HHS awards $399M for cloud services to support ACA systems, with General Dynamics as prime

Contract Overview

Contract Amount: $398,870,902 ($398.9M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2015-06-22

End Date: 2020-09-21

Contract Duration: 1,918 days

Daily Burn Rate: $208.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: TO PROCURE CLOUD COMPUTING SERVICES TO MEET THE AGENCY'S CONTINUALLY GROWING NEED FOR AGILE AND SCALABLE INFRASTRUCTURE HOSTING ENVIRONMENTS. THIS NEED IS PATICULARLY ACUTE IN SUPPORT OF THE SYSTEMS BEING DEVELOPED IN CONNECTION WITH THE AFFORDABLE CARE ACT (ACA). IGF::OT::IGF

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $398.9 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: TO PROCURE CLOUD COMPUTING SERVICES TO MEET THE AGENCY'S CONTINUALLY GROWING NEED FOR AGILE AND SCALABLE INFRASTRUCTURE HOSTING ENVIRONMENTS. THIS NEED IS PATICULARLY ACUTE IN SUPPORT OF THE SYSTEMS BEING DEVELOPED IN CONNECTION WITH THE AFFORDABLE CARE ACT (ACA). IGF::OT::IGF Key points: 1. The contract aims to provide agile and scalable cloud infrastructure, a critical need for evolving systems. 2. A significant portion of the funding is tied to supporting Affordable Care Act (ACA) initiatives. 3. The contract was awarded through full and open competition, suggesting a robust bidding process. 4. General Dynamics Information Technology, Inc. is the prime contractor for this substantial award. 5. The contract duration spans over five years, indicating a long-term commitment to cloud services. 6. The use of Time and Materials pricing may introduce cost variability if not closely managed.

Value Assessment

Rating: good

The total award of $398.9 million over approximately five years represents a significant investment in cloud computing infrastructure. Benchmarking this against similar large-scale cloud procurements is challenging without more granular data on service levels and specific technologies deployed. However, the scale suggests the agency is seeking comprehensive solutions. The Time and Materials (T&M) pricing model, while offering flexibility, requires diligent oversight to ensure cost-effectiveness and prevent scope creep, which could impact the overall value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of four bids suggests a competitive environment, which typically drives better pricing and service offerings. The level of competition is a positive sign for price discovery and ensuring the government receives a fair market price for the cloud computing services procured.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that is expected to yield cost savings and encourage innovation from multiple providers.

Public Impact

Beneficiaries include federal agencies and potentially citizens interacting with ACA-related services that rely on this cloud infrastructure. Services delivered encompass cloud computing infrastructure, data processing, web hosting, and related support. The geographic impact is national, supporting federal operations across the United States. Workforce implications may include IT professionals involved in managing and migrating systems to the cloud, both within the government and at the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to Time and Materials pricing if not strictly managed.
Dependence on a single prime contractor for critical cloud infrastructure services.
Ensuring data security and privacy compliance within the cloud environment is paramount.

Positive Signals

Awarded through full and open competition, indicating a competitive market.
Aims to provide scalable and agile infrastructure, supporting modernization efforts.
Long-term contract duration suggests a strategic commitment to cloud adoption.

Sector Analysis

The cloud computing market is a rapidly growing sector within the IT industry, driven by demand for scalability, flexibility, and cost efficiency. Federal agencies are increasingly migrating to cloud solutions to modernize infrastructure and improve service delivery. This contract, focused on computing infrastructure providers, data processing, and web hosting, falls squarely within this dynamic market. Comparable spending benchmarks for large-scale federal cloud procurements vary widely based on scope, but this award is substantial, reflecting a significant commitment to cloud services.

Small Business Impact

While this contract was awarded through full and open competition and does not appear to have a specific small business set-aside, the prime contractor, General Dynamics Information Technology, Inc., may engage small businesses for subcontracting opportunities. The extent of small business participation will depend on the prime's subcontracting plan and the specific services required. Analysis of subcontracting reports would be necessary to fully assess 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 would be embedded in the contract's performance work statement, service level agreements, and reporting requirements. Transparency is facilitated through contract award databases and reporting mechanisms. The Inspector General for the Department of Health and Human Services would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Cloud Computing Services
IT Infrastructure Modernization
Affordable Care Act (ACA) IT Support
Data Processing and Hosting Services
General Services Administration (GSA) Cloud Offerings

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Data security and privacy compliance in a cloud environment.
Ensuring seamless integration and performance of ACA systems.
Vendor lock-in risks with cloud service providers.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $398.9 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. TO PROCURE CLOUD COMPUTING SERVICES TO MEET THE AGENCY'S CONTINUALLY GROWING NEED FOR AGILE AND SCALABLE INFRASTRUCTURE HOSTING ENVIRONMENTS. THIS NEED IS PATICULARLY ACUTE IN SUPPORT OF THE SYSTEMS BEING DEVELOPED IN CONNECTION WITH THE AFFORDABLE CARE ACT (ACA). IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is GENERAL DYNAMICS INFORMATION TECHNOLOGY, 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 $398.9 million.

What is the period of performance?

Start: 2015-06-22. End: 2020-09-21.

What is the historical spending trend for cloud computing services at CMS?

Analyzing historical spending trends for cloud computing services at CMS requires access to detailed budget and contract data over multiple fiscal years. Without specific historical data for CMS's cloud expenditures, it's difficult to provide a precise trend. However, federal agencies, including those within HHS like CMS, have generally shown an increasing trend in cloud spending over the past decade. This is driven by a strategic push towards modernization, improved efficiency, and enhanced scalability of IT systems. The $399 million award for cloud services to support ACA systems indicates a significant, ongoing investment in this area, suggesting that previous spending has likely been substantial and is continuing to grow to meet evolving needs.

How does the pricing structure (Time and Materials) compare to fixed-price contracts for similar cloud services?

Time and Materials (T&M) contracts, like the one awarded to General Dynamics, offer flexibility by allowing payment based on the actual labor hours and material costs incurred. This can be advantageous for projects with evolving scopes or uncertain requirements, such as developing new systems for the ACA. However, T&M contracts carry a higher risk of cost overruns if not closely monitored, as the total cost is not predetermined. Fixed-price contracts, conversely, provide cost certainty but may be less adaptable to changing requirements and could lead to disputes if the scope is not clearly defined upfront. For cloud services, a hybrid approach or carefully defined T&M with strong oversight and cost ceilings is often employed to balance flexibility with cost control. The effectiveness of this T&M contract hinges on robust government oversight to manage labor hours and material costs.

What are the key performance indicators (KPIs) used to measure the success of this cloud services contract?

Key Performance Indicators (KPIs) for a cloud services contract of this nature typically focus on availability, performance, security, and responsiveness. Specific KPIs might include: uptime percentage (e.g., 99.9% availability), latency (response time for critical services), data backup and recovery success rates, security incident response times, and adherence to service level agreements (SLAs) for provisioning new resources. For a contract supporting ACA systems, KPIs related to the performance and availability of those specific applications would be crucial. The contract's Performance Work Statement (PWS) would detail these KPIs, and regular performance reviews would assess the contractor's adherence to them, directly impacting contractor payment and future contract decisions.

What is General Dynamics Information Technology's track record with large federal IT contracts, particularly in cloud services?

General Dynamics Information Technology (GDIT), now part of General Dynamics, has a long and extensive track record of managing large, complex IT contracts for various U.S. federal agencies. They have been a significant player in providing IT modernization, cloud migration, cybersecurity, and mission support services. GDIT has held numerous prime contracts across departments like Health and Human Services (HHS), Defense, and others. Their experience includes managing large-scale data centers, migrating applications to cloud environments (both public and private), and providing ongoing cloud operations and maintenance. While specific performance details for every contract are not publicly available, their consistent win rate on large federal bids suggests a generally positive track record and capability in delivering complex IT solutions, including cloud services.

What are the potential risks associated with migrating ACA systems to a cloud environment?

Migrating critical systems like those supporting the Affordable Care Act (ACA) to a cloud environment presents several potential risks. Data security and privacy are paramount; ensuring compliance with HIPAA and other regulations in a cloud setting requires robust security controls and careful vendor management. System integration challenges can arise when moving complex, legacy applications, potentially leading to performance issues or unexpected downtime. Vendor lock-in is another concern, where the agency might become overly dependent on a specific cloud provider's proprietary technologies, making future transitions difficult or costly. Performance and availability risks also exist; while cloud offers scalability, ensuring consistent performance for high-demand periods requires careful architecture and resource management. Finally, the transition process itself carries risks of disruption to ongoing operations if not meticulously planned and executed.

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: 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: 151562

Offers Received: 4

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp

Address: 3150 FAIRVIEW PARK DR STE 100, FALLS CHURCH, VA, 22042

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $422,459,704

Exercised Options: $398,870,902

Current Obligation: $398,870,902

Actual Outlays: $1,044,753

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $2,262,661

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HHSM500201300011I

IDV Type: IDC

Timeline