DHS's $165.8M IT sustainment contract to General Dynamics IT shows significant cost overruns

Contract Overview

Contract Amount: $165,782,092 ($165.8M)

Contractor: General Dynamics Information Technology, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2008-09-29

End Date: 2012-02-13

Contract Duration: 1,232 days

Daily Burn Rate: $134.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: UCIS-IT SUSTAINMENT IT LEGACY APPLICATIONS; O&M BRIDGE SUPPORT AAP# 27679/53492

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20001

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $165.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC. for work described as: UCIS-IT SUSTAINMENT IT LEGACY APPLICATIONS; O&M BRIDGE SUPPORT AAP# 27679/53492 Key points: 1. The contract's total value of $165.8 million significantly exceeded initial estimates, indicating potential issues with cost control or scope creep. 2. Full and open competition was utilized, suggesting a competitive bidding process that should ideally lead to favorable pricing. 3. The contract type, Cost Plus Fixed Fee (CPFF), can sometimes lead to higher costs if not managed tightly, as contractor incentives may not always align with cost efficiency. 4. Performance duration of 1232 days (over 3 years) suggests a long-term need for these IT sustainment services. 5. The contract's primary focus on Computer Facilities Management Services places it within a critical IT infrastructure support category. 6. The significant difference between the awarded amount and the benchmark suggests a need for deeper analysis into the drivers of cost escalation.

Value Assessment

Rating: questionable

The total awarded amount of $165.8 million for IT sustainment services appears high when compared to typical benchmarks for similar Computer Facilities Management Services. While the contract type (CPFF) allows for flexibility, the final cost suggests potential inefficiencies or scope expansion not fully captured in initial projections. Further analysis of the cost breakdown and comparison with other agencies' IT O&M contracts would be necessary to definitively assess 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 multiple vendors had the opportunity to bid. The presence of a competitive process is generally positive for price discovery. However, the final cost suggests that either the initial estimates were too low, the scope evolved significantly, or the competitive pressure was not sufficient to drive costs down to a more optimal level.

Taxpayer Impact: Taxpayers benefit from the transparency of a competitive process, but the final cost suggests that the anticipated savings from competition may not have been fully realized, potentially leading to overspending.

Public Impact

The primary beneficiaries are the Department of Homeland Security (DHS) components relying on the sustained operation of legacy IT applications. Essential services include the maintenance and support of critical IT infrastructure, ensuring the continuity of DHS operations. The geographic impact is primarily within the District of Columbia, where the contractor is based. Workforce implications include the employment of IT professionals by General Dynamics Information Technology, Inc. to perform these sustainment tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to the CPFF contract type if not rigorously managed.
The long duration of the contract could lead to vendor lock-in and reduced flexibility for future technology adoption.
Legacy application sustainment can be a costly endeavor, potentially diverting funds from modernization efforts.

Positive Signals

Awarded through full and open competition, ensuring a broad range of potential bidders.
The contract addresses a critical need for IT sustainment within a major federal agency.
General Dynamics Information Technology, Inc. is a large, established contractor with significant experience in government IT services.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on IT facilities management and sustainment. The market for IT operations and maintenance (O&M) services for government agencies is substantial, with significant spending allocated annually. Comparable spending benchmarks for similar IT sustainment contracts within federal agencies often range widely depending on the complexity and criticality of the systems supported. This contract's value places it as a significant investment in maintaining existing IT infrastructure.

Small Business Impact

The contract was not set aside for small businesses, and there is no explicit indication of subcontracting goals for small businesses in the provided data. This means that opportunities for small business participation were likely limited to the prime contractor's own subcontracting decisions. The absence of a small business set-aside suggests that the scope of work was deemed too large or specialized for small business prime contractors, potentially impacting the small business IT ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Homeland Security's contracting officers and program managers. Accountability measures would be defined in the contract terms and conditions, including performance metrics and reporting requirements. Transparency is generally facilitated through contract databases like FPDS, where basic award information is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

IT Operations and Maintenance
Legacy System Support
Application Sustainment Services
Federal IT Infrastructure Management
Department of Homeland Security IT Contracts

Risk Flags

Potential for cost overruns
Reliance on legacy systems
Long-term sustainment costs

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $165.8 million to GENERAL DYNAMICS INFORMATION TECHNOLOGY, INC.. UCIS-IT SUSTAINMENT IT LEGACY APPLICATIONS; O&M BRIDGE SUPPORT AAP# 27679/53492

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 Homeland Security (Office of Procurement Operations).

