DoD's 3M Grouper Software Maintenance contract awarded $31M over 5 years, raising value-for-money questions
Contract Overview
Contract Amount: $30,964,433 ($31.0M)
Contractor: 3M Company
Awarding Agency: Department of Defense
Start Date: 2016-10-01
End Date: 2021-09-30
Contract Duration: 1,825 days
Daily Burn Rate: $17.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: IGF::OT::IGF 3M GROUPER SOFTWARE MAINTENANCE
Place of Performance
Location: FALLS CHURCH, FAIRFAX County, VIRGINIA, 22041
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $31.0 million to 3M COMPANY for work described as: IGF::OT::IGF 3M GROUPER SOFTWARE MAINTENANCE Key points: 1. The contract's value-for-money is questionable given the lack of detailed performance metrics and a single award. 2. Competition dynamics show a full and open competition, but only one bid was received, potentially limiting price discovery. 3. Risk indicators include a long performance period and a firm fixed-price structure, which may not adapt well to changing software needs. 4. Performance context is limited, with no clear metrics provided to assess the effectiveness of the software maintenance. 5. Sector positioning places this contract within the IT services sector, specifically software maintenance for defense health systems.
Value Assessment
Rating: questionable
The $31 million awarded over five years for software maintenance appears high without clear performance benchmarks. Comparing this to similar software maintenance contracts is difficult due to the proprietary nature of the 'Grouper' software. The firm fixed-price structure may lead to overpayment if the scope of work changes or if maintenance needs are less than anticipated. The lack of detailed justification for the price in the award data prevents a robust value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit an offer. However, only one bid was received. This could suggest that the market for this specific software maintenance is limited, or that the requirements were structured in a way that deterred other potential bidders. A single bid in a full and open competition often raises concerns about whether the government received the best possible pricing and terms.
Taxpayer Impact: A single bid in a full and open competition means taxpayers may not have benefited from the competitive pressure that typically drives down prices. The government may have paid more than necessary without alternative offers to consider.
Public Impact
The primary beneficiaries are the Department of Defense and the Defense Health Agency, who receive continued access to and support for the Grouper software. The services delivered include maintenance, support, and potentially updates for the Grouper software, crucial for healthcare operations. The geographic impact is primarily within the Department of Defense's healthcare infrastructure, likely supporting operations nationwide. Workforce implications are minimal for the public, but the contractor's technical staff are engaged in maintaining critical software.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of detailed performance metrics makes it difficult to assess if the full value of the maintenance contract is being realized.
- The firm fixed-price contract may not be optimal for software maintenance where needs can evolve, potentially leading to cost inefficiencies.
- Receiving only one bid under full and open competition suggests potential issues with market competitiveness or solicitation clarity.
Positive Signals
- The contract was awarded through full and open competition, adhering to standard procurement practices.
- The use of a firm fixed-price contract provides cost certainty for the government, assuming the scope is well-defined.
- The contractor, 3M Company, is a large, established entity with a track record in various industrial and healthcare sectors.
Sector Analysis
This contract falls within the Information Technology sector, specifically focusing on software maintenance and support. The market for specialized healthcare software maintenance can be niche, with a few dominant players. The total federal spending on IT services is in the hundreds of billions annually, with software maintenance being a significant sub-category. This contract represents a small fraction of that overall spending but is critical for the Defense Health Agency's operational capabilities.
Small Business Impact
There is no indication that this contract included small business set-asides. The prime contractor, 3M Company, is a large corporation. Without specific subcontracting plans detailed in the award data, it's unclear what, if any, opportunities were provided to small businesses. Large IT contracts often have subcontracting goals, but their achievement and impact on the small business ecosystem can vary.
Oversight & Accountability
Oversight for this contract would typically fall under the Defense Health Agency's contracting and program management offices. The firm fixed-price nature of the contract implies less need for detailed cost oversight compared to cost-reimbursement contracts. Transparency is limited by the public availability of detailed performance reports or audits. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Defense Health Agency IT Support Contracts
- Software Maintenance Services
- Federal Health IT Spending
- 3M Company Government Contracts
Risk Flags
- Single Bidder in Full and Open Competition
- Lack of Performance Metrics
- Potential for Overpricing due to Limited Competition
Tags
it-services, software-maintenance, department-of-defense, defense-health-agency, firm-fixed-price, full-and-open-competition, large-business, healthcare-it, virginia, delivery-order
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $31.0 million to 3M COMPANY. IGF::OT::IGF 3M GROUPER SOFTWARE MAINTENANCE
Who is the contractor on this award?
The obligated recipient is 3M COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $31.0 million.
What is the period of performance?
Start: 2016-10-01. End: 2021-09-30.
What is the specific function and criticality of the 'Grouper' software within the Defense Health Agency?
The 'Grouper' software, as indicated by its name and the context of the Defense Health Agency (DHA), likely plays a crucial role in processing and managing healthcare data, possibly related to patient billing, coding, or clinical decision support. Its criticality stems from its integration into the DHA's operational workflows, where accurate and timely data processing is essential for patient care, resource allocation, and financial management. Without specific documentation, its exact function remains inferred, but its maintenance under a significant contract suggests it is a vital component of the DHA's IT infrastructure. The $31 million expenditure over five years underscores its perceived importance to the agency's mission.
How does the $31 million contract value compare to similar software maintenance contracts for comparable systems within the federal government?
Direct comparison of the $31 million contract value for '3M GROUPER SOFTWARE MAINTENANCE' to similar federal contracts is challenging without knowing the specific functionalities and user base of the Grouper software. However, federal IT maintenance contracts can range widely. For enterprise-level software supporting critical functions, annual costs can easily reach millions of dollars, especially if they involve proprietary systems or require specialized vendor support. Given the five-year duration, the average annual cost is approximately $6.2 million. This figure needs to be benchmarked against contracts for similar-sized healthcare IT systems or specialized data processing software within agencies like the Veterans Affairs or other large federal health programs to determine if it represents a fair market price. The lack of detailed performance metrics in the award data hinders a precise value-for-money assessment.
What are the key performance indicators (KPIs) used to measure the success of this software maintenance contract?
The provided award data does not include specific Key Performance Indicators (KPIs) for this contract. Typically, for software maintenance contracts, KPIs might include metrics such as system uptime, response time for critical issues, resolution time for reported bugs, availability of software updates, and user satisfaction. The absence of these details in the public award information suggests that either they were not explicitly defined in the contract solicitation or are not readily available in summary data. Without defined KPIs, it is difficult for external observers to objectively assess the contractor's performance and the overall value delivered to the Defense Health Agency.
What is 3M Company's track record with federal IT contracts, particularly in the healthcare sector?
3M Company has a significant and long-standing track record of contracting with the U.S. federal government across various sectors, including healthcare and IT. They are known for providing a wide range of products and services, from medical supplies and devices to software solutions. Within the federal healthcare space, 3M has been involved in contracts related to health information systems, data analytics, and administrative software. Their experience includes working with agencies like the Centers for Medicare & Medicaid Services (CMS) and the Department of Veterans Affairs (VA). While this specific 'Grouper' software contract is a notable IT service agreement, 3M's broader engagement in federal healthcare IT suggests they possess the necessary infrastructure and expertise to manage such requirements.
Given the single bid received, what steps were taken to ensure fair pricing and prevent potential overcharging?
When a single bid is received under a full and open competition, contracting officers are expected to take specific steps to ensure fair and reasonable pricing. This typically involves a thorough price analysis of the offered proposal. Methods can include comparing the proposed prices to historical prices paid for the same or similar items, analyzing cost elements (labor, materials, overhead) using established cost-estimating guides or commercial price lists, and potentially obtaining independent government cost estimates. If the offered price is deemed excessive, the contracting officer may negotiate with the sole bidder or, in some cases, terminate the solicitation and re-evaluate the acquisition strategy. The award data indicates the contract was awarded, suggesting that a price analysis was conducted and the price was determined to be fair and reasonable at the time of award.
Industry Classification
NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores
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
Solicitation ID: HT001516R0033
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 3M CENTER BLDG 220 11W 02, SAINT PAUL, MN, 55144
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $30,964,433
Exercised Options: $30,964,433
Current Obligation: $30,964,433
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: GS35F4002G
IDV Type: FSS
Timeline
Start Date: 2016-10-01
Current End Date: 2021-09-30
Potential End Date: 2021-09-30 00:00:00
Last Modified: 2021-12-07
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