor, may have subcontracting opportunities for small businesses to fulfill specific aspects of the IT infrastructure requirements. The extent of small business subcontracting would depend on the prime contractor's policies and the nature of the work.

Oversight & Accountability

Oversight for this contract would primarily reside with the Centers for Medicare and Medicaid Services (CMS), a component of HHS. Mechanisms likely include contract officer representatives (CORs) who monitor performance, adherence to terms, and deliverables. The 'COST PLUS AWARD FEE' structure implies performance metrics that are evaluated to determine award fees, providing a form of accountability. Transparency is generally facilitated through contract databases like FPDS, where award details are published. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

CMS IT Modernization
Federal Cloud Computing Strategy
Data Center Consolidation Initiative
HHS IT Services Contracts
Medicare Part D IT Support

Risk Flags

Potential for cost overruns due to CPAF structure.
Risk of technological obsolescence over the contract's long duration.
Need for robust government oversight to ensure performance and value.
Dependence on a single contractor for critical IT infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $27.6 million to SAFEGUARD SERVICES LLC. MEDIC - PART D

Who is the contractor on this award?

The obligated recipient is SAFEGUARD SERVICES LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $27.6 million.

What is the period of performance?

Start: 2006-09-29. End: 2012-07-31.

What specific IT infrastructure services were provided under this contract?

The North American Industry Classification System (NAICS) code 518210 indicates services related to 'Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services.' This broadly covers the provision and management of computing resources, data storage and processing, and web hosting capabilities. Specific services could include server maintenance, network management, data backup and recovery, cloud services integration, and application hosting. Without access to the detailed contract statement of work (SOW), the precise nature of the services remains general, but they are fundamental to the operational IT backbone of the Centers for Medicare and Medicaid Services (CMS).

How does the 'COST PLUS AWARD FEE' (CPAF) structure compare to other contract types for similar IT services?

The CPAF structure is often used for complex services where performance outcomes are difficult to define precisely upfront or where innovation is encouraged. It reimburses the contractor for allowable costs plus a base fee, with an additional award fee contingent on meeting or exceeding performance objectives. Compared to fixed-price contracts, CPAF can offer more flexibility but carries a higher risk of cost growth if performance targets are not well-defined or if the government's oversight is insufficient. It differs from Cost Plus Incentive Fee (CPIF) by having a more subjective award fee component, and from Cost Plus Fixed Fee (CPFF) by allowing the fee to vary. For IT infrastructure, agencies might opt for fixed-price if requirements are stable, but CPAF is suitable when adaptability and high performance are paramount.

What is the significance of the contract being a 'DELIVERY ORDER'?

A 'DELIVERY ORDER' typically signifies that this contract is a task order issued under a larger, pre-existing indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar multiple-award contract vehicle. This means that the $27.6 million represents the value of this specific order placed against a broader contract that likely had a longer potential duration and a higher ceiling value. The use of IDIQs allows agencies to procure a range of services or supplies over time with streamlined ordering processes, often after an initial competition to establish the IDIQ contract itself. This specific delivery order would have its own period of performance and scope of work.

What does the number of bidders (10) suggest about the market for these IT services?

Having 10 bidders for a 'FULL AND OPEN COMPETITION' suggests a healthy and competitive market for the IT infrastructure services solicited by CMS. This number indicates that multiple companies were interested and capable of performing the required work, which is a positive sign for price discovery and potential innovation. A larger number of bidders generally increases the likelihood that the government will receive competitive proposals, leading to better value for taxpayer dollars. It also suggests that the barriers to entry for competing on this type of contract were not prohibitively high for a significant number of firms.

How does the contract's location in Texas relate to the services provided to CMS?

The contract indicates that Safeguard Services LLC, the awardee, is located in Texas ('ST': 'TX', 'SN': 'TEXAS'). However, the services provided are for the Centers for Medicare and Medicaid Services (CMS), a federal agency headquartered in Baltimore, Maryland, with operations nationwide. The IT infrastructure services, such as data processing and web hosting, can often be delivered remotely or from geographically dispersed data centers. Therefore, the Texas location likely refers to the contractor's operational base or a specific data center facility used to fulfill the contract requirements, rather than implying the services are exclusively for a Texas-based CMS operation.

What are the potential risks associated with a contract of this duration and value?

Contracts spanning over five years and valued at $27.6 million carry inherent risks. Technological obsolescence is a significant concern; IT infrastructure needs can change rapidly, and a long-term contract might lock the government into outdated solutions if not managed proactively. Cost control is another risk, especially with a CPAF structure, requiring diligent oversight to prevent scope creep and ensure efficiency. Vendor lock-in is also a possibility, making it difficult or costly to switch providers if performance degrades or better alternatives emerge. Furthermore, the long duration necessitates sustained government oversight and contract management expertise to ensure continued alignment with agency goals and value for money.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

Product/Service Code: RESEARCH AND DEVELOPMENT › N – Health R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 10

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Veritas Capital Fund Management, L.L.C.

Address: 5400 LEGACY DRIVE, PLANO, TX, 75024

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $30,953,176

Exercised Options: $27,643,307

Current Obligation: $27,643,307

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSM500200500011I

IDV Type: IDC

Timeline