HHS awards $28M for enterprise architecture services to Data Networks, Inc. over 5 years

Contract Overview

Contract Amount: $28,039,103 ($28.0M)

Contractor: Data Networks, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2009-09-01

End Date: 2014-08-31

Contract Duration: 1,825 days

Daily Burn Rate: $15.4K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 9

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ENTERPRISE ARCHITECTURE

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $28.0 million to DATA NETWORKS, INC. for work described as: ENTERPRISE ARCHITECTURE Key points: 1. Value for money appears fair given the 5-year duration and fixed-price nature. 2. Competition dynamics were not fully open, indicating potential for better price discovery. 3. Risk indicators are moderate, with a long performance period and a single award. 4. Performance context shows a firm fixed-price contract, aligning incentives for cost control. 5. Sector positioning is within IT services, specifically custom computer programming.

Value Assessment

Rating: fair

The total award of $28 million over five years averages to approximately $5.6 million annually. Benchmarking this against similar enterprise architecture contracts is challenging without more specific service details. However, the firm fixed-price contract type suggests an effort to control costs. The number of bids received (9) is a positive sign for competition, but the final award to a single entity warrants further scrutiny on whether the pricing reflects optimal value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded as a competitive delivery order, suggesting it was part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract that underwent full and open competition. Nine bids were received, indicating a healthy level of interest and potential for price competition. The award to a single entity implies that Data Networks, Inc. offered the best value among the competitive proposals.

Taxpayer Impact: A competitive process with multiple bidders generally leads to better pricing for taxpayers by fostering a more aggressive bidding environment.

Public Impact

Beneficiaries include the Centers for Medicare and Medicaid Services (CMS) and potentially other HHS agencies requiring enterprise architecture support. Services delivered focus on custom computer programming and related IT services for enterprise architecture. Geographic impact is primarily within Virginia, where the contractor is located. Workforce implications may include employment opportunities for IT professionals in the Virginia area.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (5 years) can sometimes lead to scope creep or evolving requirements that may not be optimally priced over time.
Reliance on a single awardee for enterprise architecture services could pose a risk if performance issues arise or if the contractor's capabilities become outdated.

Positive Signals

The contract was competed, with nine bids received, indicating a robust initial competition.
Firm fixed-price contract type incentivizes the contractor to manage costs effectively.
The award is to a single entity, suggesting a focused relationship for specialized services.

Sector Analysis

This contract falls within the Information Technology (IT) services sector, specifically under the North American Industry Classification System (NAICS) code 541511 for Custom Computer Programming Services. The market for enterprise architecture services is significant, supporting government agencies in managing complex IT systems and strategic planning. Comparable spending benchmarks for similar IT services contracts within federal agencies often range widely based on scope and duration, but a $28 million award over five years is a substantial commitment.

Small Business Impact

The provided data does not indicate if this contract included small business set-asides or subcontracting requirements. As a competitive delivery order, the focus was likely on best value, and small business participation would depend on the specific terms of the parent IDIQ contract and the proposals submitted. Further analysis would be needed to determine the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified services. Transparency is generally facilitated through contract databases like FPDS-NG, though detailed performance metrics are often internal.

Related Government Programs

IT Enterprise Architecture Support
Custom Computer Programming Services
Federal IT Services Contracts
CMS IT Modernization Efforts

Risk Flags

Long-term contract duration may not adapt well to rapid technological changes.
Single awardee concentration risk.
Potential for scope creep in evolving enterprise architecture needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $28.0 million to DATA NETWORKS, INC.. ENTERPRISE ARCHITECTURE

Who is the contractor on this award?

The obligated recipient is DATA NETWORKS, INC..

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 $28.0 million.

What is the period of performance?

Start: 2009-09-01. End: 2014-08-31.

What is the track record of Data Networks, Inc. with federal contracts, particularly in enterprise architecture?

A review of federal procurement data indicates that Data Networks, Inc. has a history of receiving federal contracts. To assess their track record specifically in enterprise architecture, a deeper dive into their past performance on similar contracts would be necessary. This would involve examining contract performance reports, any past performance evaluations, and the types of services they have delivered on previous engagements. Understanding their experience with government IT projects, especially those involving complex architectural planning and custom programming, is crucial for evaluating their capability to fulfill this $28 million award effectively over the next five years.

How does the $28 million award compare to typical spending on enterprise architecture services by HHS or CMS?

The $28 million award for enterprise architecture services over five years represents a significant investment by the Centers for Medicare and Medicaid Services (CMS). Annualized, this contract is valued at approximately $5.6 million. Comparing this to typical spending requires analyzing historical HHS and CMS IT budgets and specific allocations for enterprise architecture initiatives. Without access to detailed internal budget breakdowns, it's difficult to provide a precise benchmark. However, given the critical nature of enterprise architecture for managing large, complex systems like those at CMS, this level of funding is not unusual for a multi-year, comprehensive support contract. It suggests a sustained commitment to strategic IT planning and system integration.

What are the primary risks associated with a 5-year firm fixed-price contract for enterprise architecture services?

A primary risk with a 5-year firm fixed-price contract for enterprise architecture services is the potential for technological obsolescence or evolving requirements that the fixed price may not adequately accommodate. Technology landscapes change rapidly, and architectural needs can shift significantly over five years. If the contractor is locked into a fixed price based on initial requirements, they may face challenges adapting to new standards or functionalities without significant negotiation, potentially impacting service quality or leading to change orders. Conversely, the government risks overpaying if the contractor's costs decrease significantly over the contract period due to efficiencies or market shifts, and the fixed price doesn't reflect this. Ensuring robust contract management and clear scope definition is vital to mitigate these risks.

How effective is the competitive delivery order mechanism in ensuring value for money in IT services?

The competitive delivery order mechanism, often used under IDIQ contracts, is generally effective in ensuring value for money for IT services, provided the underlying IDIQ contract was competed robustly. By soliciting multiple bids for specific task orders, agencies can leverage competition to obtain favorable pricing and select the best-suited vendor for a particular requirement. The receipt of nine bids for this enterprise architecture contract suggests a healthy competitive environment, which typically drives down prices and encourages innovation. However, the ultimate value for money also depends on the clarity of the statement of work, the evaluation criteria used, and the effectiveness of contract administration throughout the performance period.

What are the implications of awarding this contract to a single entity for enterprise architecture support?

Awarding a significant enterprise architecture contract to a single entity, like Data Networks, Inc. in this case, can offer benefits such as fostering a deep understanding of the agency's specific needs and promoting continuity of service. This focused relationship can lead to more integrated and efficient architectural solutions. However, it also concentrates risk. If the contractor underperforms, faces financial instability, or experiences key personnel departures, the agency's enterprise architecture efforts could be severely disrupted. It also limits the agency's exposure to potentially innovative solutions or competitive pricing that might arise from engaging multiple vendors over the contract's life. Strong performance management and contingency planning are essential when relying on a single provider for critical functions.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming 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: 9

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Arctic Slope Regional Corporation (UEI: 076637073)

Address: 1821 MICHAEL FARADAY DR STE 401, RESTON, VA, 20190

Business Categories: 8(a) Program Participant, Asian Pacific American Owned Business, Category Business, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, Woman Owned Business

Financial Breakdown

Contract Ceiling: $28,039,103

Exercised Options: $28,039,103

Current Obligation: $28,039,103

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS06F0067Z

IDV Type: GWAC

Timeline