Leidos awarded $267.7M for MHS Genesis enterprise services, impacting defense healthcare IT
Contract Overview
Contract Amount: $267,654,331 ($267.7M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2020-07-29
End Date: 2021-07-28
Contract Duration: 364 days
Daily Burn Rate: $735.3K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: STAGE 6 ENTERPRISE SERVICES FOR MHS GENESIS, INCLUDING PROGRAM MANAGEMENT, ENTERPRISE SUSTAINMENT, LICENSE MAINTENANCE, AND OPERATIONAL MANAGEMENT SERVICES.
Place of Performance
Location: RESTON, FAIRFAX County, VIRGINIA, 20190
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $267.7 million to LEIDOS, INC. for work described as: STAGE 6 ENTERPRISE SERVICES FOR MHS GENESIS, INCLUDING PROGRAM MANAGEMENT, ENTERPRISE SUSTAINMENT, LICENSE MAINTENANCE, AND OPERATIONAL MANAGEMENT SERVICES. Key points: 1. Contract provides critical enterprise sustainment and operational management for a major defense health system. 2. Full and open competition suggests a robust market for these specialized IT services. 3. Performance period of one year indicates a focus on immediate operational needs. 4. The contract type (Cost Plus Fixed Fee) allows for flexibility but requires careful cost oversight. 5. This award is a significant component of the broader MHS Genesis modernization effort. 6. The value of the award is substantial, reflecting the complexity of managing large-scale IT systems.
Value Assessment
Rating: good
The contract value of $267.7 million for a one-year period for enterprise IT services is substantial. Benchmarking against similar large-scale IT support contracts for federal health systems is complex due to unique requirements. However, the fixed fee component within the Cost Plus Fixed Fee structure provides some cost control. The award amount appears to align with the scope of managing a critical enterprise system like MHS Genesis, suggesting a reasonable, though not definitively low, price for the services rendered.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The specific number of bidders is not provided, but the designation suggests a competitive process. This level of competition is generally favorable for price discovery and ensuring that the government receives competitive offers for complex IT services.
Taxpayer Impact: Full and open competition helps ensure that taxpayer dollars are used efficiently by fostering a competitive environment that drives down prices and encourages innovation.
Public Impact
Service members and beneficiaries of the Military Health System will benefit from the continued operational stability and maintenance of the MHS Genesis electronic health record system. The contract ensures the delivery of program management, enterprise sustainment, license maintenance, and operational management services. The geographic impact is nationwide, supporting military treatment facilities and personnel across various locations. Workforce implications include the potential for IT professionals employed by Leidos and its subcontractors to support this critical defense health initiative.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee contracts can lead to cost overruns if not managed diligently.
- The one-year duration may necessitate frequent re-competition, leading to transition costs and potential instability.
- Reliance on a single large contractor for enterprise-level support could create vendor lock-in.
- The complexity of MHS Genesis presents inherent technical and operational risks.
- Ensuring adequate performance metrics are tied to the fixed fee is crucial for value.
- The specific details of the 'enterprise sustainment' are broad and require clear definition of service levels.
Positive Signals
- Awarded under full and open competition, indicating a healthy market and potential for competitive pricing.
- Leidos is a large, established contractor with experience in complex government IT programs.
- The contract addresses critical operational needs for a vital defense healthcare system.
- The fixed fee component provides a degree of cost certainty for the government.
- The contract supports a major modernization effort (MHS Genesis), which is a strategic priority.
- The duration, while short, allows for flexibility in adapting to evolving requirements.
Sector Analysis
The contract falls within the Computer Systems Design Services sector, a critical component of the broader IT services market. This sector is characterized by high demand for specialized expertise in managing complex software and hardware systems, particularly within government and healthcare. The total addressable market for defense IT modernization is in the tens of billions annually. This specific award represents a significant investment in maintaining and operating a core component of the Department of Defense's healthcare infrastructure, aligning with broader trends of digital transformation in public health.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large enterprise services contract, it is unlikely that significant subcontracting opportunities for small businesses will be mandated, though Leidos may engage them for specific support roles. The focus is on a prime contractor capable of managing the entire scope of services. This approach prioritizes large-scale capability over direct small business set-asides for this particular award.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Health Agency (DHA) contracting officers and program managers. Performance monitoring, financial reviews, and adherence to contract terms are standard oversight mechanisms. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- MHS Genesis Program
- Defense Health Information Technology
- Electronic Health Records Modernization
- DoD IT Enterprise Services
- Healthcare IT Services
Risk Flags
- Cost Overrun Risk (CPFF)
- Short Contract Duration
- Vendor Lock-in Potential
- Technical Complexity Risk
- Performance Measurement Clarity
Tags
it-services, computer-systems-design, defense-health-agency, department-of-defense, enterprise-it, mhs-genesis, cost-plus-fixed-fee, full-and-open-competition, delivery-order, healthcare-it, program-management, enterprise-sustainment
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $267.7 million to LEIDOS, INC.. STAGE 6 ENTERPRISE SERVICES FOR MHS GENESIS, INCLUDING PROGRAM MANAGEMENT, ENTERPRISE SUSTAINMENT, LICENSE MAINTENANCE, AND OPERATIONAL MANAGEMENT SERVICES.
Who is the contractor on this award?
The obligated recipient is LEIDOS, INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Health Agency).
What is the total obligated amount?
The obligated amount is $267.7 million.
What is the period of performance?
Start: 2020-07-29. End: 2021-07-28.
What is Leidos's track record with large-scale DoD IT contracts, particularly in healthcare?
Leidos, Inc. has a substantial track record with the Department of Defense (DoD) and in the healthcare IT sector. They are a major prime contractor on numerous large-scale IT programs, including significant work related to the MHS Genesis program itself prior to this award, and other health IT initiatives for federal agencies. Their experience encompasses system integration, enterprise IT services, cybersecurity, and program management. While specific performance metrics for all past contracts are not publicly detailed, their continued success in winning and performing on large, complex contracts suggests a demonstrated capability to meet the demanding requirements of DoD healthcare IT.
How does the $267.7 million value compare to similar enterprise IT sustainment contracts in the federal government?
The $267.7 million value for a one-year contract for enterprise IT sustainment services for a system as critical as MHS Genesis is substantial, but not unprecedented within the federal government, especially for defense health systems. Large-scale IT operations and maintenance contracts for major federal systems often run into hundreds of millions of dollars annually. For context, other federal agencies managing vast IT infrastructures (e.g., IRS, Social Security Administration, other branches of DoD) award similar-sized contracts for system sustainment, modernization, and operational support. The value reflects the complexity, scope, and criticality of the MHS Genesis system.
What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for this type of service?
The primary risk with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to Leidos, is the potential for cost overruns. While the 'fixed fee' provides a ceiling on the contractor's profit, the 'cost plus' portion means the government reimburses the contractor's allowable costs. If costs escalate beyond initial estimates due to unforeseen technical challenges, scope creep, or inefficient management, the total expenditure can exceed projections. For the government, this necessitates rigorous oversight of incurred costs and contractor performance to ensure efficiency and prevent unnecessary spending. For the contractor, the risk lies in accurately estimating costs to ensure the fixed fee remains profitable.
How effective is full and open competition in ensuring value for money on complex IT contracts?
Full and open competition is generally considered the most effective method for ensuring value for money on complex IT contracts. By allowing all responsible sources to submit bids, it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive pricing and innovative solutions. This process drives down costs through market forces and encourages contractors to propose the most efficient and effective approaches to meet the government's requirements. While it requires more upfront effort in terms of solicitation and evaluation, the long-term benefits in terms of cost savings and quality of service typically outweigh these initial investments.
What is the historical spending trend for MHS Genesis enterprise services prior to this award?
Historical spending data specifically for 'MHS Genesis enterprise services' prior to this award is not directly available in the provided snippet. However, MHS Genesis is a large-scale modernization program, implying significant prior investment in its development and initial deployment phases. The sustainment and operational management services awarded here represent a shift from development/deployment to ongoing operational support. Spending on such sustainment contracts typically stabilizes after initial rollout but remains substantial due to the continuous need for maintenance, updates, and support of a complex enterprise system. Previous contracts supporting the legacy systems being replaced by MHS Genesis would also provide context for the scale of ongoing IT support required.
What are the implications of the one-year duration for program stability and future competition?
A one-year contract duration, especially for critical enterprise services, can have mixed implications. On one hand, it provides flexibility for the government to adapt requirements or re-evaluate contractor performance relatively quickly. It also allows for more frequent opportunities to test the competitive market. On the other hand, such short durations can lead to contractor uncertainty, potentially impacting long-term investment in personnel and process improvements. It may also result in recurring transition costs and administrative burdens associated with frequent recompetes, potentially disrupting program stability and continuity of operations if not managed carefully.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 1750 PRESIDENTS ST, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $267,654,331
Exercised Options: $267,654,331
Current Obligation: $267,654,331
Subaward Activity
Number of Subawards: 51
Total Subaward Amount: $57,020,920
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0003915D0044
IDV Type: IDC
Timeline
Start Date: 2020-07-29
Current End Date: 2021-07-28
Potential End Date: 2021-07-28 00:00:00
Last Modified: 2025-03-07
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