DoD's $194M contract for telecom services awarded to Peraton Enterprise Solutions LLC shows potential value concerns

Contract Overview

Contract Amount: $194,052,732 ($194.1M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2009-07-31

End Date: 2009-09-30

Contract Duration: 61 days

Daily Burn Rate: $3.2M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: OTHER ADP & TELECOMMUNICATIONS SERVICES

Place of Performance

Location: NEW ORLEANS, ORLEANS County, LOUISIANA, 70146

State: Louisiana Government Spending

Plain-Language Summary

Department of Defense obligated $194.1 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: OTHER ADP & TELECOMMUNICATIONS SERVICES Key points: 1. The contract's value appears high relative to its short duration, suggesting a need for detailed cost analysis. 2. Competition was full and open, which typically drives better pricing, but the final price needs benchmarking. 3. The contract's performance period is relatively short, which may limit long-term risk assessment. 4. This contract falls under 'Other Computer Related Services,' a broad category requiring specific performance metrics for evaluation. 5. The award was a delivery order, indicating it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) vehicle, impacting its standalone risk profile. 6. The contractor, Peraton Enterprise Solutions LLC, has a significant presence in the federal IT services market.

Value Assessment

Rating: fair

The total award amount of $194 million for a 61-day period (approximately 2 months) suggests a very high daily burn rate. Without specific deliverables or service levels, it's difficult to benchmark the value effectively. However, comparing this to typical IT services contracts, the implied daily cost is substantial. Further analysis would be needed to determine if the services rendered justify this expenditure, especially considering the short timeframe.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This generally fosters a competitive environment that can lead to more favorable pricing and better service offerings for the government. The presence of 4 bids suggests a reasonable level of interest, but the ultimate price achieved needs to be assessed against market benchmarks to confirm value for money.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of obtaining services at competitive prices, preventing potential overpayment that could occur with less competitive solicitations.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other Department of Defense entities requiring telecommunications services. The contract likely supports critical communication infrastructure and operations for naval forces. The geographic impact is likely focused on areas where the Department of the Navy operates, potentially worldwide. Workforce implications could include the need for specialized telecommunications technicians and support staff, both within the contractor's organization and potentially government personnel overseeing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High cost per day necessitates scrutiny of service delivery and necessity.
Short performance period may indicate a need for immediate, short-term solutions rather than strategic, long-term investments.
Broad service category ('Other Computer Related Services') could mask inefficiencies or scope creep if not tightly managed.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Contractor has experience in providing IT and telecommunications services to the federal government.
Delivery order structure implies it's part of a potentially larger, established framework contract.

Sector Analysis

This contract falls within the broader Information Technology (IT) and Telecommunications sector, specifically under 'Other Computer Related Services.' The federal government is a major consumer of these services, with significant spending allocated annually to maintain and upgrade its communication networks. Benchmarking this contract's value would involve comparing its per-diem or per-service costs against similar IT and telecom support contracts awarded by the DoD or other federal agencies.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (ss: false, sb: false). While the primary awardee is Peraton Enterprise Solutions LLC, which is a large business, there is no explicit information provided regarding subcontracting plans or actual subcontracting to small businesses. Further investigation into the contract's subcontracting goals and performance would be necessary to assess its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and the relevant program management office within the Department of the Navy. Transparency is facilitated through contract databases like FPDS. Accountability measures would be tied to the performance work statement and delivery terms. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Telecommunications Services
Navy IT Support Contracts
Other Computer Related Services Contracts
Federal IT Services Spending
Indefinite Delivery/Indefinite Quantity (IDIQ) Contracts

Risk Flags

High Cost Per Day
Short Performance Period
Broad Service Category

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $194.1 million to PERATON ENTERPRISE SOLUTIONS LLC. OTHER ADP & TELECOMMUNICATIONS SERVICES

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 $194.1 million.

What is the period of performance?

Start: 2009-07-31. End: 2009-09-30.

What specific telecommunications services were delivered under this contract, and how do they align with the high daily cost?

