DoD's $48.4M IT support contract awarded to DDC IT SERVICES LLC raises value and competition concerns

Contract Overview

Contract Amount: $48,398,477 ($48.4M)

Contractor: DDC IT Services LLC

Awarding Agency: Department of Defense

Start Date: 2021-09-20

End Date: 2025-03-19

Contract Duration: 1,276 days

Daily Burn Rate: $37.9K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: BIES TECHNICAL SUPPORT

Place of Performance

Location: BOYERS, BUTLER County, PENNSYLVANIA, 16020

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $48.4 million to DDC IT SERVICES LLC for work described as: BIES TECHNICAL SUPPORT Key points: 1. The contract's value appears high relative to its duration and the limited competition. 2. Pricing benchmarks are difficult to establish without detailed service breakdowns. 3. The sole-source award limits opportunities for cost savings through competitive bidding. 4. Performance context is limited, making it hard to assess overall effectiveness. 5. The IT support sector is highly competitive, suggesting potential for better value. 6. The contract's duration of over 3 years warrants close monitoring of performance and costs.

Value Assessment

Rating: questionable

The total contract value of $48.4 million over approximately 3.5 years averages to roughly $13.8 million annually. Without specific details on the scope of services, it is challenging to benchmark this against similar IT support contracts. However, given the nature of IT support, this annual spend could be on the higher side, especially if the contract was not competitively bid, which may have led to a less favorable price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This significantly limits the number of potential bidders and removes the downward pressure on pricing that typically results from a competitive bidding process. The lack of competition means the government did not explore options from multiple vendors, potentially missing out on better pricing or innovative solutions.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no market-driven incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the Department of Defense and its Defense Counterintelligence and Security Agency, receiving essential IT support services. Services delivered likely include computing infrastructure, data processing, and web hosting, crucial for agency operations. The geographic impact is centered in Pennsylvania, where the contractor is based, but the services support a federal agency's national mission. Workforce implications are direct for DDC IT SERVICES LLC, which secures a significant contract, and indirect for the DoD personnel relying on the IT infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated costs for taxpayers.
Limited transparency on service delivery metrics makes performance assessment difficult.
Sole-source awards can create vendor lock-in and reduce future flexibility.
The contract's duration could mask inefficiencies if not actively managed.
Absence of detailed service scope makes value-for-money assessment challenging.

Positive Signals

The contract provides essential IT infrastructure and support, ensuring operational continuity for a critical defense agency.
A single, established contractor can offer continuity and specialized knowledge.
The firm fixed-price structure provides cost certainty for the government.
The contract is awarded to a US-based company, supporting domestic industry.

Sector Analysis

The IT support sector, encompassing computing infrastructure, data processing, and web hosting, is a vast and dynamic market. Federal spending in this area is substantial, supporting a wide range of government functions. This contract falls under the 'Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services' NAICS code (518210). While specific benchmarks for sole-source IT support contracts are hard to pinpoint, the general IT services market is characterized by intense competition, making the lack of competition here notable.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. There is no information provided regarding subcontracting plans for small businesses. The award to a single entity, DDC IT SERVICES LLC, does not inherently benefit the small business ecosystem unless the prime contractor has robust subcontracting initiatives, which are not detailed here.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve contract officers, program managers within the Defense Counterintelligence and Security Agency, and potentially the Department of Defense's Inspector General. Transparency is limited due to the sole-source nature and lack of publicly available performance metrics. Accountability rests with the contracting officer to ensure DDC IT SERVICES LLC meets the terms of the firm fixed-price contract.

Related Government Programs

IT Infrastructure Services
Cloud Computing Services
Data Center Operations
Managed IT Services
Defense Agency IT Modernization

Risk Flags

Sole-source award limits price competition.
Lack of detailed service scope hinders value assessment.
Potential for higher costs due to non-competitive nature.
Limited public data on contractor performance history.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.4 million to DDC IT SERVICES LLC. BIES TECHNICAL SUPPORT

Who is the contractor on this award?

The obligated recipient is DDC IT SERVICES LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Counterintelligence and Security Agency).

What is the total obligated amount?

The obligated amount is $48.4 million.

What is the period of performance?

Start: 2021-09-20. End: 2025-03-19.

What is the track record of DDC IT SERVICES LLC in performing similar federal IT support contracts?

Information regarding DDC IT SERVICES LLC's specific track record on federal IT support contracts of this magnitude is not readily available in the provided data. As this contract was awarded sole-source, historical performance data with the agency or similar agencies might have been a key factor in the decision-making process, but this is not detailed. Further investigation into contract databases and performance assessment reports (e.g., CPARS) would be necessary to fully assess their past performance and suitability for this role. Without this, the award relies heavily on the agency's internal assessment of the contractor's capabilities.

How does the pricing of this contract compare to market rates for similar IT support services?

Direct comparison of pricing is difficult without a detailed breakdown of the services provided under this $48.4 million contract and specific market rate data for those exact services. However, the fact that it was a sole-source award suggests that competitive market forces were not leveraged to ensure the best possible price. Typically, sole-source contracts may not achieve the same level of cost-effectiveness as competitively awarded ones. Benchmarking would require identifying comparable contracts with similar scopes and competition levels, which are absent here, making a definitive value assessment challenging.

What are the primary risks associated with awarding a large IT support contract on a sole-source basis?

The primary risks associated with a sole-source award for a significant IT support contract like this include potential overpayment due to lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and the risk of vendor lock-in. Taxpayers may bear a higher cost than necessary. Furthermore, without a competitive process, there's a reduced opportunity to assess a wider range of technical solutions or service delivery models that might be more effective or cost-efficient. The agency also relies heavily on the incumbent's capabilities without the validation of a competitive selection.

How effective is the IT support provided by DDC IT SERVICES LLC likely to be, given the contract details?

Assessing the likely effectiveness of the IT support is challenging based solely on the provided data. The contract is firm fixed-price, which generally incentivizes the contractor to meet the defined scope efficiently. However, the sole-source nature means effectiveness is primarily judged against the agency's internal expectations and the contractor's stated capabilities, rather than against competing solutions. The duration of the contract (over 3 years) suggests an expectation of sustained performance. Without specific performance metrics or service level agreements (SLAs) detailed publicly, a concrete assessment of effectiveness is speculative.

What has been the historical spending pattern for IT support services by the Defense Counterintelligence and Security Agency?

The provided data does not include historical spending patterns for IT support services by the Defense Counterintelligence and Security Agency (DCSA). To understand this pattern, one would need to analyze past contracts awarded by DCSA for similar services, noting the value, duration, competition level, and contractors involved. This analysis would help determine if this $48.4 million contract represents an increase, decrease, or continuation of previous spending trends, and whether the shift towards or continuation of sole-source awards is a recent development or a long-standing practice.

What is the potential impact of this contract on IT service innovation within the DCSA?

The potential impact on IT service innovation within the DCSA due to this sole-source contract is likely limited. Sole-source awards often maintain the status quo, relying on the incumbent's existing capabilities rather than fostering new approaches that might emerge from a competitive bidding process. While DDC IT SERVICES LLC may propose innovations within the scope of their contract, the absence of competing vendors means there is less external pressure or opportunity to adopt cutting-edge technologies or methodologies that could be brought in by other firms. The agency might need to proactively solicit innovative ideas separately.

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 › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 8840 E CHAPARRAL RD STE 145, SCOTTSDALE, AZ, 85250

Business Categories: 8(a) Program Participant, American Indian Owned Business, Category Business, Corporate Entity Tax Exempt, Government, Native American Tribal Government, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $49,282,598

Exercised Options: $48,398,477

Current Obligation: $48,398,477

Actual Outlays: $29,642,299

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline