Department of Homeland Security's $39.5M IT support contract awarded to Variq Corporation shows mixed value and competition

Contract Overview

Contract Amount: $39,539,168 ($39.5M)

Contractor: Variq Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2014-09-24

End Date: 2020-03-01

Contract Duration: 1,985 days

Daily Burn Rate: $19.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::CL::IGF PROFESSIONAL INFORMATION TECHNOLOGY PERSONNEL IN SUPPORT OF INFORMATION SYSTEMS DIVISION.

Place of Performance

Location: ELIZABETH CITY, PASQUOTANK County, NORTH CAROLINA, 27909

State: North Carolina Government Spending

Plain-Language Summary

Department of Homeland Security obligated $39.5 million to VARIQ CORPORATION for work described as: IGF::CL::IGF PROFESSIONAL INFORMATION TECHNOLOGY PERSONNEL IN SUPPORT OF INFORMATION SYSTEMS DIVISION. Key points: 1. Contract value of $39.5M over 6 years suggests a moderate annual spend. 2. Awarded under full and open competition, indicating a potentially competitive bidding process. 3. Fixed-price contract type may offer cost certainty but could limit flexibility. 4. The contract supports IT personnel for information systems, a critical function. 5. Performance period of nearly 2000 days highlights the long-term nature of the support. 6. No small business set-aside was utilized, potentially limiting opportunities for smaller firms.

Value Assessment

Rating: fair

The total contract value of $39.5 million over approximately six years averages to about $6.6 million annually. Benchmarking this against similar IT support contracts requires more granular data on the specific services provided. However, the firm-fixed-price structure suggests an attempt to control costs. Without detailed performance metrics or comparisons to industry standards for IT personnel support, a definitive value-for-money assessment is challenging. The number of bids received (3) is on the lower side for a full and open competition, which might indicate less aggressive pricing.

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 bids. Three bids were received, which is a relatively low number for a contract of this size and duration under such a competitive solicitation. While full and open competition is generally preferred for maximizing price discovery, the limited number of bidders could suggest potential barriers to entry or a concentrated market for these specific IT support services.

Taxpayer Impact: The limited number of bidders, despite full and open competition, may have resulted in less downward pressure on pricing than a more robustly contested bid process would typically yield.

Public Impact

The U.S. Coast Guard benefits from professional IT personnel supporting its information systems. Essential IT services are delivered to maintain the operational effectiveness of the Coast Guard's digital infrastructure. The contract's impact is primarily within the Department of Homeland Security's operational domain. The contract supports a workforce of IT professionals, contributing to employment in the technology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (3) in a full and open competition may indicate potential market concentration or barriers to entry.
The contract's long duration (nearly 6 years) could lead to vendor lock-in if not managed carefully.
Lack of specific performance metrics in the provided data makes it difficult to assess the quality and efficiency of services delivered.
No indication of small business subcontracting goals or achievements.

Positive Signals

Awarded under full and open competition, which is the preferred method for ensuring broad market access.
Firm-fixed-price contract type provides cost certainty for the government.
The contract addresses critical IT support needs for a key agency within the Department of Homeland Security.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a significant segment of the IT services industry. This sector encompasses a wide range of activities, from custom software development to IT infrastructure management and support. The market size for IT services supporting government agencies is substantial, with agencies increasingly relying on external contractors for specialized expertise. This contract represents a portion of the broader federal spending on IT support, which is a continuous requirement for maintaining government operations.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. This suggests that opportunities for small businesses to directly participate in this contract may have been limited. Without specific subcontracting plans or goals, the impact on the small business ecosystem for this particular award is unclear, though it represents a missed opportunity for direct small business prime contracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Coast Guard contracting officers and program managers within the Department of Homeland Security. The firm-fixed-price nature of the contract provides a degree of cost control. Transparency is generally facilitated through contract award databases like FPDS. However, specific details on ongoing performance monitoring, quality assurance surveillance plans, or Inspector General involvement are not provided in the summary data.

Related Government Programs

IT Support Services
Information Systems Division Support
Professional Services Contracts
Department of Homeland Security IT Spending
U.S. Coast Guard Operations Support

Risk Flags

Low number of bidders in full and open competition.
Lack of transparency on performance metrics.
Potential for vendor lock-in due to long contract duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $39.5 million to VARIQ CORPORATION. IGF::CL::IGF PROFESSIONAL INFORMATION TECHNOLOGY PERSONNEL IN SUPPORT OF INFORMATION SYSTEMS DIVISION.

Who is the contractor on this award?

The obligated recipient is VARIQ CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $39.5 million.

What is the period of performance?

Start: 2014-09-24. End: 2020-03-01.

What is the historical spending trend for IT support services by the U.S. Coast Guard?

Analyzing historical spending trends for IT support services by the U.S. Coast Guard requires access to detailed historical contract data. Generally, federal agencies like the Coast Guard have seen a consistent and often increasing demand for IT support due to the digitization of operations and increasing cybersecurity needs. Spending can fluctuate based on specific program requirements, technology upgrades, and budget allocations. Without specific historical data for this contract or related categories, it's difficult to pinpoint precise trends, but the overall federal IT spending landscape suggests a sustained or growing requirement for such services.

How does the number of bidders (3) compare to similar IT support contracts awarded by DHS?

The number of bidders (3) for this $39.5 million IT support contract awarded under full and open competition is on the lower side when compared to many large federal IT contracts. While the 'ideal' number of bidders can vary significantly based on market conditions, contract complexity, and specific service requirements, agencies often aim for a higher number to ensure robust competition. For similar large-scale IT support contracts within the Department of Homeland Security (DHS), it's not uncommon to see anywhere from 5 to 15 or even more bids, especially for broadly defined services. A lower number like three might suggest a more specialized niche, fewer capable vendors, or potentially less effective outreach during the solicitation phase.

What are the key performance indicators (KPIs) used to evaluate Variq Corporation's performance on this contract?

The provided data does not specify the key performance indicators (KPIs) used to evaluate Variq Corporation's performance on this contract. Typically, for IT support services contracts, KPIs might include metrics such as system uptime, response times for help desk tickets, resolution rates, project completion timelines, adherence to security protocols, and customer satisfaction surveys. The firm-fixed-price nature of the contract suggests that performance is likely tied to the delivery of defined services and potentially service level agreements (SLAs). Without access to the contract's statement of work or performance reports, a detailed assessment of performance evaluation is not possible.

What is the typical profit margin for IT support services contractors like Variq Corporation in the federal market?

Determining the typical profit margin for IT support services contractors like Variq Corporation in the federal market is complex and depends on numerous factors, including the specific services offered, contract type, competition level, and overhead costs. Generally, profit margins for IT services can range from 5% to 20% or higher, with firm-fixed-price contracts often allowing for potentially higher margins if the contractor manages costs effectively. However, competitive bidding, especially under full and open competition, tends to drive down profit margins. Without specific financial data or industry benchmarks tailored to this exact service niche and contract structure, providing a precise profit margin estimate for Variq Corporation on this contract is speculative.

How does the annual value of this contract compare to the overall IT budget of the U.S. Coast Guard?

The annual value of this contract is approximately $6.6 million ($39.5M / ~6 years). To compare this to the overall IT budget of the U.S. Coast Guard, one would need access to the Coast Guard's specific annual IT budget figures. Federal agencies' IT budgets can range from tens of millions to billions of dollars, depending on their size and mission complexity. The U.S. Coast Guard, as a significant component of the Department of Homeland Security, likely has a substantial IT budget. This $6.6 million annual spend represents a component of that larger budget, likely focused on specific IT personnel support functions rather than the entirety of the Coast Guard's IT infrastructure, software development, or cybersecurity initiatives.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12300 TWINBROOK PARKWAY, SUITE 155, ROCKVILLE, MD, 20852

Business Categories: Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Hispanic American Owned Business, HUBZone Firm, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $41,894,738

Exercised Options: $39,539,168

Current Obligation: $39,539,168

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HSHQDC13DE2044

IDV Type: IDC

Timeline