DHS's $33.7M FADS II contract with Empower AI, Inc. shows a high per-unit cost for IT services

Contract Overview

Contract Amount: $33,701,186 ($33.7M)

Contractor: Empower AI, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2016-09-30

End Date: 2019-03-24

Contract Duration: 905 days

Daily Burn Rate: $37.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 25

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF FLEXIBLE AGILE DEVELOPMENT SERVICES II (FADS II)

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20529

State: District of Columbia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $33.7 million to EMPOWER AI, INC. for work described as: IGF::OT::IGF FLEXIBLE AGILE DEVELOPMENT SERVICES II (FADS II) Key points: 1. The contract's total value of $33.7 million over its period of performance suggests a significant investment in IT services. 2. Empower AI, Inc. secured this contract, indicating their capability in providing flexible agile development services. 3. The contract was awarded under full and open competition, implying a robust bidding process. 4. The duration of the contract, approximately 905 days, allowed for sustained service delivery. 5. The fixed-price contract type suggests a defined scope and cost structure, potentially mitigating cost overrun risks. 6. The contract's focus on computing infrastructure, data processing, and web hosting aligns with critical government IT needs.

Value Assessment

Rating: fair

The total award of $33.7 million for a period of roughly 30 months (905 days) indicates a substantial investment. Benchmarking this against similar large-scale IT service contracts is challenging without more granular data on the specific services rendered. However, the per-unit cost appears on the higher side, suggesting potential areas for cost optimization or a premium for specialized agile development expertise. Further analysis of the deliverables and performance metrics would be needed for a more definitive value assessment.

Cost Per Unit: The average monthly cost is approximately $1.12 million ($33.7M / 30 months). Without specific details on the number of personnel or hours billed, a direct per-unit cost comparison is difficult. However, this monthly burn rate for IT services of this nature can be considered high, especially if it doesn't reflect a commensurate level of output or complexity.

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, meaning all responsible sources were permitted to submit a bid. The fact that it was competed suggests that the agency sought the best value and technical solution available in the market. The number of bids received (25) indicates a healthy level of interest and competition for this type of IT service contract.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation, leading to better value for public funds.

Public Impact

U.S. Citizenship and Immigration Services (USCIS) benefits from enhanced IT capabilities to support its mission. The contract delivers essential computing infrastructure, data processing, and web hosting services. Services are primarily delivered within the District of Columbia, impacting federal operations in the nation's capital. The contract supports the federal IT workforce through the provision of specialized agile development services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for high per-unit costs requires careful monitoring of service delivery and efficiency.
The significant contract value could indicate a reliance on a single vendor for critical IT functions, posing a risk if performance falters.
Ensuring the 'agile' aspect translates to demonstrable improvements in development speed and adaptability is crucial.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment and a wide selection of potential providers.
The fixed-price contract type provides cost certainty for the agency.
The contract's duration allowed for a sustained and stable provision of IT services.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computing infrastructure, data processing, and web hosting. This is a critical area for government operations, supporting everything from citizen services to internal administrative functions. The market for these services is highly competitive, with numerous large and small businesses offering solutions. Government spending in this category is substantial, reflecting the increasing digitization of federal agencies. Comparable spending benchmarks would typically look at the average cost per server, per terabyte of storage, or per user for similar managed IT services.

Small Business Impact

The contract was not set aside for small businesses, and the data indicates no explicit small business subcontracting goals were met or required. This suggests that the primary award went to a large business, Empower AI, Inc. While this contract may not directly benefit small businesses through set-asides, large prime contractors are often encouraged or required to subcontract portions of their work to small businesses. The impact on the small business ecosystem would depend on whether Empower AI, Inc. actively engages small businesses as subcontractors for specialized services.

Oversight & Accountability

Oversight for this contract would typically fall under the U.S. Citizenship and Immigration Services (USCIS) contracting officers and program managers. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse. The fixed-price nature of the contract provides a degree of accountability by linking payment to defined deliverables.

Related Government Programs

IT Infrastructure Services
Cloud Computing Services
Data Processing and Hosting
Agile Software Development
Government IT Modernization

Risk Flags

High Per-Unit Cost Potential
Contract Duration and Scope Management
Vendor Lock-in Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $33.7 million to EMPOWER AI, INC.. IGF::OT::IGF FLEXIBLE AGILE DEVELOPMENT SERVICES II (FADS II)

Who is the contractor on this award?

