HHS awards $55.6M for Oracle maintenance, with a $290K credit impacting the net cost

Contract Overview

Contract Amount: $55,554,879 ($55.6M)

Contractor: Mythics, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2009-05-01

End Date: 2012-09-29

Contract Duration: 1,247 days

Daily Burn Rate: $44.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: TAS::75 4554::TAS ORACLE - ANNUAL MAINTENANCE OF EXISTING LICENSE W/CREDIT OF $290,239.43

Place of Performance

Location: VIRGINIA BEACH, VIRGINIA BEACH CITY County, VIRGINIA, 23454

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $55.6 million to MYTHICS, LLC for work described as: TAS::75 4554::TAS ORACLE - ANNUAL MAINTENANCE OF EXISTING LICENSE W/CREDIT OF $290,239.43 Key points: 1. Value for money appears fair given the long-term maintenance nature of the contract. 2. Competition dynamics indicate a full and open process, suggesting potential for competitive pricing. 3. Risk indicators are moderate, typical for long-term software maintenance contracts. 4. Performance context is for annual maintenance of existing licenses, a recurring need. 5. Sector positioning is within IT services, specifically software maintenance and support.

Value Assessment

Rating: fair

The contract value of $55.6 million over approximately four years for Oracle annual maintenance is within a reasonable range for such services. The inclusion of a credit of $290,239.43 slightly reduces the overall expenditure. Benchmarking against similar long-term software maintenance contracts suggests this pricing is competitive, especially considering the criticality of maintaining existing Oracle licenses.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bids suggests a moderate level of competition. While full and open competition is generally preferred, the specific number of bidders can influence price discovery.

Taxpayer Impact: A full and open competition process is favorable for taxpayers as it encourages multiple vendors to offer their best pricing, potentially leading to cost savings compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the National Institutes of Health (NIH) within HHS, ensuring continued operation of critical IT systems. The services delivered include essential annual maintenance for existing Oracle software licenses. The geographic impact is primarily within the United States, supporting federal IT infrastructure. Workforce implications are minimal, as this contract focuses on software maintenance rather than direct personnel services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in with long-term maintenance agreements.
Reliance on a single vendor for critical software updates and support.
Risk of price increases in future contract renewals if competition diminishes.

Positive Signals

Awarded under full and open competition, maximizing potential for competitive pricing.
Firm Fixed Price contract type provides cost certainty for the government.
Long-term maintenance ensures stability and continued functionality of essential systems.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on software maintenance and support for Oracle products. The market for enterprise software maintenance is substantial, with government agencies being significant consumers. Comparable spending benchmarks for similar large-scale software maintenance contracts can vary widely based on the software suite and vendor.

Small Business Impact

The contract data indicates that small business participation was not a specific set-aside requirement for this award (ss: false, sb: false). Therefore, the direct impact on small businesses is likely limited unless they were involved as subcontractors to the prime contractor, Mythics, LLC. Further analysis would be needed to determine subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically reside with the contracting officer's representative (COR) at NIH, responsible for monitoring performance and ensuring compliance. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver services within the agreed-upon cost. Transparency is facilitated by the contract award data being publicly available.

Related Government Programs

Oracle Software Maintenance
IT Infrastructure Support
Federal Software Licensing
Health IT Services

Risk Flags

Long-term reliance on a single vendor for critical software.
Potential for price increases in future contract renewals.
Need for ongoing assessment of software relevance and potential replacement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $55.6 million to MYTHICS, LLC. TAS::75 4554::TAS ORACLE - ANNUAL MAINTENANCE OF EXISTING LICENSE W/CREDIT OF $290,239.43

Who is the contractor on this award?

The obligated recipient is MYTHICS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (National Institutes of Health).

What is the total obligated amount?

The obligated amount is $55.6 million.

What is the period of performance?

Start: 2009-05-01. End: 2012-09-29.

What is the track record of Mythics, LLC in performing similar federal IT maintenance contracts?

Mythics, LLC has a history of performing IT services for the federal government, including software maintenance and support. Their experience with Oracle products is a key factor in their ability to secure this contract. A review of their past performance ratings on similar contracts would provide further insight into their reliability and effectiveness. Federal procurement databases often contain past performance information that can be used to assess a contractor's track record. For this specific contract, the duration of 1247 days (approximately 3.4 years) suggests a significant commitment and implies a level of trust from the agency.

How does the awarded price compare to market rates for Oracle annual maintenance?

Determining precise market rates for Oracle annual maintenance is complex due to variations in software versions, support levels, and negotiated discounts. However, the total award of $55.6 million over roughly 3.4 years, with a credit of $290,239.43, suggests an average annual cost of approximately $16 million. This figure needs to be contextualized by the specific Oracle products and services covered. Given that Oracle software is a critical component for many large organizations, and maintenance is often a significant ongoing expense, this price appears to be within a plausible range, especially when considering the competitive bidding process.

What are the primary risks associated with this type of long-term software maintenance contract?

The primary risks associated with long-term software maintenance contracts include vendor lock-in, where the agency becomes heavily reliant on a single provider, making it difficult and costly to switch. There's also the risk of price escalation in future renewals, especially if competition is limited. Technological obsolescence is another concern; the software being maintained might become outdated, requiring significant investment in upgrades or replacements. Furthermore, the contractor's financial stability and ability to provide consistent, high-quality support throughout the contract term are critical risk factors.

How effective is the firm fixed-price contract type in managing costs for software maintenance?

The Firm Fixed Price (FFP) contract type is generally effective in managing costs for software maintenance because it shifts the risk of cost overruns to the contractor. The government knows the total price upfront, providing budget certainty. For maintenance services, where the scope of work is relatively well-defined (e.g., providing updates, patches, and technical support), FFP is a suitable choice. It incentivizes the contractor to perform efficiently to maximize their profit margin. However, if unforeseen issues arise that require significant deviation from the original scope, contract modifications might be necessary, potentially impacting the initial cost certainty.

What is the historical spending pattern for Oracle maintenance at NIH?

Analyzing historical spending patterns for Oracle maintenance at NIH would require access to detailed historical contract data beyond this single award. However, it is common for large federal agencies like NIH to have ongoing, multi-year contracts for the maintenance of critical enterprise software like Oracle. Spending in this area is often substantial and can fluctuate based on license renewals, upgrades, and the introduction of new Oracle products. Understanding past spending trends would help in assessing whether this $55.6 million award represents an increase, decrease, or stable level of investment in Oracle maintenance.

What is the significance of the $290,239.43 credit on the total contract value?

The credit of $290,239.43 represents a reduction in the total amount paid by the government to Mythics, LLC. This could stem from various reasons, such as a negotiated discount, a rebate, or a reconciliation of previous overpayments or unused services. Regardless of the source, it effectively lowers the net cost of the contract to HHS. While it's a relatively small percentage of the total award (approximately 0.5%), it demonstrates a financial adjustment that benefits the agency and reduces the overall expenditure for the specified maintenance period.

Industry Classification

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

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1439 N GREAT NECK RD STE 2, VIRGINIA BEACH, VA, 23454

Business Categories: Category Business, Small Business

Financial Breakdown

Contract Ceiling: $83,677,837

Exercised Options: $55,554,879

Current Obligation: $55,554,879

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ06A0003

IDV Type: IDC

Timeline