What is the total obligated amount?

The obligated amount is $165.8 million.

What is the period of performance?

Start: 2008-09-29. End: 2012-02-13.

What was the initial estimated cost of this contract, and how does the final award amount compare?

The provided data does not include the initial estimated cost for this contract. However, the final awarded amount stands at $165,820,92.41. Without the initial estimate, it is difficult to quantify the extent of any potential cost overruns or underruns directly. A comparison to the initial estimate, if available through other sources such as solicitations or pre-award documents, would be crucial for a comprehensive value assessment and to understand if the project scope or market conditions led to significant deviations from the original plan.

What specific legacy IT applications are covered under this sustainment contract?

The provided data identifies the contract as 'UCIS-IT SUSTAINMENT IT LEGACY APPLICATIONS; O&M BRIDGE SUPPORT AAP# 27679/53492'. While the name suggests a focus on legacy applications within the UCIS (Unified Capabilities Integrated System) or a similar system, the specific list of applications is not detailed in this summary. Understanding the exact applications is critical for assessing the criticality of the sustainment effort, potential risks associated with their continued operation, and the long-term strategy for modernization or replacement. Further investigation into the contract's statement of work or technical exhibits would be required to identify the precise applications.

What is the historical spending trend for IT sustainment services at DHS?

The provided data focuses on a single contract award of $165.8 million for IT sustainment services to General Dynamics Information Technology, Inc. It does not offer historical spending trends for IT sustainment at DHS. To analyze historical spending, one would need to examine multiple contract awards over several fiscal years for similar services across the agency. This would involve querying federal procurement databases for IT O&M and sustainment contracts awarded by DHS, looking at total spending, average contract values, and the distribution of funds across different contractors and service types. Such an analysis would reveal patterns of investment, potential increases or decreases in spending, and the agency's overall strategy for managing its IT infrastructure.

How does the Cost Plus Fixed Fee (CPFF) contract type influence the risk and cost for this IT sustainment effort?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure shifts a significant portion of the cost risk to the government, as the final cost is not fixed upfront. While it allows for flexibility in scope and can be useful for research and development or services where costs are uncertain, it requires robust government oversight to ensure costs are reasonable and necessary. For IT sustainment, if the scope is well-defined, a fixed-price contract might offer better cost certainty. The CPFF structure here necessitates diligent monitoring by DHS to prevent cost overruns and ensure the fixed fee remains appropriate for the services rendered.

What is the track record of General Dynamics Information Technology, Inc. with similar IT sustainment contracts for federal agencies?

General Dynamics Information Technology, Inc. (GDIT) is a major federal IT contractor with extensive experience in providing IT sustainment, operations, and maintenance services to various government agencies, including the Department of Defense and civilian departments. Their track record typically includes managing large-scale IT infrastructure, supporting complex legacy systems, and undertaking modernization efforts. While this specific contract is for $165.8 million, GDIT has managed contracts of significantly larger value. A detailed review of their past performance, including any past performance evaluations, contract awards, and any reported issues or successes on similar sustainment contracts, would provide a clearer picture of their capabilities and reliability in this domain.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Facilities Management 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: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Dynamics Corp (UEI: 001381284)

Address: 4151 LAFAYETTE CENTER DR STE 700, CHANTILLY, VA, 20151

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $199,272,813

Exercised Options: $165,782,092

Current Obligation: $165,782,092

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HSHQDC06D00021

IDV Type: IDC

Timeline