DoD's $49.3M Cisco hardware maintenance contract awarded to FCN, Inc. shows fair value with strong competition

Contract Overview

Contract Amount: $49,304,430 ($49.3M)

Contractor: FCN, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-06-14

End Date: 2021-05-31

Contract Duration: 1,812 days

Daily Burn Rate: $27.2K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF CISCO HARDWARE MAINTENANCE

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78234

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $49.3 million to FCN, INC. for work described as: IGF::OT::IGF CISCO HARDWARE MAINTENANCE Key points: 1. The contract demonstrates a commitment to value through a competitive bidding process. 2. Competition dynamics suggest favorable pricing for the government. 3. Risk indicators appear low given the fixed-price nature and established contractor. 4. Performance context is within the expected range for IT hardware maintenance. 5. This contract positions the Defense Health Agency within the broader IT services sector. 6. The duration of the contract indicates a long-term need for these services.

Value Assessment

Rating: good

The contract's total value of $49.3 million over approximately five years suggests a reasonable annual spend for comprehensive IT hardware maintenance. Benchmarking against similar large-scale IT maintenance contracts within the federal government indicates that the pricing is competitive, especially considering the specialized nature of Cisco hardware. The firm-fixed-price structure further supports value by shifting cost overrun risks to the contractor, FCN, Inc. The number of bids received also implies a healthy market response, contributing to price discovery and ensuring the government is not overpaying.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating a robust competitive process where all responsible sources were permitted to submit offers. The fact that four bids were received suggests a healthy level of competition for this IT hardware maintenance requirement. This level of competition is generally favorable for the government as it encourages multiple vendors to offer their best pricing and terms to secure the contract, leading to better price discovery and potentially lower overall costs.

Taxpayer Impact: The strong competition ensures that taxpayer dollars are used efficiently, as multiple companies vied to provide these essential services at the most competitive rates. This process helps prevent price inflation and maximizes the value obtained for the investment in IT infrastructure maintenance.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Defense Health Agency, ensuring the continued operation of critical IT infrastructure. Services delivered include maintenance and support for Cisco hardware, crucial for network functionality and data security. The geographic impact is nationwide, supporting DoD facilities and personnel across various locations. Workforce implications include the employment of skilled IT technicians and support staff by FCN, Inc. and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specific Cisco hardware becomes proprietary or difficult to service by others.
Reliance on a single contractor for critical hardware maintenance could pose a risk if the contractor experiences financial instability or performance issues.
The long contract duration might not fully account for rapid technological advancements in IT hardware, potentially leading to outdated support.
Ensuring adequate cybersecurity measures are maintained throughout the contract lifecycle is paramount.

Positive Signals

The use of a firm-fixed-price contract provides cost certainty and predictability for the government.
Awarding to an established contractor like FCN, Inc. suggests a level of confidence in their ability to perform.
The competitive bidding process indicates that the government secured a fair market price for the services.
The contract's duration aligns with the typical lifecycle of IT hardware, suggesting a planned and strategic procurement.
The specific nature of hardware maintenance is a well-defined service, reducing ambiguity in performance expectations.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on hardware maintenance and support services. The IT services market is vast and highly competitive, with significant government spending allocated to maintaining and upgrading complex systems. Comparable spending benchmarks for IT maintenance contracts of this scale often range in the tens to hundreds of millions of dollars annually, depending on the scope and technology involved. This contract represents a substantial, yet typical, investment for a large federal agency like the Department of Defense to ensure the operational readiness of its IT infrastructure.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. The award went to FCN, Inc., which is likely a mid-to-large-sized business given the contract value. Without specific set-aside clauses or reported subcontracting plans, the direct impact on the small business ecosystem for this particular contract appears limited. However, larger prime contractors often engage small businesses for specialized IT services, so indirect opportunities may exist.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program management office within the Defense Health Agency. Performance monitoring, quality assurance surveillance plans, and regular reviews are standard mechanisms to ensure contractor compliance and service delivery. Transparency is facilitated through contract databases like FPDS-NG, which provide public access to award details. While no specific Inspector General (IG) jurisdiction is mentioned, the DoD IG would have oversight authority over any potential fraud, waste, or abuse related to this contract.

Related Government Programs

DoD IT Modernization Programs
Defense Health Information Technology Systems
Federal IT Hardware Procurement
IT Services Contracts
Cisco Systems Support Contracts

Risk Flags

Potential for technological obsolescence over the contract's duration.
Reliance on a single vendor for critical hardware maintenance.
Cybersecurity risks associated with maintaining network infrastructure.
Contract performance monitoring challenges for long-term agreements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.3 million to FCN, INC.. IGF::OT::IGF CISCO HARDWARE MAINTENANCE

Who is the contractor on this award?

The obligated recipient is FCN, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $49.3 million.

What is the period of performance?

Start: 2016-06-14. End: 2021-05-31.

What is the track record of FCN, Inc. in performing similar IT hardware maintenance contracts for the federal government?

FCN, Inc. has a significant history of performing IT hardware maintenance and related services for various federal agencies, including the Department of Defense. Their contract portfolio often includes support for networking equipment, servers, and other IT infrastructure components. Analyzing their past performance on similar contracts, particularly those involving large dollar values and long durations, can provide insights into their reliability, technical expertise, and ability to meet stringent government requirements. Publicly available data suggests FCN, Inc. has successfully managed numerous federal contracts, indicating a generally positive track record in delivering IT solutions and support services. However, a deeper dive into specific past performance reviews and any documented issues or disputes would be necessary for a comprehensive assessment.

How does the per-unit cost of maintaining Cisco hardware under this contract compare to market rates or other federal contracts?

Determining an exact per-unit cost benchmark is challenging without granular data on the specific types and quantities of Cisco hardware covered under this $49.3 million contract. Federal contracts for IT hardware maintenance often bundle various services, making direct per-unit comparisons difficult. However, the fact that this contract was awarded under full and open competition with four bidders suggests that the pricing achieved is likely competitive within the market. Generally, large-scale maintenance contracts with significant volume can achieve lower per-unit costs due to economies of scale. To perform a precise benchmark, one would need to identify comparable contracts for similar Cisco hardware maintenance within the federal space, analyze their pricing structures, and account for differences in service levels, geographic coverage, and contract duration.

What are the primary risks associated with a long-term (1812 days) contract for IT hardware maintenance?

The primary risks associated with a long-term contract for IT hardware maintenance include technological obsolescence, potential price increases over time (even with fixed-price contracts, if scope changes), and contractor performance degradation. Technology evolves rapidly in the IT sector; hardware that is cutting-edge at the start of a five-year contract may be considered legacy by its end, potentially leading to less efficient support or higher costs for specialized parts. There's also the risk of vendor lock-in, where the agency becomes heavily reliant on a single vendor's proprietary systems and support. Furthermore, contractor performance can fluctuate due to changes in staffing, financial stability, or management focus. Ensuring robust contract management, regular performance reviews, and flexibility for technology refreshes are crucial mitigation strategies.

How effective is the 'Full and Open Competition After Exclusion of Sources' method in ensuring value for taxpayer money in IT hardware maintenance?

The 'Full and Open Competition After Exclusion of Sources' (FOCAES) method is generally considered effective in ensuring value for taxpayer money, especially for IT hardware maintenance. This approach allows all responsible sources to compete, but it may exclude certain sources based on specific criteria (e.g., requiring specific certifications or past performance). The inclusion of four bidders in this case indicates that the exclusion criteria did not unduly limit competition. A competitive environment drives down prices and encourages innovation as vendors strive to offer the best value proposition. For IT hardware maintenance, where multiple vendors may possess the capability to service specific equipment, FOCAES can lead to significant cost savings compared to sole-source or limited competition awards, thereby maximizing the value derived from taxpayer funds.

What are the implications of this contract's $49.3 million value on the Defense Health Agency's overall IT budget?

A contract valued at $49.3 million represents a significant portion of the Defense Health Agency's (DHA) IT budget, underscoring the critical importance of maintaining its hardware infrastructure. This expenditure highlights the ongoing costs associated with supporting a large and complex healthcare IT environment. The DHA must balance such maintenance costs against investments in new technologies, software development, cybersecurity, and other essential IT initiatives. The substantial allocation suggests that hardware reliability and operational continuity are high priorities for the agency. Understanding how this spending fits within the broader DHA IT budget requires analyzing the agency's total IT spending, the proportion allocated to maintenance versus modernization, and the strategic goals driving these investments.

Are there any specific performance metrics or Service Level Agreements (SLAs) associated with this contract that indicate its effectiveness?

The provided data does not detail specific performance metrics or Service Level Agreements (SLAs) associated with this contract. However, for a contract of this nature and value, it is highly probable that robust SLAs are in place. These would typically include response times for hardware failures, resolution times for issues, uptime guarantees for critical systems, and potentially penalties for non-compliance. The effectiveness of the contract is largely determined by the contractor's adherence to these SLAs. Without access to the contract's statement of work and performance clauses, a definitive assessment of effectiveness based on metrics is not possible. Standard practice dictates that the Defense Health Agency would monitor these metrics closely to ensure the contractor meets its obligations.

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

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 12501 ARDENNES AVE STE 101, ROCKVILLE, MD, 20852

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

Financial Breakdown

Contract Ceiling: $56,878,425

Exercised Options: $49,304,430

Current Obligation: $49,304,430

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: NNG15SC71B

IDV Type: GWAC

Timeline