The contract, valued at $194 million over 61 days, falls under the 'Other ADP & Telecommunications Services' category (NAICS 541519). While the specific services are not detailed in the provided data, this category typically encompasses a wide range of IT and communication support, including network management, system integration, hardware/software support, and potentially specialized telecommunications infrastructure maintenance or deployment. The high daily cost (approximately $3.18 million per day) suggests either the provision of highly complex, mission-critical services, significant equipment procurement, or potentially a need for further justification. Without a detailed Performance Work Statement (PWS) or delivery data, it is challenging to definitively assess the value proposition. However, given the short duration, it might represent an urgent operational requirement or a bridge contract.

How does the $194 million award compare to similar telecommunications contracts awarded by the Department of the Navy or DoD?

Benchmarking this $194 million award is challenging without more granular data on the specific services rendered and the contract's duration. However, the implied daily rate of over $3 million is exceptionally high for standard telecommunications services. Typical large-scale federal telecommunications contracts, even those supporting major operations, often have longer durations and more spread-out costs. For instance, multi-year contracts for enterprise-wide network services might average tens or hundreds of thousands of dollars per day, not millions. This contract's high daily burn rate, coupled with its short 61-day period, suggests it might cover unique, high-demand, or emergency-response telecommunications needs, or potentially include significant one-time costs for equipment or setup. A direct comparison to contracts with similar scope and duration is necessary for a true value assessment.

What are the potential risks associated with a contract of this size awarded for such a short period?

A primary risk is the potential for inefficient use of funds due to the compressed timeline. Awarding such a large sum for only two months could indicate rushed procurement, potentially leading to inflated pricing or inadequate vetting of services. There's also a risk that the services provided might not fully meet long-term strategic needs if the contract was intended as a stopgap. Furthermore, the high daily expenditure necessitates rigorous oversight to ensure that the funds are being spent effectively and that the contractor is delivering commensurate value. If the services are critical, the short duration also poses a risk of service disruption if follow-on contracts are not secured in a timely manner.

Given the 'full and open competition' award type, what does the number of bids (4) suggest about the market for these services?

An award under 'full and open competition' with 4 bids suggests a moderately competitive market for the specific telecommunications services procured. While more bids are generally preferred to maximize competition and potentially drive down prices further, 4 bidders indicate that the opportunity was visible and attracted interest from multiple capable firms. This level of competition is generally considered adequate to provide the government with a reasonable selection of qualified vendors and a basis for price negotiation. However, the ultimate success of the competition in achieving best value for taxpayers depends on the quality of the proposals received and the government's evaluation process, not just the number of bids.

What is Peraton Enterprise Solutions LLC's track record with similar large federal contracts?

Peraton Enterprise Solutions LLC is a significant player in the federal IT and defense contracting space. The company has a history of winning and performing on large, complex contracts, often involving telecommunications, cybersecurity, and mission support services for various government agencies, including the Department of Defense. While specific details of their performance on contracts of this exact nature and scale would require deeper analysis of past performance evaluations and contract histories, their established presence suggests they possess the capabilities and infrastructure to handle substantial government requirements. However, each contract is unique, and past performance does not guarantee future results; rigorous oversight remains crucial.

How does the $194 million spending compare to historical spending patterns for 'Other ADP & Telecommunications Services' by the Department of the Navy?

Analyzing historical spending patterns for 'Other ADP & Telecommunications Services' (NAICS 541519) by the Department of the Navy is crucial for context. While this specific $194 million award over 61 days is substantial on a daily basis, its significance within the Navy's overall IT and telecom budget depends on the frequency and scale of similar awards. The Navy typically spends billions annually on IT and communications. If this contract represents a one-off, high-urgency requirement or a component of a larger program, its impact might be localized. However, if such high-value, short-duration contracts become a pattern, it could indicate shifts in procurement strategy or potential inefficiencies compared to longer-term, more competitively bid IDIQ vehicles.

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: FULL AND OPEN COMPETITION

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: HP, Inc.

Address: 13600 EDS DRIVE, HERNDON, VA, 20171

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $194,052,732

Exercised Options: $194,052,732

Current Obligation: $194,052,732

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002400D6000

IDV Type: IDC

Timeline