DoD's $22.8M contract for Enterprise Business Systems support awarded to VSOLVIT LLC raises questions on competition and value

Contract Overview

Contract Amount: $22,790,762 ($22.8M)

Contractor: Vsolvit LLC

Awarding Agency: Department of Defense

Start Date: 2025-01-06

End Date: 2027-01-05

Contract Duration: 729 days

Daily Burn Rate: $31.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: ENTERPRISE BUSINESS SYSTEMS ENHANCED OPERATIONS ENVIRONMENT SUPPORT

Place of Performance

Location: PORT HUENEME CBC BASE, VENTURA County, CALIFORNIA, 93043

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $22.8 million to VSOLVIT LLC for work described as: ENTERPRISE BUSINESS SYSTEMS ENHANCED OPERATIONS ENVIRONMENT SUPPORT Key points: 1. Contract awarded on a 'not available for competition' basis, limiting price discovery. 2. Significant duration of 729 days suggests a long-term need for these services. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Research and Development NAICS code (541715) may not fully capture the nature of business systems support. 5. No small business set-aside was utilized for this procurement. 6. The contract value of over $22 million warrants scrutiny for cost-effectiveness.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bidding and specific details on the services provided. The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility, can lead to higher costs compared to fixed-price contracts if not managed rigorously. Without comparable contracts or detailed cost breakdowns, it's difficult to definitively assess if the $22.8 million represents a fair price for the enterprise business systems enhanced operations environment support. The absence of a competitive process limits the ability to gauge market rates and ensure optimal value for taxpayer dollars.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'not available for competition' justification, indicating that a full and open competition was not pursued. This typically means that only one source was considered capable of meeting the government's needs, or that specific circumstances precluded a broader solicitation. The lack of multiple bidders means there was no direct price competition, potentially leading to higher costs than if multiple companies had vied for the contract. This approach limits the government's ability to leverage market forces for the best possible pricing and terms.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The government's ability to negotiate favorable terms and pricing is diminished when only one contractor is considered.

Public Impact

The Department of the Navy benefits from continued support for its enterprise business systems, crucial for operational efficiency. This contract ensures the ongoing functionality and enhancement of critical business operations environments. The primary beneficiaries are the Department of Defense's internal operations and personnel relying on these systems. The contract supports the technological infrastructure necessary for effective defense operations and management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Cost Plus Fixed Fee structure can incentivize higher spending.
The R&D NAICS code might not accurately reflect the service type, potentially impacting oversight.
No small business participation is noted, missing opportunities for economic inclusion.

Positive Signals

Award to a single contractor can ensure continuity of essential services.
The fixed fee component provides some cost certainty for the government.
The contract duration suggests a recognized, long-term need for the services.

Sector Analysis

This contract falls within the broader IT services and support sector, specifically focusing on enterprise resource planning (ERP) or similar business management software. The market for such services is substantial, with government agencies being significant consumers. The NAICS code 541715 (Research and Development in the Physical, Engineering, and Life Sciences) appears misaligned with the stated purpose of supporting enterprise business systems, which typically falls under IT services or professional services categories. Comparable spending benchmarks for large-scale business system support contracts within the federal government can range from tens to hundreds of millions of dollars annually, depending on the scope and complexity.

Small Business Impact

This contract does not appear to include a small business set-aside. The absence of such provisions means that opportunities for small businesses to compete for or subcontract on this work are not guaranteed. This could limit the participation of smaller, potentially innovative firms in supporting critical defense systems and may not contribute to the government's small business contracting goals. Further analysis would be needed to determine if any subcontracting opportunities are planned or mandated.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring will be crucial to ensure costs remain within reasonable bounds and that the contractor meets all performance requirements. Transparency regarding the specific services rendered and the justification for costs will be key. The Inspector General for the Department of Defense may have jurisdiction for audits and investigations if concerns arise regarding waste, fraud, or abuse.

Related Government Programs

Department of Defense Enterprise Resource Planning (ERP) Systems
Navy Business Systems Modernization Programs
IT Support Services for Federal Agencies
Research and Development Support Contracts

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Cost Plus Fixed Fee contract type carries inherent risks of cost escalation.
Misaligned NAICS code may indicate a lack of clarity in contract classification or purpose.
Lack of small business participation limits economic inclusion opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.8 million to VSOLVIT LLC. ENTERPRISE BUSINESS SYSTEMS ENHANCED OPERATIONS ENVIRONMENT SUPPORT

Who is the contractor on this award?

The obligated recipient is VSOLVIT 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 $22.8 million.

What is the period of performance?

Start: 2025-01-06. End: 2027-01-05.

What specific enterprise business systems are being supported under this contract, and what is the scope of 'enhanced operations environment support'?

The provided data does not specify the exact enterprise business systems covered by this contract. 'Enhanced operations environment support' typically encompasses a range of activities including system maintenance, upgrades, performance optimization, user support, and potentially the development of new functionalities or integrations. For a contract valued at $22.8 million over two years, this likely involves significant ongoing operational support and potentially some level of system enhancement or modernization. A deeper dive into the contract's Statement of Work (SOW) would be necessary to understand the precise services and systems involved. The misaligned NAICS code (541715) further complicates understanding the exact nature of the support being provided.

What was the justification for awarding this contract on a 'not available for competition' basis?

The justification for awarding this contract on a 'not available for competition' basis is not detailed in the provided data. Generally, such sole-source awards are made when only one responsible source is available or capable of meeting the agency's needs, or in cases of urgent and compelling requirements where competition is not feasible. Specific circumstances, such as unique technical capabilities, proprietary technology, or a lack of qualified alternative vendors, could lead to this determination. The Department of the Navy would have had to formally document and approve this justification, often requiring review and approval from higher authorities within the Department of Defense to ensure it aligns with federal procurement regulations.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types for similar IT support services in terms of cost and risk?

Cost Plus Fixed Fee (CPFF) contracts are used when the scope of work is not precisely defined, allowing for flexibility but also introducing potential cost risks. The government agrees to pay the contractor's actual costs plus a fixed fee representing profit. This contrasts with Firm-Fixed-Price (FFP) contracts, where the price is set regardless of actual costs, incentivizing contractor efficiency but potentially leading to higher initial bids to cover contractor risk. For IT support, FFP contracts are often preferred for well-defined services to ensure cost certainty. CPFF contracts, like this one, can be more expensive if costs escalate, though the fixed fee component provides some predictability. The risk of cost overruns is higher with CPFF, necessitating robust government oversight to manage expenditures effectively.

What is the historical spending pattern for Enterprise Business Systems Enhanced Operations Environment Support within the Department of the Navy or DoD?

Historical spending data for 'Enterprise Business Systems Enhanced Operations Environment Support' within the Department of the Navy or DoD is not provided in this dataset. However, federal agencies, particularly large organizations like the DoD, consistently invest significant sums in maintaining and enhancing their enterprise business systems. These systems are critical for financial management, logistics, human resources, and operational command. Spending in this area can fluctuate based on modernization initiatives, system lifecycles, and evolving technological requirements. Without specific historical data, it's difficult to contextualize the $22.8 million award as unusually high or low, but it represents a substantial investment in maintaining core operational capabilities.

What are the potential implications of using the NAICS code 541715 (Research and Development) for a contract primarily focused on business systems support?

Using NAICS code 541715, which pertains to 'Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology),' for a contract focused on enterprise business systems support is unusual and potentially problematic. Business systems support typically falls under IT services (e.g., NAICS 541512 - Computer Systems Design Services) or professional services. The R&D classification might imply a focus on innovation or scientific advancement rather than routine operational support and maintenance. This misclassification could affect how the contract is procured, managed, and reported, potentially obscuring the true nature of the services rendered and impacting data analysis for sector-specific spending trends. It may also influence the types of companies eligible or considered for the contract.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6426725R6000

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 2651 N. GREEN VALLEY PKWY, #101, HENDERSON, NV, 89014

Business Categories: Category Business, Limited Liability Corporation, Minority Owned Business, Partnership or Limited Liability Partnership, Small Business, Special Designations, Indian (Subcontinent) American Owned Business, U.S.-Owned Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $93,856,737

Exercised Options: $35,822,071

Current Obligation: $22,790,762

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline