DoD's $58.4M IT contract for health readiness system development awarded without competition

Contract Overview

Contract Amount: $58,358,501 ($58.4M)

Contractor: American Systems Corporation

Awarding Agency: Department of Defense

Start Date: 2021-03-12

End Date: 2025-12-26

Contract Duration: 1,750 days

Daily Burn Rate: $33.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ANNUAL SURVEILLANCE & READINESS (S&R) SUSTAINMENT AND DEVELOPMENT OF THE DEFENSE OCCUPATIONAL AND ENVIRONMENTAL HEALTH READINESS SYSTEM PROGRAM.

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78234

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $58.4 million to AMERICAN SYSTEMS CORPORATION for work described as: ANNUAL SURVEILLANCE & READINESS (S&R) SUSTAINMENT AND DEVELOPMENT OF THE DEFENSE OCCUPATIONAL AND ENVIRONMENTAL HEALTH READINESS SYSTEM PROGRAM. Key points: 1. Contract awarded on a firm-fixed-price basis, indicating defined scope and cost. 2. The contract duration of 1750 days suggests a long-term need for sustainment and development. 3. Awarded to American Systems Corporation, a single contractor, raising questions about competition. 4. The North American Industry Classification System (NAICS) code 541519 points to IT services, specifically 'Other Computer Related Services'. 5. The contract is a delivery order, implying it's part of a larger, potentially pre-existing agreement. 6. The contract is not set aside for small businesses, suggesting a focus on larger prime contractors.

Value Assessment

Rating: questionable

Benchmarking the value of this $58.4 million contract is challenging without comparable sole-source awards for similar IT sustainment and development services. The firm-fixed-price structure provides cost certainty for the government, but the lack of competition may have led to a higher price than could have been achieved through a competitive process. Further analysis would require understanding the specific deliverables and market rates for specialized IT services in defense health readiness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, American Systems Corporation, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified under specific circumstances (e.g., urgency, unique capabilities), they limit price discovery and potentially reduce the government's ability to secure the best value.

Taxpayer Impact: The absence of competition means taxpayers may not have benefited from the cost savings typically driven by a bidding process. This could result in a higher overall expenditure for the services provided.

Public Impact

Personnel in the Department of Defense, particularly those involved in occupational and environmental health, will benefit from the sustained and developed readiness system. The contract delivers IT services focused on the sustainment and development of a critical defense health readiness system. The geographic impact is primarily within the Department of Defense's operational footprint, supporting readiness across various locations. The contract supports a workforce of IT professionals and potentially healthcare personnel who rely on the system for their operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award limits transparency and potential for better value.
Long-term sustainment contract without competitive re-evaluation raises concerns about ongoing cost-effectiveness.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a single contractor may indicate specialized capabilities required for the system.
Sustainment and development of a critical defense health system addresses a long-term need.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on software development, sustainment, and related computer services for a defense application. The market for defense IT services is substantial, with significant government spending allocated to maintaining and upgrading complex systems. Comparable spending benchmarks would typically involve other large-scale IT sustainment contracts within federal agencies, particularly those supporting critical infrastructure or operational readiness.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses. The award to a single, likely larger, prime contractor suggests that the scope of work may not have been structured to facilitate small business participation as prime awardees. Further investigation into subcontracting plans would be needed to assess any indirect impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specific outcomes. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Occupational and Environmental Health Readiness System (DOEHRS)
DoD IT Modernization Programs
Defense Health Agency IT Contracts
Federal Health IT Services
IT Sustainment Contracts

Risk Flags

Sole-source award lacks transparency and competitive pricing.
Potential for higher costs due to lack of competition.
Long-term contract duration without re-competition may reduce incentive for innovation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $58.4 million to AMERICAN SYSTEMS CORPORATION. ANNUAL SURVEILLANCE & READINESS (S&R) SUSTAINMENT AND DEVELOPMENT OF THE DEFENSE OCCUPATIONAL AND ENVIRONMENTAL HEALTH READINESS SYSTEM PROGRAM.

Who is the contractor on this award?

The obligated recipient is AMERICAN SYSTEMS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Health Agency).

What is the total obligated amount?

The obligated amount is $58.4 million.

What is the period of performance?

Start: 2021-03-12. End: 2025-12-26.

What is the specific nature of the 'Other Computer Related Services' provided under this contract?

The NAICS code 541519, 'Other Computer Related Services,' is broad and encompasses a wide range of IT activities not classified elsewhere. For this specific contract, it pertains to the 'ANNUAL SURVEILLANCE & READINESS (S&R) SUSTAINMENT AND DEVELOPMENT OF THE DEFENSE OCCUPATIONAL AND ENVIRONMENTAL HEALTH READINESS SYSTEM PROGRAM.' This suggests services likely include software maintenance, bug fixing, system updates, performance enhancements, and potentially the development of new features or modules for the Defense Occupational and Environmental Health Readiness System (DOEHRS). The 'surveillance and readiness' aspect implies a focus on ensuring the system effectively monitors and supports occupational and environmental health standards within the military.

Why was this contract awarded on a sole-source basis instead of through full and open competition?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. Justifications for sole-source awards typically fall under specific exceptions to the Competition in Contracting Act, such as when only one responsible source can provide the required supplies or services, or when a public exigency requires immediate procurement. Without further documentation (like a Justification for Other Than Full and Open Competition - JOFOC), the specific reason remains unknown. It's possible American Systems Corporation possesses unique intellectual property, specialized expertise, or is the incumbent with deep system knowledge that the agency deemed essential and irreplaceable through competition within the given timeframe.

How does the firm-fixed-price (FFP) contract type mitigate risk for the government in this sole-source scenario?

A firm-fixed-price (FFP) contract type is generally advantageous for the government as it shifts the risk of cost overruns to the contractor. In this sole-source scenario, the FFP structure locks in the price for the defined scope of work, providing budget certainty. While the government doesn't benefit from competitive price reductions, the FFP ensures that the $58.4 million ceiling is the maximum expenditure for the specified deliverables. This contrasts with cost-reimbursement contracts where the government bears the risk of cost increases. However, the FFP price itself could still be higher than a competitively derived price.

What are the potential implications of a long contract duration (1750 days) for IT sustainment and development?

A contract duration of 1750 days (approximately 4.8 years) for IT sustainment and development indicates a long-term commitment to the Defense Occupational and Environmental Health Readiness System (DOEHRS). For sustainment, this allows for stable support and maintenance, ensuring the system remains operational and secure. For development, it suggests a phased approach to enhancements or new functionalities. However, such long durations, especially without periodic re-competition, can lead to vendor lock-in and potentially stifle innovation if the contractor does not proactively adapt to evolving technologies or user needs. It also means the government is committed to this specific solution for an extended period.

What is the historical spending pattern for the Defense Occupational and Environmental Health Readiness System (DOEHRS) program?

The provided data only details a single delivery order valued at $58.4 million with an end date in late 2025. To understand the historical spending pattern for the DOEHRS program, one would need to examine prior contracts awarded for its development, sustainment, and any related services. This would involve searching federal procurement databases (like FPDS or USASpending) for previous awards to American Systems Corporation or other contractors associated with DOEHRS. Analyzing these past expenditures would reveal trends in annual spending, the number and type of contracts (competitive vs. sole-source), and the overall lifecycle cost of the system.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HT001121R0001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 14151 PARK MEADOW DR STE 500, CHANTILLY, VA, 20151

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

Financial Breakdown

Contract Ceiling: $99,439,014

Exercised Options: $58,358,501

Current Obligation: $58,358,501

Actual Outlays: $5,992,124

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $43,472,051

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HT003819G0001

IDV Type: BOA

Timeline