HHS awards $130M for IT systems maintenance, with Peraton Enterprise Solutions LLC as prime

Contract Overview

Contract Amount: $130,142,923 ($130.1M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2017-02-01

End Date: 2022-01-31

Contract Duration: 1,825 days

Daily Burn Rate: $71.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: IGF::OT::IGF FISCAL INTERMEDIARY SHARED SYSTEM MAINTAINER

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $130.1 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: IGF::OT::IGF FISCAL INTERMEDIARY SHARED SYSTEM MAINTAINER Key points: 1. Contract value of $130M over 5 years suggests significant investment in IT infrastructure. 2. Full and open competition indicates a broad market approach, potentially leading to competitive pricing. 3. Cost Plus Award Fee (CPAF) contract type allows for performance-based incentives. 4. The contract's duration of 1825 days (5 years) points to a long-term need for system stability. 5. The primary NAICS code (541512) signifies a focus on computer systems design services. 6. The award was a single delivery order, suggesting a phased or specific project execution.

Value Assessment

Rating: good

The total award amount of $130M over five years for IT systems maintenance appears reasonable given the scope of services typically required for federal systems. Benchmarking against similar large-scale IT maintenance contracts within HHS or other agencies would provide a more precise value assessment. The Cost Plus Award Fee (CPAF) structure, while potentially leading to higher costs than fixed-price contracts, incentivizes performance and quality, which can be valuable for critical systems. Without specific performance metrics and award fee payouts, a definitive value-for-money assessment is challenging, but the overall investment aligns with the operational needs of a major agency like CMS.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. The fact that it resulted in a single delivery order suggests that while the competition was broad, one offeror ultimately provided the best value. The number of bidders is not specified, but full and open competition generally fosters a more competitive environment, which can lead to better pricing and innovation compared to sole-source or limited competition scenarios.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and higher quality services due to a wider pool of contractors vying for the work.

Public Impact

Beneficiaries include Centers for Medicare and Medicaid Services (CMS) staff and, indirectly, healthcare providers and beneficiaries who rely on the stability of these IT systems. Services delivered encompass the maintenance of critical IT systems essential for healthcare program administration. The geographic impact is national, as CMS operates nationwide, and its IT systems support these operations. Workforce implications may include the need for specialized IT personnel to maintain and support these complex systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Award Fee (CPAF) contracts if performance incentives are not tightly managed.
Reliance on a single contractor for critical IT systems maintenance could pose a risk if performance degrades or the contractor faces financial instability.
The duration of the contract (5 years) may limit opportunities for adopting newer technologies or more cost-effective solutions if not managed proactively.

Positive Signals

Awarding under full and open competition suggests a robust process that likely identified a capable contractor.
The Cost Plus Award Fee (CPAF) structure incentivizes high performance and quality, which is crucial for maintaining critical IT systems.
The contract's length indicates a commitment to ensuring the stability and reliability of essential IT infrastructure.

Sector Analysis

This contract falls within the IT services sector, specifically focusing on computer systems design and related services. The federal IT services market is substantial, with agencies consistently investing in maintaining and modernizing their systems. Comparable spending benchmarks for large-scale IT maintenance and support contracts within federal agencies often range in the tens to hundreds of millions of dollars, depending on the complexity and criticality of the systems involved. This contract's value of $130M is consistent with significant IT support requirements for a major federal program.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded under full and open competition, there may be opportunities for small businesses to participate as subcontractors to the prime contractor, Peraton Enterprise Solutions LLC. However, the extent of small business subcontracting is not detailed in the provided data. Agencies are encouraged to promote small business participation, and the prime contractor's subcontracting plan would outline specific goals and efforts.

Oversight & Accountability

Oversight for this contract would typically be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. The Cost Plus Award Fee (CPAF) structure implies performance monitoring to determine award fee payouts, adding a layer of oversight. Transparency is generally maintained through contract award databases and public reporting mechanisms. Depending on the nature of the systems supported, the HHS Office of Inspector General (OIG) may also have oversight jurisdiction for audits and investigations related to program integrity and financial management.

Related Government Programs

Federal Health IT Modernization Programs
CMS IT Infrastructure Support Contracts
Healthcare Information Systems Maintenance
Government IT Services Procurement
Health and Human Services IT Spending

Risk Flags

Cost Overruns Risk (CPAF)
Contractor Performance Dependency
System Obsolescence Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $130.1 million to PERATON ENTERPRISE SOLUTIONS LLC. IGF::OT::IGF FISCAL INTERMEDIARY SHARED SYSTEM MAINTAINER

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 (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $130.1 million.