The obligated recipient is EMPOWER AI, INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Citizenship and Immigration Services).

What is the total obligated amount?

The obligated amount is $33.7 million.

What is the period of performance?

Start: 2016-09-30. End: 2019-03-24.

What was the specific nature of the 'flexible agile development services' provided under this contract?

The contract, IGF FLEXIBLE AGILE DEVELOPMENT SERVICES II (FADS II), was awarded to EMPOWER AI, INC. by the Department of Homeland Security (DHS) through U.S. Citizenship and Immigration Services (USCIS). The core services involved computing infrastructure, data processing, web hosting, and related services, delivered using agile methodologies. Agile development emphasizes iterative progress, collaboration, and rapid response to change. For USCIS, this likely translated into faster development cycles for software applications, improved system maintenance, and the ability to adapt IT solutions to evolving operational needs. The 'flexible' aspect suggests the contractor had latitude in how they applied agile principles to meet diverse and changing requirements within the specified scope, aiming for enhanced efficiency and responsiveness in IT service delivery.

How does the per-unit cost of this contract compare to industry benchmarks for similar IT services?

The total award of $33.7 million over approximately 30 months (905 days) yields an average monthly cost of roughly $1.12 million. Without granular data on the specific services, personnel hours, or deliverables, a precise per-unit cost comparison is difficult. However, this monthly expenditure for IT services, particularly those involving infrastructure, data processing, and web hosting, can be considered substantial. Industry benchmarks vary widely based on service type, complexity, and geographic location. If this monthly cost primarily covers personnel, it might suggest a high number of senior or specialized staff. If it includes significant infrastructure costs, it could be more aligned with market rates for robust managed services. Further analysis would require breaking down the costs by service component and comparing them to established IT service pricing models.

What were the key performance indicators (KPIs) or success metrics for this contract?

Specific Key Performance Indicators (KPIs) for the FADS II contract are not detailed in the provided summary data. However, for IT service contracts of this nature, typical KPIs would likely include system uptime and availability (e.g., 99.9% uptime for critical services), response times for issue resolution (e.g., critical issues resolved within 4 hours), data processing throughput, security compliance adherence, and successful deployment of new features or updates within defined sprint cycles (common in agile development). User satisfaction surveys and the successful completion of project milestones would also likely be part of the performance evaluation framework to ensure the 'flexible agile development services' were effectively meeting USCIS's needs.

What is the track record of Empower AI, Inc. in delivering similar large-scale IT contracts for federal agencies?

Empower AI, Inc. (formerly known as NCI Information Systems) has a history of providing IT services to various federal agencies. While the specific details of their track record for large-scale, flexible agile development services contracts like FADS II require deeper investigation into past performance evaluations and contract histories, the company has been involved in significant government IT modernization efforts. Their portfolio often includes areas like cloud migration, cybersecurity, data analytics, and enterprise IT management. Securing a $33.7 million contract with USCIS indicates a level of trust and demonstrated capability. However, a comprehensive assessment would involve reviewing their performance on previous contracts, client feedback, and any past performance issues or commendations.

How has spending on computing infrastructure and data processing services evolved within USCIS over the past five years?

While specific USCIS spending trends for computing infrastructure and data processing are not directly available from the provided data, federal agencies like USCIS have generally seen a significant increase in IT spending over the past five years. This trend is driven by the need for digital transformation, modernization of legacy systems, enhanced data analytics capabilities, and the adoption of cloud services. Agencies are increasingly moving towards flexible, scalable solutions to manage vast amounts of data and provide efficient citizen services. Contracts like FADS II reflect this broader shift towards agile, service-oriented IT procurement, moving away from traditional, monolithic system development towards more adaptable and responsive IT solutions.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 25

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: HIG Capital Management, Inc.

Address: 11730 PLAZA AMERICA DR STE 700, RESTON, VA, 20190

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $50,616,446

Exercised Options: $33,701,186

Current Obligation: $33,701,186

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $203,980

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HSHQDC13DE2104

IDV Type: IDC

Timeline