DoD awards $42.6M for IT support to Military Health System, raising value-for-money questions

Contract Overview

Contract Amount: $42,551,815 ($42.6M)

Contractor: HUI Huliau Technology Services LLC

Awarding Agency: Department of Defense

Start Date: 2023-09-30

End Date: 2026-04-11

Contract Duration: 924 days

Daily Burn Rate: $46.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: MILITARY HEALTH SYSTEM GENESIS ISSUE RESOLUTION MANAGEMENT SUPPORT- OCONUS REGIONAL MARKET

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22042

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $42.6 million to HUI HULIAU TECHNOLOGY SERVICES LLC for work described as: MILITARY HEALTH SYSTEM GENESIS ISSUE RESOLUTION MANAGEMENT SUPPORT- OCONUS REGIONAL MARKET Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. IT support services are critical for the functioning of the Military Health System. 3. The contract duration of over two years suggests a need for sustained support. 4. Fixed-price contract type aims to control costs, but sole-source nature may inflate pricing. 5. The specific IT services provided are not detailed, making direct performance benchmarking difficult. 6. The contractor, HUI HULIAU TECHNOLOGY SERVICES LLC, has a limited public contract history for this scale of work.

Value Assessment

Rating: questionable

The contract's value of $42.6 million for IT support services requires careful scrutiny due to its sole-source nature. Without competitive bidding, it's challenging to benchmark the pricing against market rates or similar government contracts. The fixed-price structure is a positive cost-control measure, but the lack of competition could lead to a higher-than-necessary price. Further analysis of the specific services rendered and their necessity would be required to fully assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This significantly limits the number of potential bidders and the opportunity for market forces to drive down prices. While sole-source awards can be justified in specific circumstances, they often result in less competitive pricing and potentially reduced innovation compared to full-and-open competition.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive pressure. The lack of transparency in the bidding process makes it difficult to ascertain if the government secured the best possible price.

Public Impact

Service members and their families will benefit from improved IT infrastructure and support within the Military Health System. Essential IT management and resolution support services will be delivered to the Defense Health Agency. The contract has a geographic impact primarily on OCONUS (Outside Continental United States) regions where military health facilities are located. The contract supports IT professionals and potentially other roles within the contractor's organization, impacting the defense IT workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially value for money.
Lack of detailed service description hinders performance and cost benchmarking.
Contractor's limited public track record at this scale raises potential performance risks.
The significant dollar value warrants close monitoring of service delivery and cost.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Award to a specific contractor may indicate a strategic relationship or specialized capability.
Support for the Military Health System is a critical government function.

Sector Analysis

This contract falls within the IT services sector, specifically focusing on computer systems design and related services. The IT services market for the federal government is substantial, with agencies like the Department of Defense being major consumers. This contract supports the operational needs of the Defense Health Agency, a critical component of the military's healthcare infrastructure. Comparable spending benchmarks for IT support services within the defense sector are varied, but the scale of this award suggests a significant operational requirement.

Small Business Impact

The contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses. This suggests that the primary contractor is expected to perform the majority of the work, and opportunities for small businesses to participate in this specific contract are likely limited. The absence of small business participation could mean missed opportunities to foster growth within the small business defense contracting ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Health Agency's contracting officers and program managers. The fixed-price nature of the contract provides some level of accountability for cost. Transparency regarding performance metrics and service delivery would be crucial for effective oversight. The Inspector General of the Department of Defense may have jurisdiction for audits and investigations if concerns arise regarding fraud, waste, or abuse.

Related Government Programs

Military Health System IT Modernization
Defense Health Agency IT Services
OCONUS IT Support Contracts
Federal IT Services Procurement
Sole-Source IT Contracts

Risk Flags

Sole-source award
Lack of detailed service description
Potential for inflated pricing
Limited public contractor performance data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.6 million to HUI HULIAU TECHNOLOGY SERVICES LLC. MILITARY HEALTH SYSTEM GENESIS ISSUE RESOLUTION MANAGEMENT SUPPORT- OCONUS REGIONAL MARKET

Who is the contractor on this award?

