DoD's $26M IT support contract awarded to Solvendum Health Information Systems raises value and competition concerns

Contract Overview

Contract Amount: $26,122,139 ($26.1M)

Contractor: Solventum Health Information Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2020-10-01

End Date: 2023-09-30

Contract Duration: 1,094 days

Daily Burn Rate: $23.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: 3M SOFTWARE MAINTENANCE SUPPORT

Place of Performance

Location: JBSA FT SAM HOUSTON, BEXAR County, TEXAS, 78234

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $26.1 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC. for work described as: 3M SOFTWARE MAINTENANCE SUPPORT Key points: 1. The contract's value proposition is unclear due to a lack of competitive bidding. 2. Limited competition suggests potential for overpayment and reduced innovation. 3. The firm-fixed-price structure offers some cost certainty but may not reflect true market value. 4. Performance context is limited without clear benchmarks or comparison data. 5. This contract falls within the IT services sector, specifically supporting healthcare information systems. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

The total contract value of $26.1 million over three years for IT software maintenance and support appears high given the lack of competitive bidding. Without comparable contracts or market benchmarks for similar services, it is difficult to definitively assess value for money. The firm-fixed-price contract type provides cost certainty, but the absence of competition raises concerns that the price may not be optimized. Further analysis of the specific services rendered and their criticality would be needed for a more precise valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required services, often due to proprietary technology or unique expertise. However, the lack of competition limits price discovery and may prevent the government from obtaining the best possible pricing and terms. The absence of a competitive process means potential savings through bidding are forgone.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no market pressure to drive down prices. This lack of competition means taxpayer funds may not be utilized as efficiently as they could be in a more open bidding environment.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel, who receive continued access to critical healthcare information systems. The contract ensures the ongoing operation and maintenance of essential IT infrastructure for the Defense Health Agency. Services are delivered within Texas, indicating a specific geographic focus for this support. The contract supports IT professionals employed by Solvendum Health Information Systems, contributing to the tech workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer dollars.
Sole-source award raises questions about the necessity and justification for not seeking competitive bids.
Limited transparency in the procurement process hinders a full assessment of the contract's fairness.
Absence of performance metrics or clear deliverables makes it difficult to gauge effectiveness.
Potential for vendor lock-in due to the specialized nature of the support.

Positive Signals

Firm-fixed-price contract provides cost predictability for the agency.
Contract duration of three years offers stability for essential IT services.
Awarded to a single vendor, potentially ensuring continuity of specialized support.
The contract supports critical healthcare information systems for the Department of Defense.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design and related services (NAICS 541519). The IT services market is vast and highly competitive, with numerous firms offering software maintenance and support. However, specialized healthcare IT, particularly within the defense sector, can have unique requirements and fewer qualified vendors. Comparable spending benchmarks for similar large-scale IT support contracts within government healthcare systems would be necessary for a robust comparison.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and the prime contractor is not a small business. This suggests that opportunities for small businesses to participate as subcontractors may be limited or non-existent. Further investigation into the subcontracting plan, if any, would be necessary to understand the impact on the small business ecosystem. The absence of a set-aside for small businesses in a contract of this size could mean missed opportunities for these entities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Health Agency's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance standards and payment schedules. Transparency is limited due to the sole-source nature of the award, with less public information available compared to competed contracts. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Health Information Systems
DoD IT Modernization Programs
Healthcare IT Services
Software Maintenance Contracts
Sole-Source IT Procurements

Risk Flags

Sole-source award lacks competitive pricing.
Potential for overpayment due to lack of competition.
Limited transparency in procurement process.
Absence of clear performance metrics in provided data.
Unknown justification for sole-source award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.1 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC.. 3M SOFTWARE MAINTENANCE SUPPORT

Who is the contractor on this award?

The obligated recipient is SOLVENTUM HEALTH INFORMATION SYSTEMS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $26.1 million.

What is the period of performance?

Start: 2020-10-01. End: 2023-09-30.

What specific software systems does Solvendum Health Information Systems support under this contract, and what is the criticality of these systems to the Defense Health Agency's operations?

The provided data does not specify the exact software systems supported by Solvendum Health Information Systems. However, given the contract's designation under the Defense Health Agency and the NAICS code for 'Other Computer Related Services,' it is highly probable that the support pertains to critical healthcare information systems used by the DoD. These could include electronic health records (EHR), patient management systems, or other data management platforms essential for military healthcare delivery. The criticality is presumed to be high, as IT support for healthcare systems is fundamental to operational continuity and patient care within the armed forces. Without specific system names, a detailed criticality assessment is challenging, but the context implies significant operational importance.

Can the $26.1 million contract value be benchmarked against similar IT support contracts awarded by the DoD or other federal agencies?

Benchmarking this $26.1 million contract is challenging without more specific details on the services provided and the systems supported. The 'Other Computer Related Services' category is broad. However, generally, IT support contracts for large federal agencies can range from a few million to hundreds of millions of dollars, depending on scope, duration, and complexity. The fact that this is a sole-source award for three years at $26.1 million ($8.7 million annually) suggests a substantial, ongoing need. To perform a true benchmark, one would need to compare it to contracts for similar-sized healthcare IT systems within government, considering factors like the number of users, data volume, and the specific maintenance and support functions included. The lack of competition here inherently makes direct price comparison difficult.

What is the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?

The provided data indicates the contract was 'NOT COMPETED,' implying a sole-source award. Federal Acquisition Regulation (FAR) Part 6 outlines the policies for contracting without full and open competition. Justifications for sole-source awards typically include situations where only one responsible source can satisfy the agency's needs (e.g., unique capabilities, proprietary data, urgent and compelling needs). Without the specific justification document (often a Justification and Approval - J&A), it's impossible to know the precise reasons. Agencies are required to document why full and open competition is not feasible. It is unknown from the data if alternative competitive strategies were considered; however, the 'NOT COMPETED' status suggests they were deemed unsuitable or impossible under the circumstances.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract, and how is Solvendum's performance being measured?

The provided data does not include specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. Typically, firm-fixed-price contracts include clauses that define performance expectations, such as system uptime, response times for support requests, and resolution times for issues. The Defense Health Agency would be responsible for monitoring Solvendum's performance against these contractual requirements. Without access to the contract's statement of work (SOW) or performance work statement (PWS), a detailed assessment of how performance is measured and whether the contractor is meeting expectations cannot be made. Contract performance evaluations are crucial for ensuring value and identifying potential issues.

What has been the historical spending pattern for IT support services related to these healthcare information systems prior to this contract?

The provided data does not offer historical spending patterns for IT support related to these specific healthcare information systems. To understand historical spending, one would need to access previous contract awards for similar services, potentially from the same or predecessor systems, awarded to Solvendum or other contractors. Analyzing past expenditures would help determine if the current $26.1 million contract represents an increase, decrease, or stable level of investment. It would also shed light on whether this is a new requirement or a continuation of existing support, and whether spending has been consistent over time. This information is vital for assessing long-term cost trends and budget planning.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: 3M Company

Address: 575 W MURRAY BLVD, MURRAY, UT, 84123

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

Financial Breakdown

Contract Ceiling: $26,122,139

Exercised Options: $26,122,139

Current Obligation: $26,122,139

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline