DoD's $11.3M software maintenance contract awarded to Solvendum Health Information Systems raises value and competition questions

Contract Overview

Contract Amount: $11,310,682 ($11.3M)

Contractor: Solventum Health Information Systems, Inc.

Awarding Agency: Department of Defense

Start Date: 2007-10-01

End Date: 2009-09-30

Contract Duration: 730 days

Daily Burn Rate: $15.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SOFTWARE SUITE MAINTENANCE AND SUPPORT

Place of Performance

Location: SAINT PAUL, RAMSEY County, MINNESOTA, 55144

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $11.3 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC. for work described as: SOFTWARE SUITE MAINTENANCE AND SUPPORT Key points: 1. The contract's value proposition is unclear given the lack of competitive bidding and limited performance data. 2. Sole-source award suggests potential for inflated pricing and reduced market pressure. 3. The contract duration of two years with a firm-fixed-price structure offers some cost predictability. 4. Performance context is limited, making it difficult to assess the effectiveness of the software maintenance. 5. The IT services sector is highly competitive, making the sole-source nature of this award notable. 6. The absence of small business set-aside indicates a focus on larger, specialized contractors.

Value Assessment

Rating: questionable

Benchmarking the value of this $11.3 million contract is challenging due to the sole-source award and limited public performance data. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. Comparing it to similar software maintenance contracts for custom computer programming services would require access to more detailed pricing structures and performance metrics. The firm-fixed-price nature provides some cost certainty, but the overall value for money remains uncertain without a competitive baseline.

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 can provide the required goods or services, or in specific emergency situations. The lack of competition means there was no opportunity for price discovery through bidding, potentially leading to higher costs for the government compared to a competed contract. The government would need to justify the sole-source award based on specific criteria outlined in federal acquisition regulations.

Taxpayer Impact: Taxpayers may be paying a premium for this software maintenance due to the absence of competitive pressure. The government's ability to negotiate favorable terms is diminished in a sole-source scenario.

Public Impact

The Department of the Navy benefits from continued maintenance and support for a critical software suite. This contract ensures the operational continuity of essential IT systems for military operations. The primary beneficiaries are the end-users within the Department of Defense who rely on the software. The contract supports the IT infrastructure necessary for national defense functions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs.
Limited transparency on performance metrics makes value assessment difficult.
Sole-source awards can indicate potential vendor lock-in.
Contract duration and value warrant scrutiny for potential inefficiencies.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Contract supports critical Department of Defense IT infrastructure.
Contractor has a history of performing government contracts.

Sector Analysis

This contract falls within the IT services sector, specifically custom computer programming services. The market for software maintenance and support is substantial, with significant government spending allocated to maintaining existing systems. Comparable spending benchmarks for similar custom software maintenance contracts can vary widely based on complexity, criticality, and vendor. The IT services market is characterized by both large established players and specialized niche providers.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This suggests that the scope of work or the specialized nature of the software maintenance required a contractor with specific capabilities typically found in larger firms. The absence of small business participation means limited direct benefit to the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting officers and program managers. Accountability measures would be defined in the contract's statement of work and performance standards. Transparency is limited due to the sole-source nature and lack of publicly available performance data. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense IT Modernization Programs
Custom Software Development Services
Software Maintenance and Support Contracts
Defense Information Systems Agency (DISA) Contracts

Risk Flags

Sole-source award lacks competitive justification.
Limited public performance data hinders value assessment.
Potential for inflated pricing due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.3 million to SOLVENTUM HEALTH INFORMATION SYSTEMS, INC.. SOFTWARE SUITE MAINTENANCE AND SUPPORT

Who is the contractor on this award?

The obligated recipient is SOLVENTUM HEALTH INFORMATION SYSTEMS, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $11.3 million.

What is the period of performance?

Start: 2007-10-01. End: 2009-09-30.

What is the specific software suite being maintained under this contract, and what is its criticality to Department of Defense operations?

The provided data does not specify the exact software suite. However, given the contractor (Solvendum Health Information Systems, Inc.) and the agency (Department of the Navy), it is likely related to health information systems or other critical operational software. The criticality to DoD operations would be determined by its function, such as supporting medical readiness, logistics, or command and control. Without this specific information, assessing the impact of potential disruptions or the necessity of sole-source procurement is difficult. Further investigation into the contract's statement of work would be required to ascertain the software's specific role and importance.

Can the pricing of this $11.3 million contract be benchmarked against similar sole-source software maintenance contracts?

Benchmarking this $11.3 million sole-source contract against similar agreements is challenging without more detailed information on the scope of services, the complexity of the software, and the specific labor categories and rates involved. Sole-source contracts inherently lack the price discovery mechanism of competition, often leading to higher costs. To perform a robust benchmark, one would need to compare it to other sole-source contracts for comparable software maintenance services, ideally from the same agency or within the same functional area. Additionally, comparing it to competitively awarded contracts for similar services, while not a direct comparison, could highlight potential cost differentials attributable to the lack of competition. The firm-fixed-price structure provides some cost certainty, but the underlying rates and total price remain a point of concern without competitive validation.

What justification was provided for awarding this contract on a sole-source basis instead of through full and open competition?

Federal Acquisition Regulation (FAR) Part 6 outlines the policies and procedures for contracting, including justifications for other than full and open competition (JOFOC). Common justifications for sole-source awards include the existence of only one responsible source, a national emergency, or when a statute expressly requires or authorizes non-competitive procurement. For this specific contract, the Department of the Navy would have had to document and approve a JOFOC, likely citing reasons such as unique proprietary software, specialized expertise only available from Solvendum Health Information Systems, Inc., or a critical need that could not be met through a competitive process within the required timeframe. Without access to the official JOFOC documentation, the precise rationale remains unknown.

What are the performance metrics and key performance indicators (KPIs) associated with this contract, and how has the contractor performed against them?

The provided data does not include specific performance metrics or KPIs for this contract. Typically, software maintenance and support contracts include service level agreements (SLAs) that define response times, resolution times for issues, system availability, and other performance standards. The effectiveness of Solvendum Health Information Systems, Inc. in fulfilling these requirements would be assessed against these metrics. Without access to contract performance reports or award fee determinations (if applicable), it is impossible to evaluate the contractor's performance objectively. This lack of transparency regarding performance makes it difficult to ascertain the true value delivered for the $11.3 million expenditure.

How does the $11.3 million spending on this contract compare to historical spending on similar software maintenance services by the Department of the Navy?

To compare this $11.3 million contract to historical spending, one would need to analyze past contracts for software maintenance and support services awarded by the Department of the Navy, particularly for similar types of software or systems. This would involve searching contract databases for relevant keywords, NAICS codes (like 541511), and contractor names over several fiscal years. Factors to consider in the comparison would include inflation, changes in technology, and the evolution of the software's functionality and user base. A significant increase or decrease in spending compared to historical averages could indicate changes in requirements, market conditions, or procurement strategies. Without this historical data, it's difficult to contextualize the current spending level.

Industry Classification

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

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6523607R3001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: 3M Company (UEI: 006173082)

Address: 575 MURRAY BLVD, SALT LAKE CITY, UT, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $11,310,682

Exercised Options: $11,310,682

Current Obligation: $11,310,682

Timeline