The obligated recipient is HUI HULIAU TECHNOLOGY SERVICES LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $42.6 million.

What is the period of performance?

Start: 2023-09-30. End: 2026-04-11.

What specific IT services are included under this 'Genesis Issue Resolution Management Support' contract?

The provided data does not detail the specific IT services encompassed by 'Genesis Issue Resolution Management Support.' Typically, such contracts involve technical support, troubleshooting, system maintenance, issue tracking, and potentially help desk functions for IT systems within the Military Health System. The 'Genesis' designation might refer to a specific IT system or platform managed by the Defense Health Agency. Without further information, it's difficult to ascertain the exact scope, which impacts the ability to benchmark costs and assess performance effectiveness.

What is the justification for awarding this contract on a sole-source basis?

The data indicates the contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' which is synonymous with a sole-source award. Government agencies typically sole-source contracts when only one responsible source can satisfy the agency's needs. This could be due to unique capabilities, proprietary technology, urgent and compelling circumstances, or a previous contract where the incumbent is the only viable option. The specific justification for this award is not provided in the data, but it implies that the Defense Health Agency determined HUI HULIAU TECHNOLOGY SERVICES LLC was the only entity capable of meeting the requirements at the time of award.

How does the $42.6 million contract value compare to similar IT support contracts for the Military Health System?

Direct comparison of the $42.6 million contract value to similar IT support contracts for the Military Health System is challenging without more specific data on contract scope and duration. However, the value suggests a significant and ongoing need for IT support services. Given the sole-source nature, it's difficult to definitively state if this represents a competitive market rate. Historically, large-scale IT support contracts for federal agencies can range from tens to hundreds of millions of dollars, depending on the complexity and breadth of services required. Further analysis would require identifying comparable contracts with similar service offerings and durations.

What are the potential risks associated with a sole-source IT support contract of this magnitude?

The primary risk associated with a sole-source IT support contract of this magnitude is the potential for inflated pricing due to a lack of competitive pressure. Without multiple bidders vying for the contract, the government may not achieve the most cost-effective solution. Other risks include vendor lock-in, where the agency becomes overly reliant on a single provider, potentially hindering future flexibility or innovation. There's also a risk that the sole-source provider may not maintain the highest standards of service or performance if they perceive less risk of losing the contract to a competitor. Effective contract management and oversight are crucial to mitigate these risks.

What is the track record of HUI HULIAU TECHNOLOGY SERVICES LLC in providing IT support services to the federal government?

The provided data indicates HUI HULIAU TECHNOLOGY SERVICES LLC as the contractor. Information regarding their specific track record in providing IT support services, particularly for a contract of this scale and nature within the Military Health System, is not detailed. A deeper dive into the Federal Procurement Data System (FPDS) or other contract databases would be necessary to assess their past performance, contract history, and any reported issues or successes on previous government contracts. Without this information, it's difficult to evaluate their experience and reliability for this critical support role.

How does the fixed-price contract type influence cost control and performance for this IT support service?

A Firm Fixed Price (FFP) contract type, as indicated for this award, is generally favored by the government for IT services because it places the risk of cost overruns on the contractor. This incentivizes the contractor to manage their costs efficiently and perform the work within the agreed-upon budget. For the government, it provides cost certainty. However, for an FFP contract awarded sole-source, the initial price is critical. If the price was not competitively determined, the cost certainty might come at a higher base price. Performance is also a key factor; the contractor must deliver the specified services to receive payment, but the quality of that performance still needs to be monitored.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HT001123R0101

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 85-876 FARRINGTON HWY, WAIANAE, HI, 96792

Business Categories: 8(a) Program Participant, Category Business, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Native Hawaiian Organization Owned Firm, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $77,112,735

Exercised Options: $42,551,815

Current Obligation: $42,551,815

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline