DoD's $37M software support contract with FOUR LLC shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $36,957,907 ($37.0M)

Contractor: Four LLC

Awarding Agency: Department of Defense

Start Date: 2016-03-30

End Date: 2019-09-30

Contract Duration: 1,279 days

Daily Burn Rate: $28.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF SOFTWARE SUPPORT AND MAINTENANCE

Place of Performance

Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22041

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $37.0 million to FOUR LLC for work described as: IGF::OT::IGF SOFTWARE SUPPORT AND MAINTENANCE Key points: 1. The contract's value appears reasonable when benchmarked against similar IT support services. 2. Competition was limited, with only two bidders, potentially impacting price discovery. 3. The fixed-price contract type mitigates some cost overrun risks. 4. Performance duration of over three years provides stability for the Defense Health Agency. 5. This contract falls within the broad category of IT services for the federal government. 6. The contractor has a track record with federal agencies, suggesting some level of reliability.

Value Assessment

Rating: good

The total contract value of approximately $37 million over its period of performance appears to be within a reasonable range for comprehensive software support and maintenance services. Benchmarking against similar IT support contracts awarded by the Department of Defense and other agencies suggests that the pricing structure is competitive. The firm-fixed-price nature of the award helps control costs for the government, as the contractor bears the risk of cost overruns. However, a more granular analysis of specific service components would be needed for a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded prior to the solicitation. With only two bidders participating, the level of competition was limited. This suggests that the market for this specific type of specialized software support might be constrained, or that the solicitation's requirements may have inadvertently limited the pool of potential offerors. Limited competition can sometimes lead to higher prices than would be achieved in a more robustly contested procurement.

Taxpayer Impact: The limited competition means taxpayers may not have benefited from the most aggressive pricing possible. A wider range of bidders could have driven down costs through competitive pressure.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Defense Health Agency, which receives essential software support. Services delivered include maintenance and support for critical software systems, ensuring operational continuity. The geographic impact is primarily within the operational sphere of the Defense Health Agency, supporting its IT infrastructure. The contract supports a specialized IT workforce, likely requiring specific technical skills for software maintenance and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in a higher price than a more open bidding process.
The specific reasons for excluding certain sources in the 'Full and Open Competition After Exclusion of Sources' award are not detailed, raising questions about fairness.
Lack of detailed performance metrics in the provided data makes it difficult to assess the contractor's effectiveness beyond contract completion.

Positive Signals

The contract utilizes a firm-fixed-price structure, which is generally favorable for government cost control.
The contractor, FOUR LLC, has experience with federal contracts, suggesting a degree of established capability.
The contract duration of over three years provides stability and continuity for essential IT services.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on software support and maintenance. The federal IT services market is substantial, with agencies consistently investing in maintaining and upgrading their complex software systems. Comparable spending benchmarks for similar IT support contracts often range from tens to hundreds of millions of dollars, depending on the scope and criticality of the software. This contract's value is moderate within this context, reflecting specialized support for a particular agency's needs.

Small Business Impact

The provided data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific benefits for the small business ecosystem stemming from this particular award. The focus appears to be on securing specialized IT support services, with the primary contractor selected based on qualifications and price, rather than small business utilization goals.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the Defense Health Agency's program management office. Accountability measures are inherent in the firm-fixed-price contract type, requiring the contractor to deliver specified services within the agreed-upon cost. Transparency is generally facilitated through contract award databases like FPDS, where basic information is publicly available. Specific Inspector General jurisdiction would depend on the nature of any potential fraud, waste, or abuse identified.

Related Government Programs

Defense Health Information Technology
IT Software Maintenance Services
Federal IT Support Contracts
Department of Defense IT Procurement

Risk Flags

Limited Competition
Potential for Suboptimal Pricing
Lack of Detailed Performance Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.0 million to FOUR LLC. IGF::OT::IGF SOFTWARE SUPPORT AND MAINTENANCE

Who is the contractor on this award?

The obligated recipient is FOUR LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.0 million.

What is the period of performance?

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

What is the track record of FOUR LLC in fulfilling federal contracts, particularly those involving software support and maintenance?

Based on the provided data, FOUR LLC has been awarded federal contracts, including this specific $37 million contract with the Defense Health Agency. The contract type (Delivery Order) suggests it was part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle or a similar framework. While the data confirms their engagement with the government, a comprehensive assessment of their track record would require examining past performance reviews, contract completion history, and any documented issues or successes on previous federal engagements. Without access to detailed performance reports or a broader contract history, it's difficult to definitively gauge their reliability and expertise beyond their participation in this specific award.

How does the pricing of this contract compare to similar IT software support contracts awarded by the Department of Defense or other federal agencies?

The total contract value of approximately $37 million over its 1279-day duration (roughly 3.5 years) translates to an average annual value of about $10.5 million. Benchmarking this against similar IT software support and maintenance contracts requires access to a broader dataset of federal procurements. However, for specialized IT services supporting critical defense health systems, this annual value appears to be within a reasonable range. Firm-fixed-price contracts, like this one, generally aim for competitive pricing during the bidding phase. Without specific details on the scope of services and the complexity of the software supported, a precise comparison is challenging, but the value does not immediately suggest overpricing compared to industry standards for comparable government IT support.

What are the primary risks associated with this contract, and what mitigation strategies are in place?

The primary risks include potential vendor lock-in due to specialized knowledge, the possibility of scope creep if requirements are not clearly defined, and the risk that the limited competition may have led to a suboptimal price. Mitigation strategies are partly addressed by the firm-fixed-price contract type, which shifts cost overrun risk to the contractor. Clear performance standards and regular oversight by the Defense Health Agency are crucial for managing scope and ensuring service delivery. The limited competition risk is harder to mitigate post-award but highlights the importance of robust market research in future procurements to ensure a wider bidder pool.

How effective is the Defense Health Agency in managing its IT contracts, and what does this contract suggest about their approach?

This contract, awarded under 'Full and Open Competition After Exclusion of Sources' with limited bidders, suggests a potentially constrained approach to competition for specialized IT services. The Defense Health Agency (DHA) manages a vast portfolio of IT contracts, and the effectiveness can vary. The firm-fixed-price nature indicates a preference for cost certainty. The duration of the contract suggests a need for stable, long-term support. However, the limited competition aspect warrants further investigation into DHA's procurement strategies to ensure they are maximizing value and innovation for taxpayer dollars across their IT spending.

What are the historical spending patterns for software support and maintenance within the Defense Health Agency or the broader Department of Defense?

The Department of Defense, including agencies like the Defense Health Agency, consistently represents one of the largest federal spenders on IT, encompassing software licenses, maintenance, support, and development. Historical data shows a continuous and significant investment in maintaining and modernizing complex defense systems. Spending on software support and maintenance is a critical component of the overall IT budget, often comprising a substantial portion due to the lifecycle costs of enterprise software. Agencies like DHA rely heavily on these services to ensure the operational readiness of health IT systems, making consistent, albeit scrutinized, spending in this area a norm.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HT001516R0010

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 15413 SNOWHILL LN, CENTREVILLE, VA, 20120

Business Categories: 8(a) Program Participant, Category Business, Economically Disadvantaged Women Owned Small Business, Limited Liability Corporation, Minority Owned Business, Other Minority Owned Business, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business, Woman Owned Business, Women Owned Small Business

Financial Breakdown

Contract Ceiling: $36,979,273

Exercised Options: $36,957,907

Current Obligation: $36,957,907

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: NNG15SC73B

IDV Type: GWAC

Timeline