HHS awarded $44.8M for IT infrastructure, but competition was limited, raising value concerns

Contract Overview

Contract Amount: $44,832,205 ($44.8M)

Contractor: CNI Administration Services, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2009-08-01

End Date: 2018-10-31

Contract Duration: 3,378 days

Daily Burn Rate: $13.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: MIG DATA ENGINE

Place of Performance

Location: NORMAN, CLEVELAND County, OKLAHOMA, 73071

State: Oklahoma Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $44.8 million to CNI ADMINISTRATION SERVICES, LLC for work described as: MIG DATA ENGINE Key points: 1. The contract's value of $44.8M over its duration indicates significant investment in IT infrastructure. 2. Limited competition for this contract may have impacted price discovery and potentially inflated costs. 3. The long duration of the contract (3378 days) suggests a need for sustained IT support. 4. The 'NOT AVAILABLE FOR COMPETITION' status warrants scrutiny regarding the justification for sole-sourcing. 5. The Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not managed tightly. 6. Performance and financial status were rated 'OK', suggesting satisfactory but not exceptional delivery. 7. The contract's focus on computing infrastructure and data processing aligns with core government IT needs.

Value Assessment

Rating: questionable

The total award of $44.8M for IT infrastructure services over nearly a decade requires careful benchmarking. Without specific comparable contracts or detailed cost breakdowns, assessing value for money is challenging. The CPFF structure, while offering flexibility, can lead to higher costs if the contractor does not diligently manage expenses. The 'OK' performance rating suggests the service met requirements, but doesn't indicate exceptional value or efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This means there was likely a specific justification for not opening the contract to a broader bidding process, such as a unique capability or urgent need. The lack of competition limits the government's ability to leverage market forces to achieve the best possible pricing and terms.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from competitive pricing, potentially leading to higher overall expenditure for the services rendered.

Public Impact

The Centers for Medicare and Medicaid Services (CMS) benefits from reliable IT infrastructure and data processing. Essential government functions related to healthcare administration are supported by these services. The contract ensures the continuity of critical IT operations for a significant federal agency. Workforce implications are likely internal to CMS, requiring personnel to manage and utilize the provided infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and reduced innovation.
The CPFF contract type can lead to cost escalation if not rigorously monitored.
Long contract duration may indicate a lack of agile procurement or market shifts.
The 'OK' performance rating suggests room for improvement in service delivery or efficiency.

Positive Signals

The contract successfully provided necessary IT infrastructure and data processing services.
The contractor maintained 'OK' performance ratings throughout the contract period.
The long duration suggests a stable and reliable service provision for critical functions.

Sector Analysis

This contract falls within the IT services sector, specifically focusing on computing infrastructure, data processing, and web hosting. The market for these services is vast and highly competitive, with numerous providers ranging from large corporations to specialized firms. Government IT spending is a significant portion of the federal budget, with agencies constantly seeking to modernize infrastructure and enhance data management capabilities. Benchmarks for similar IT infrastructure contracts vary widely based on scope, duration, and service level agreements.

Small Business Impact

There is no indication that this contract involved small business set-asides or subcontracting goals. As a sole-source award, the focus was likely on securing a specific capability rather than promoting small business participation. This contract does not appear to directly impact the small business ecosystem through set-aside provisions.

Oversight & Accountability

Oversight for this contract would typically reside within the Centers for Medicare and Medicaid Services (CMS) contracting and program offices. Accountability measures would be tied to the contract's performance clauses and financial reporting requirements. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply to any potential fraud, waste, or abuse.

Related Government Programs

Federal IT Infrastructure Modernization Programs
Data Center Consolidation Initiatives
Cloud Computing Services Contracts
IT Services for Healthcare Agencies

Risk Flags

Sole-source award lacks competitive pricing.
CPFF contract type poses risk of cost escalation.
Long contract duration may not reflect current technology needs.
Performance rated 'OK' suggests potential for improvement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $44.8 million to CNI ADMINISTRATION SERVICES, LLC. MIG DATA ENGINE

Who is the contractor on this award?

The obligated recipient is CNI ADMINISTRATION 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 $44.8 million.

What is the period of performance?

Start: 2009-08-01. End: 2018-10-31.

What specific justification was provided for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT AVAILABLE FOR COMPETITION,' which is a designation for sole-source awards. Typically, such justifications are based on factors like the existence of only one responsible source capable of providing the required services, urgent and compelling needs where a competitive process would cause unacceptable delays, or specific statutory authority. Without access to the contract file or justification documents, the precise reason remains unknown. However, for a contract of this magnitude and duration, a thorough justification would have been required, likely involving detailed market research to confirm the lack of alternatives or the unique nature of the required services.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar IT infrastructure services?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not precisely defined or when there is a high degree of uncertainty in the costs. In such cases, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF can offer more flexibility but carries a higher risk of cost overruns if not managed diligently. For IT infrastructure services where requirements might evolve, CPFF can be suitable. However, it generally leads to higher overall costs for the government than competitively bid fixed-price contracts, as the contractor bears less financial risk. Other common types include Firm-Fixed-Price (FFP), which offers the most cost certainty for the government, and Cost-Plus-Incentive-Fee (CPIF), which incentivizes cost control.

What were the key performance indicators (KPIs) and how was the 'OK' rating determined?

The provided data only states the performance status was 'OK'. Specific Key Performance Indicators (KPIs) are not detailed. Typically, for IT infrastructure contracts, KPIs might include metrics such as system uptime/availability, response times for technical support, data processing speed, security compliance adherence, and successful implementation of upgrades or patches. An 'OK' rating generally signifies that the contractor met the minimum acceptable performance standards outlined in the contract. It implies that requirements were fulfilled but does not necessarily indicate exceptional performance, exceeding expectations, or achieving optimal efficiency. A more granular review of performance reports would be needed to understand the specific metrics contributing to the 'OK' assessment.

What is the historical spending trend for this specific service category within HHS or CMS?

The provided data pertains to a single contract awarded in 2009 and ending in 2018, totaling $44.8M. To understand historical spending trends for this service category (NAICS 518210 - Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services) within HHS or CMS, a broader analysis of multiple contracts over a longer period would be necessary. This would involve querying federal procurement databases (like FPDS or USASpending.gov) for all contracts awarded by HHS/CMS under this NAICS code or similar ones. Analyzing the total obligated amounts, number of contracts, and average award values year-over-year would reveal trends such as increasing or decreasing investment, shifts towards specific types of IT services (e.g., cloud migration), and changes in average contract values.

Were there any identified risks or challenges during the contract's performance period, and how were they mitigated?

The data indicates the contractor's financial and performance status was 'OK', and the overall status was 'OK'. This suggests that major, unmitigated risks that would have jeopardized contract performance or financial stability were likely not present or were successfully managed. However, the 'OK' ratings imply that performance met baseline requirements but may not have exceeded them, suggesting potential areas for improvement or minor challenges encountered. Without specific risk logs or performance issue reports associated with this contract, it's impossible to detail specific risks or mitigation strategies. Common risks in IT infrastructure contracts include security breaches, system outages, cost overruns (especially with CPFF), delays in upgrades, and vendor lock-in. Mitigation typically involves robust security protocols, contingency planning, active contract management, and clear communication channels.

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: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Chickasaw Nation

Address: 4411 THE 25 WAY NE STE 200, ALBUQUERQUE, NM, 87109

Business Categories: 8(a) Program Participant, Category Business, Government, Native American Tribal Government, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, Tribally Owned Firm

Financial Breakdown

Contract Ceiling: $44,832,205

Exercised Options: $44,832,205

Current Obligation: $44,832,205

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline