DHS's $37.3M Unisys contract for legacy product support raises questions about value and competition

Contract Overview

Contract Amount: $37,360,133 ($37.4M)

Contractor: Unisys Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2005-12-30

End Date: 2007-12-31

Contract Duration: 731 days

Daily Burn Rate: $51.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: LEGACY PRODUCT COST AND TRANSITION TO OWNERSHIP COSTS

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20590

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $37.4 million to UNISYS CORPORATION for work described as: LEGACY PRODUCT COST AND TRANSITION TO OWNERSHIP COSTS Key points: 1. The contract's value proposition is unclear due to a lack of competitive bidding and limited performance data. 2. Sole-source procurement limits price discovery and potentially inflates costs for essential legacy product support. 3. The long duration and fixed-price nature may not adequately account for evolving technology or unforeseen issues. 4. Performance context is minimal, making it difficult to assess Unisys's effectiveness in meeting DHS needs. 5. This contract represents a significant investment in maintaining older systems, highlighting potential modernization challenges. 6. The absence of small business participation is noted, with no set-aside or subcontracting requirements specified.

Value Assessment

Rating: questionable

This contract for legacy product support was awarded sole-source to Unisys Corporation for $37.3 million. Without competitive benchmarking, it is difficult to ascertain if this price represents fair market value. The fixed-price structure, while offering cost certainty, may not be optimal for services involving evolving legacy systems where the scope of work could change. A comparison to similar sole-source contracts for legacy IT support would be necessary to provide a more robust value assessment, but such data is not readily available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Unisys Corporation. The justification for this approach is not detailed, but it implies that either only Unisys possessed the necessary expertise or proprietary knowledge for the legacy product support, or that a competitive process was deemed impractical or unnecessary. The lack of competition means there was no opportunity for multiple vendors to bid, which typically drives down prices and encourages innovation.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing bids, the government lacks assurance that it secured the most cost-effective solution available in the market.

Public Impact

The Department of Homeland Security (DHS) benefits from continued support of its legacy IT systems. Essential operational continuity is maintained for critical government functions reliant on these systems. The contract ensures the availability of technical expertise for maintaining and operating specific legacy products. The primary beneficiaries are the internal DHS IT operations and the agencies that depend on these systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and reduced value for taxpayer dollars.
Sole-source awards can stifle innovation and prevent the government from accessing potentially better or more cost-effective solutions.
Reliance on a single vendor for critical legacy support creates vendor lock-in and potential long-term dependency.
The fixed-price contract may not adequately adapt to potential changes in scope or unforeseen technical challenges with legacy systems.
Limited transparency into the justification for the sole-source award hinders public and internal oversight.
The contract's duration and focus on legacy systems may indicate a lack of progress in modernizing critical IT infrastructure.

Positive Signals

The contract ensures the continued operation of essential legacy systems, preventing potential disruptions to critical DHS functions.
A fixed-price contract provides cost certainty for the duration of the award, aiding in budget predictability.
Unisys Corporation's established relationship and presumed expertise in supporting these specific legacy products likely ensures a degree of stability.
The contract specifies a clear end date, implying a planned transition or end-of-life for the supported systems.
The award was made to a known entity, potentially reducing initial onboarding risks associated with a new vendor.

Sector Analysis

This contract falls within the IT support services sector, specifically focusing on maintaining legacy systems. The market for such services is often characterized by specialized knowledge requirements, particularly for older or proprietary technologies. While the broader IT services market is vast and highly competitive, contracts for niche legacy support can sometimes be concentrated among a few incumbent providers. Benchmarking is challenging without knowing the specific legacy products supported, but IT maintenance and support services represent a significant portion of federal IT spending.

Small Business Impact

This contract does not appear to have included any small business set-aside provisions, nor is there information indicating subcontracting goals for small businesses. The sole-source nature of the award likely precluded opportunities for small businesses to participate. This suggests that the primary focus was on securing support from the incumbent, Unisys Corporation, rather than fostering small business engagement within this specific procurement.

Oversight & Accountability

Oversight for this contract would primarily reside within the Department of Homeland Security's procurement and program management offices. As a sole-source award, the justification and terms would be subject to internal review and potentially audits by agencies like the Government Accountability Office (GAO) or DHS's Office of Inspector General (OIG) if specific concerns arise. Transparency is limited due to the lack of a competitive process and publicly available detailed performance metrics.

Related Government Programs

DHS IT Modernization Efforts
Legacy System Support Contracts
Federal IT Services Procurement
Sole-Source IT Contract Awards

Risk Flags

Sole-source award lacks transparency and competitive justification.
Potential for overpayment due to lack of competition.
Reliance on legacy systems may indicate slow modernization.
No clear performance metrics provided in summary data.
Absence of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $37.4 million to UNISYS CORPORATION. LEGACY PRODUCT COST AND TRANSITION TO OWNERSHIP COSTS

Who is the contractor on this award?

The obligated recipient is UNISYS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Office of Procurement Operations).

What is the total obligated amount?

The obligated amount is $37.4 million.

What is the period of performance?

Start: 2005-12-30. End: 2007-12-31.

What specific legacy products or systems does this contract support, and what is their criticality to DHS operations?

The provided data does not specify the exact legacy products or systems supported by this contract. However, given the award to Unisys Corporation and the description 'LEGACY PRODUCT COST AND TRANSITION TO OWNERSHIP COSTS,' it likely pertains to IT infrastructure or software that is no longer in mainstream production but remains essential for certain DHS functions. The criticality is implied by the substantial contract value and the Department of Homeland Security's mission, which relies heavily on robust IT systems for national security, border control, and emergency management. Without specific product identification, a precise assessment of criticality is challenging, but any system supporting core operational functions would be considered highly critical.

What was the justification for awarding this contract on a sole-source basis to Unisys Corporation?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. Federal procurement regulations typically require competitive bidding unless specific exceptions apply. Common justifications for sole-source awards include proprietary technology, unique capabilities held by only one vendor, urgent and compelling needs where competition is not feasible, or when a previous contract expires and a transition to a new vendor is impractical. Without further documentation from the Department of Homeland Security, the precise justification for this specific award to Unisys remains unknown. This lack of transparency is a common concern with sole-source procurements.

How does the $37.3 million contract value compare to industry benchmarks for similar legacy IT support services?

Benchmarking this $37.3 million contract is difficult without knowing the specific legacy products supported, their complexity, and the scope of services (e.g., maintenance, upgrades, help desk). However, for context, federal IT support contracts can range widely. Large-scale legacy system support for critical infrastructure can indeed run into tens of millions of dollars over several years, especially if it involves specialized expertise or hardware. The fact that this was a sole-source award to Unisys Corporation for a duration of two years (731 days) suggests a significant, potentially specialized, ongoing need. A more precise comparison would require access to Unisys's commercial pricing for similar services or data from other agencies supporting comparable legacy systems.

What performance metrics or key performance indicators (KPIs) were established for Unisys Corporation under this contract?

The provided data does not include details on the performance metrics or Key Performance Indicators (KPIs) established for Unisys Corporation under this contract. Typically, government contracts, especially those for IT support, include clauses outlining expected service levels, response times, system uptime, and other measurable outcomes. The absence of this information in the summary data suggests it might be detailed in the full contract document. Without these KPIs, it is challenging to objectively assess whether Unisys met its contractual obligations or if the government received adequate value for the $37.3 million expenditure.

What is the historical spending pattern for legacy product support within the Department of Homeland Security, and how does this contract fit?

The provided data focuses on a single contract ($37.3 million from 2005-2007). To understand historical spending patterns, one would need to analyze DHS's procurement history over a longer period, looking for contracts related to legacy IT support, maintenance, and transition services. This particular contract, awarded to Unisys, represents a significant investment in maintaining existing systems rather than acquiring new ones. Its value suggests that legacy systems constituted a substantial part of DHS's IT portfolio at the time. Analyzing trends in such spending could reveal whether DHS has been prioritizing modernization or continued support for older technologies, and how Unisys has featured as a vendor in this context.

What are the implications of this contract's fixed-price nature on potential cost overruns or savings?

A Firm Fixed Price (FFP) contract, like this one, establishes a ceiling price that the contractor must not exceed. This structure offers cost certainty to the government, as the total expenditure is known upfront ($37.3 million). For the contractor, it implies bearing the risk of cost overruns. If Unisys's costs to provide the legacy product support exceed the fixed price, their profit margin decreases. Conversely, if they can deliver the services for less than the fixed price, their profit increases. The implication for this contract is that DHS is protected from unexpected cost increases related to the scope defined, but it also means potential savings are limited if Unisys operates very efficiently. The risk shifts to the contractor to manage their costs effectively within the agreed-upon price.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › All Other Support Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 11720 PLAZA AMERICA DR, RESTON, VA, 11

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $37,360,133

Exercised Options: $37,360,133

Current Obligation: $37,360,133

Contract Characteristics

Multi-Year Contract: Yes

Parent Contract

Parent Award PIID: HSTS0306DCIO500

IDV Type: IDC

Timeline