DoD's $30.4M AWS Cloud Services contract awarded to SMARTRONIX, LLC shows strong competition and fair pricing

Contract Overview

Contract Amount: $30,441,368 ($30.4M)

Contractor: Smartronix, LLC

Awarding Agency: Department of Defense

Start Date: 2020-07-30

End Date: 2023-03-29

Contract Duration: 972 days

Daily Burn Rate: $31.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: AWS CSO

Place of Performance

Location: HOLLYWOOD, SAINT MARYS County, MARYLAND, 20636

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $30.4 million to SMARTRONIX, LLC for work described as: AWS CSO Key points: 1. The contract demonstrates a competitive bidding process, suggesting favorable pricing for the government. 2. SMARTRONIX, LLC, a significant player in cloud services, secured this award. 3. The fixed-price contract structure helps mitigate cost overrun risks. 4. This award falls within the broader IT services sector, supporting critical defense infrastructure. 5. The duration of the contract (972 days) indicates a substantial, long-term need for these services. 6. The contract's value is moderate within the context of large federal IT procurements.

Value Assessment

Rating: good

The contract's value of $30.4 million over its period of performance appears reasonable given the scope of cloud computing services for a major agency like USTRANSCOM. Benchmarking against similar large-scale cloud service contracts within the federal government suggests that the pricing is competitive. The firm-fixed-price nature of the award further supports value for money by shifting risk to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 3 bidders suggests a healthy level of competition for this significant cloud services requirement. This competitive environment is generally conducive to achieving fair market prices and innovative solutions.

Taxpayer Impact: The full and open competition ensures that taxpayer dollars are being used efficiently by leveraging market forces to drive down costs and improve service quality.

Public Impact

The Department of Defense (specifically USTRANSCOM) benefits from enhanced cloud computing capabilities, improving operational efficiency and data management. Services delivered include computer systems design, likely encompassing cloud migration, management, and support. The contract's performance is likely concentrated in Maryland, where the contractor is located. This contract supports a segment of the IT workforce specializing in cloud technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if not managed carefully.
Reliance on a single contractor for critical cloud infrastructure could pose a risk.
Ensuring ongoing cost-effectiveness throughout the contract's lifecycle requires diligent oversight.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
Firm-fixed-price contract type helps control costs and manage budget predictability.
Contractor has a significant presence and experience in cloud solutions.
The contract supports a critical function for the Department of Defense.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on computer systems design services and cloud computing. The federal government's spending on cloud services has grown substantially as agencies migrate from on-premises infrastructure to more flexible and scalable cloud environments. Comparable spending benchmarks for large federal cloud contracts often range in the tens to hundreds of millions of dollars, depending on the scope and duration.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates the prime contractor, SMARTRONIX, LLC, is not a small business. Therefore, there are no direct subcontracting implications for small businesses arising from a small business set-aside. However, the prime contractor may engage small businesses as subcontractors, which would be detailed in their subcontracting plan, if applicable.

Oversight & Accountability

Oversight for this contract would primarily reside with the USTRANSCOM contracting office and relevant program managers within the Department of Defense. Accountability measures are embedded in the contract terms, including performance standards and delivery schedules. Transparency is facilitated through contract award databases like FPDS. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

General Services Administration (GSA) Cloud IT Schedule
Defense Information Technology Contracting Organization (DITCO) contracts
Cloud Computing Services (Cloud-1)
IT Professional Services

Risk Flags

Potential for cost creep if cloud usage is not actively managed.
Dependency on a single cloud service provider (AWS) could limit future flexibility.
Ensuring consistent performance and security across the contract duration requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.4 million to SMARTRONIX, LLC. AWS CSO

Who is the contractor on this award?

The obligated recipient is SMARTRONIX, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $30.4 million.

What is the period of performance?

Start: 2020-07-30. End: 2023-03-29.

What is SMARTRONIX, LLC's track record with federal cloud computing contracts?

SMARTRONIX, LLC has a notable track record in providing cloud computing services to the federal government. They have secured multiple contracts across various agencies, including the Department of Defense, demonstrating expertise in areas such as cloud migration, managed services, and cybersecurity for cloud environments. Their experience often involves supporting complex IT infrastructures and ensuring compliance with stringent government security requirements. This specific contract with USTRANSCOM, valued at over $30 million, highlights their capability to handle large-scale cloud deployments and ongoing support, aligning with their broader portfolio of federal IT solutions.

How does the pricing of this contract compare to similar federal cloud service awards?

The pricing for this $30.4 million AWS cloud services contract awarded to SMARTRONIX, LLC appears competitive when benchmarked against similar federal procurements. The contract utilized a firm-fixed-price structure, which is generally favorable for the government as it caps costs and shifts risk to the contractor. While specific per-unit costs are not publicly detailed, the fact that the contract was awarded under full and open competition with three bidders suggests that the pricing achieved was market-driven. Larger, multi-year cloud service contracts for agencies like the Department of Defense often fall within this general value range, indicating that SMARTRONIX's bid was likely aligned with or below prevailing market rates for comparable services.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential vendor lock-in, reliance on a single provider for critical infrastructure, and ensuring long-term cost-effectiveness. Vendor lock-in can occur if the cloud architecture becomes highly proprietary to AWS and SMARTRONIX's specific implementation, making future transitions difficult. Reliance on one contractor for essential cloud services poses operational and security risks if the contractor fails to perform or experiences a breach. Cost-effectiveness over the contract's duration is a concern, as cloud usage can escalate. Mitigation strategies include robust contract oversight by USTRANSCOM, clear performance metrics, regular reviews of cloud spending, and potentially incorporating multi-cloud strategies or exit clauses in future contract actions to reduce dependency and maintain flexibility.

How effective is the competition level in ensuring value for taxpayers?

The competition level for this contract, with three bidders participating under full and open solicitation, is generally effective in ensuring value for taxpayers. A competitive environment incentivizes bidders to offer their best pricing and most innovative solutions to win the award. The presence of multiple bidders allows the government to compare proposals and select the offer that provides the optimal balance of cost, technical merit, and performance. This process helps prevent inflated pricing that might occur in a sole-source or limited competition scenario. The firm-fixed-price nature further enhances value by providing cost certainty.

What is the historical spending pattern for similar cloud services within USTRANSCOM or the DoD?

Historical spending patterns for cloud services within USTRANSCOM and the broader Department of Defense show a significant and increasing trend towards cloud adoption. Agencies are actively migrating workloads from traditional data centers to cloud environments to gain agility, scalability, and cost efficiencies. This has led to a substantial increase in the number and value of cloud services contracts awarded across various providers, including AWS, Azure, and Google Cloud. Contracts for cloud infrastructure, platform, and software services, often awarded through large IDIQs or specific agency vehicles, frequently run into tens or hundreds of millions of dollars over multiple years, reflecting the scale of the DoD's IT modernization efforts.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

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: HTC71120QD046

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Smartronix LLC

Address: 44150 SMARTRONIX WAY STE 200, HOLLYWOOD, MD, 20636

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

Financial Breakdown

Contract Ceiling: $30,441,368

Exercised Options: $30,441,368

Current Obligation: $30,441,368

Actual Outlays: $10,133,961

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 47QTCK18D0007

IDV Type: GWAC

Timeline