DoD's $53M IT Services Contract with RITE-SOLUTIONS, INC. Faces Scrutiny Over Value and Competition

Contract Overview

Contract Amount: $53,168,737 ($53.2M)

Contractor: Rite-Solutions, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-09-24

End Date: 2024-04-30

Contract Duration: 2,045 days

Daily Burn Rate: $26.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: CODE 104 ACIO/IT DIVISION SERVICES FOR NUWCDIVNPT AND NUWC HQ

Place of Performance

Location: ANDOVER, ESSEX County, MASSACHUSETTS, 01810

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $53.2 million to RITE-SOLUTIONS, INC. for work described as: CODE 104 ACIO/IT DIVISION SERVICES FOR NUWCDIVNPT AND NUWC HQ Key points: 1. The contract's significant value raises questions about cost-effectiveness for IT services. 2. Full and open competition was utilized, but the pricing strategy needs further review. 3. Potential risks include cost overruns and whether the fixed fee adequately incentivizes efficiency. 4. The IT sector is highly competitive, suggesting opportunities for better value. 5. This contract falls under Engineering Services, a broad category with varying cost benchmarks.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee structure can lead to higher costs if not managed tightly. Benchmarking against similar IT service contracts is crucial to determine if $53M represents fair value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

While full and open competition was employed, the Cost Plus Fixed Fee (CPFF) pricing model may not be the most effective for price discovery in a competitive IT services market. This structure can sometimes lead to less aggressive bidding.

Taxpayer Impact: Taxpayer funds are being utilized for IT services. Ensuring competitive pricing and efficient service delivery is paramount to maximizing the value of this expenditure.

Public Impact

Naval warfare centers rely on these IT services for critical operations. The duration of the contract (over 6 years) impacts long-term IT planning and budgeting. Potential for technology obsolescence over the contract's lifespan needs consideration. Ensuring data security and system integrity is a key public interest.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee pricing model
Long contract duration
Potential for scope creep

Positive Signals

Full and open competition utilized
Clear contract awardee

Sector Analysis

This contract for IT services falls under the broader Engineering Services sector. Spending benchmarks in IT services vary widely based on specialization, but a $53M contract over six years suggests a substantial scope of work, potentially including software development, network management, or cybersecurity.

Small Business Impact

The data indicates this contract was not awarded to small businesses, as 'sb' is false. Analysis should explore whether small businesses were excluded or if the scope of work inherently favored larger, established prime contractors.

Oversight & Accountability

The contract is a delivery order under a larger contract, suggesting some level of pre-award oversight. However, ongoing oversight of the CPFF contract is critical to manage costs and ensure performance aligns with objectives.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Cost Plus Fixed Fee pricing model may not incentivize cost efficiency.
Long contract duration (over 6 years) increases risk of obsolescence and cost escalation.
Lack of small business participation.
Potential for undefined scope creep impacting final cost.
Need for robust government oversight to manage CPFF contract.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.2 million to RITE-SOLUTIONS, INC.. CODE 104 ACIO/IT DIVISION SERVICES FOR NUWCDIVNPT AND NUWC HQ

Who is the contractor on this award?

The obligated recipient is RITE-SOLUTIONS, 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 $53.2 million.

What is the period of performance?

Start: 2018-09-24. End: 2024-04-30.

What specific IT services are covered under this contract, and how do their costs compare to industry averages for similar deliverables?

The contract specifies 'ACIO/IT DIVISION SERVICES'. Without a detailed breakdown of services (e.g., software development, network infrastructure, cybersecurity support, help desk), a precise cost comparison is difficult. However, the $53M total award over approximately six years suggests a significant investment. Benchmarking would require granular data on labor categories, hours, and specific service outcomes against market rates for comparable government or commercial contracts.

Given the Cost Plus Fixed Fee structure, what mechanisms are in place to mitigate the risk of contractor inefficiency or unnecessary cost escalation?

CPFF contracts inherently carry a risk of cost escalation if not managed diligently. Mitigation typically involves robust government oversight, detailed performance metrics, regular audits, and clear definition of the fixed fee's relationship to performance objectives. The government contracting officer and technical team must actively monitor expenditures and contractor performance against the contract's requirements and budget.

How effectively did the 'full and open competition' process ensure the government received the best possible value for these IT services?

While 'full and open competition' theoretically maximizes the pool of potential bidders, the chosen pricing structure (CPFF) can sometimes dampen the price competition aspect. The effectiveness hinges on the clarity of the solicitation's requirements, the evaluation criteria used, and the government's ability to negotiate favorable terms. A review of the bidding process and the final negotiated price against benchmarks would be needed to fully assess value.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering 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: N6660418R3010

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 185 SOUTH BROAD ST. SUITE 303, PAWCATUCK, CT, 06379

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business

Financial Breakdown

Contract Ceiling: $54,256,258

Exercised Options: $54,228,758

Current Obligation: $53,168,737

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4115

IDV Type: IDC

Timeline