What is the period of performance?

Start: 2017-02-01. End: 2022-01-31.

What is the track record of Peraton Enterprise Solutions LLC with similar federal IT maintenance contracts?

Peraton Enterprise Solutions LLC has a significant history of performing IT services for the federal government, including contracts related to systems maintenance, integration, and cybersecurity across various agencies. Their experience often involves managing complex IT infrastructures and ensuring operational continuity for critical government functions. While specific details on past performance for contracts identical in scope and value to this HHS award would require deeper analysis of contract databases and performance reports, Peraton is generally recognized as a major federal IT contractor with substantial capabilities. Evaluating their past performance on similar contracts would involve reviewing metrics such as on-time delivery, adherence to budget, quality of service, and customer satisfaction ratings from previous government clients.

How does the $130M award compare to historical spending on similar IT maintenance services by CMS?

To compare the $130M award to historical CMS spending, one would need to analyze prior contracts for IT systems maintenance and support within CMS. This would involve identifying contracts with similar scope (e.g., maintaining core operational systems, infrastructure support) and duration. Factors like inflation, technological advancements, and changes in system complexity over time would need to be considered for a fair comparison. If historical spending on comparable services was significantly lower, it might indicate an increase in costs or scope. Conversely, if it aligns with or is lower than previous investments adjusted for inflation, it could suggest efficient procurement or stable operational costs. Without access to detailed historical CMS IT spending data, a precise comparison is not feasible, but $130M over five years represents a substantial, ongoing investment in critical IT infrastructure.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract for IT maintenance?

The primary risks associated with a Cost Plus Award Fee (CPAF) contract for IT maintenance revolve around cost control and potential for contractor inefficiency. In a CPAF structure, the contractor is reimbursed for allowable costs plus a fee that is composed of a fixed base fee and an award amount determined by performance against pre-defined metrics. The risk for the government is that costs could escalate beyond initial projections if the contractor's cost management is weak or if the scope of work expands without adequate controls. Furthermore, the award fee mechanism, while intended to incentivize performance, can sometimes lead to subjective evaluations or disputes if performance criteria are not clearly defined and measurable. For IT maintenance, ensuring that the award fee criteria accurately reflect the criticality of system uptime, security, and responsiveness is paramount to mitigate these risks and ensure value for taxpayer money.

How effective are the performance metrics likely to be in ensuring the quality of IT system maintenance?

The effectiveness of performance metrics in ensuring the quality of IT system maintenance under this CPAF contract hinges entirely on their specificity, measurability, attainability, relevance, and time-bound nature (SMART criteria). Well-defined metrics could include system uptime percentages, response times for critical issue resolution, patch deployment rates, security vulnerability remediation timelines, and user satisfaction scores. If these metrics are robust and directly tied to the award fee, they can strongly incentivize the contractor to maintain high standards. Conversely, vague or easily manipulated metrics could lead to a focus on superficial compliance rather than genuine system health and reliability. The government's oversight team plays a crucial role in monitoring adherence to these metrics and ensuring they accurately reflect the desired quality of service.

What are the potential implications of this contract on the broader federal IT services market?

This contract, awarded under full and open competition to a significant player like Peraton Enterprise Solutions LLC, has several implications for the broader federal IT services market. Firstly, it reinforces the trend of large, integrated IT service providers winning substantial contracts, potentially consolidating market share. Secondly, the full and open competition aspect signals that agencies continue to leverage this approach for major procurements, encouraging a wide range of vendors to compete, including those seeking to grow their federal footprint. Thirdly, the CPAF structure, if successfully implemented, could encourage other agencies to consider similar performance-incentivized contract types. Finally, the duration of the contract suggests a stable, long-term demand for IT maintenance services, providing a significant revenue stream for the prime contractor and potentially influencing their strategic investments and resource allocation within the federal sector.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HHSM5002016RFP0042

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 15050 CONFERENCE CENTER DR, CHANTILLY, VA, 20151

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $130,142,923

Exercised Options: $130,142,923

Current Obligation: $130,142,923

Actual Outlays: $12,935,319

Subaward Activity

Number of Subawards: 31

Total Subaward Amount: $8,165,512

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSN316201200026W

IDV Type: GWAC

Timeline