DoD's $330M IT Services Contract Awarded to Peraton Enterprise Solutions LLC Under Sole Source Basis

Contract Overview

Contract Amount: $330,845,543 ($330.8M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2012-09-30

End Date: 2012-09-30

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: OTHER ADP AND TELECOMMUNICATIONS SVS

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $330.8 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: OTHER ADP AND TELECOMMUNICATIONS SVS Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and limited market engagement. 2. Significant spending on IT services suggests a critical need for specialized support within the Department of the Navy. 3. The contract's duration and firm-fixed-price structure indicate a defined scope, but potential for scope creep remains a risk. 4. Lack of competition may have prevented the government from securing the most cost-effective solutions available. 5. The 'Other Computer Related Services' NAICS code points to a broad range of IT support, requiring careful performance monitoring. 6. Analysis of Peraton's past performance and pricing is crucial to understanding the value delivered for this substantial investment.

Value Assessment

Rating: questionable

Benchmarking the value of this $330 million contract is challenging due to its sole-source nature and the broad scope of 'Other Computer Related Services'. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if alternative, more cost-effective solutions were overlooked. The absence of comparable sole-source contracts within the DoD for similar services makes a direct price comparison problematic. Further analysis would require detailed cost breakdowns and performance metrics to assess true value for money.

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 possesses the necessary capabilities or when urgency dictates a rapid award. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than if multiple offers had been considered.

Taxpayer Impact: Taxpayers may have paid a premium for these IT services due to the absence of competitive pressure to drive down prices. The government's negotiating position is inherently weaker in a sole-source scenario.

Public Impact

The Department of the Navy benefits from specialized IT services essential for its operations. This contract supports critical IT infrastructure and telecommunications services for naval forces. The geographic impact is likely concentrated within areas where the Navy operates, potentially across multiple bases or facilities. The contract supports a workforce involved in delivering and managing these complex IT solutions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Broad scope of 'Other Computer Related Services' may lead to challenges in performance monitoring and accountability.
Lack of transparency in the procurement process due to sole-source award.
Potential for vendor lock-in given the significant investment and specialized nature of services.
Absence of small business subcontracting opportunities due to sole-source nature and potential lack of explicit requirements.

Positive Signals

Award to a single, potentially highly specialized vendor may ensure continuity of critical IT services.
Firm-fixed-price contract provides cost certainty for the government, assuming scope is well-defined.
Long-term nature of the contract (implied by significant value) suggests a strategic partnership for essential IT functions.
Award to Peraton Enterprise Solutions LLC, a known entity in the government contracting space, may indicate a level of trust in their capabilities.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically under 'Other Computer Related Services'. The IT services market for the federal government is vast, with significant spending allocated to maintaining and upgrading complex systems. Contracts of this magnitude often involve specialized software development, network management, cybersecurity, and telecommunications support. Benchmarking this spending against similar IT service contracts within the Department of Defense or other large federal agencies would provide further context on its relative size and scope.

Small Business Impact

As this contract was awarded on a sole-source basis, there is no explicit small business set-aside. Furthermore, without specific subcontracting requirements mandated in the sole-source award, the direct impact on the small business ecosystem is likely limited. While Peraton may engage small businesses as subcontractors, this is not guaranteed by the contract's structure. This approach bypasses the typical mechanisms designed to ensure small business participation in federal contracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be defined by the contract's performance work statement and delivery terms. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected or reported.

Related Government Programs

Department of Defense IT Modernization Programs
Naval Information Warfare Systems Command (NAVWAR) Contracts
Federal Civilian IT Services Spending
Large-Scale IT Support Contracts

Risk Flags

Sole Source Award
Lack of Competition
Potential for Overpricing
Broad Service Category
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $330.8 million to PERATON ENTERPRISE SOLUTIONS LLC. OTHER ADP AND TELECOMMUNICATIONS SVS

Who is the contractor on this award?

The obligated recipient is PERATON ENTERPRISE SOLUTIONS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $330.8 million.

What is the period of performance?

Start: 2012-09-30. End: 2012-09-30.

What is Peraton Enterprise Solutions LLC's track record with the Department of Defense, particularly on large IT services contracts?

Peraton Enterprise Solutions LLC has a significant history of contracting with the U.S. government, including the Department of Defense. They are known for providing a range of services, including IT, mission support, and cybersecurity. For large IT services contracts, their track record would need to be examined for on-time delivery, adherence to budget, and successful performance against contract requirements. Specific past performance evaluations and any reported issues or successes on similar large-scale DoD contracts would be critical to assessing their capability to execute this $330 million award effectively. Analyzing their portfolio of previous DoD awards can indicate their experience with complex IT infrastructure and telecommunications.

How does the $330 million value of this contract compare to typical IT services spending by the Department of the Navy?

The $330 million value of this contract represents a substantial investment in IT services for the Department of the Navy. To contextualize this, one would compare it to the Navy's overall IT budget and the average value of other large IT services contracts awarded annually. For instance, if the Navy typically awards several contracts in the $50-$100 million range for similar services, this $330 million award stands out as a significant, potentially program-defining, expenditure. Conversely, if the Navy regularly procures IT services in the hundreds of millions, this contract might be considered within the normal range for major system support. Understanding the historical spending patterns and the average contract size for 'Other Computer Related Services' within the Navy is key to assessing if this award is an outlier or a standard procurement.

What are the primary risks associated with awarding a $330 million IT services contract on a sole-source basis?

The primary risks associated with a sole-source award of this magnitude include inflated pricing due to lack of competition, potential for reduced service quality if the vendor faces no market pressure, and limited innovation. Taxpayers may bear higher costs as the government cannot leverage competitive bidding to secure the best possible price. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single provider, making future transitions difficult and costly. Furthermore, the absence of a competitive process can obscure potential performance issues or inefficiencies that might be identified by competing vendors during a formal solicitation. Ensuring robust oversight and performance management becomes even more critical in sole-source scenarios.

What specific IT services are encompassed by the NAICS code 'Other Computer Related Services' (541519) in the context of this DoD contract?

The NAICS code 541519, 'Other Computer Related Services,' is a broad category that can encompass a wide array of IT support functions beyond standard software development or hardware installation. For a Department of Defense contract of this size, it likely includes services such as IT infrastructure management, network operations and maintenance, cybersecurity support, telecommunications services, IT consulting, data management, cloud services integration, and potentially specialized system engineering or integration support. The specific services delivered would be detailed in the contract's Statement of Work (SOW). Given the 'telecommunications' mention in the data, it's probable that network infrastructure, communication systems, and related support are significant components of this contract.

What are the implications of this contract being a 'Delivery Order' (awarded under an existing contract vehicle)?

The data indicates this was a 'Delivery Order,' which means it was issued under a pre-existing contract vehicle, likely a larger Indefinite Delivery/Indefinite Quantity (IDIQ) contract or a similar master agreement. This implies that the initial competition and vetting of the contract vehicle itself may have occurred previously. However, the fact that this specific delivery order was sole-source suggests that either the original vehicle allowed for sole-source task orders, or a justification for a sole-source delivery order was made. The implications are that the foundational contract was established earlier, but the specific award of this $330 million task order bypassed competition at the task order level, raising similar concerns as a standalone sole-source award regarding price and value.

How does the 'Firm Fixed Price' (FFP) contract type influence risk and value for this $330M DoD IT services contract?

A Firm Fixed Price (FFP) contract type generally shifts most of the risk to the contractor, as the price is set regardless of the contractor's actual costs. For the government, this provides cost certainty, which is a significant advantage, especially for a large $330 million contract. It means the Department of the Navy knows the maximum amount it will pay, assuming the scope of work is not altered. However, the value proposition of an FFP contract heavily relies on the initial pricing being fair and competitive. Since this contract was sole-source, the initial pricing may not have been optimized through competition. If the contractor significantly underestimates costs, they may cut corners on quality or service to maintain profitability, posing a performance risk. Conversely, if the price was set too high, the government overpays.

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: HP, Inc.

Address: 13600 EDS DR, HERNDON, VA, 20171

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $330,845,543

Exercised Options: $330,845,543

Current Obligation: $330,845,543

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0003910D0010

IDV Type: IDC

Timeline