PBGC's $44M contract for benefits software modification awarded to Morneau Shepell Ltd

Contract Overview

Contract Amount: $44,042,939 ($44.0M)

Contractor: Morneau Shepell Ltd

Awarding Agency: Pension Benefit Guaranty Corporation

Start Date: 2003-03-05

End Date: 2010-12-31

Contract Duration: 2,858 days

Daily Burn Rate: $15.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: LABOR HOURS

Sector: IT

Official Description: PARAMETER-DRIVEN BENEFIT CALCULATIONS SOFTWARE SYSTEMS MODIFICATION

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20005

State: District of Columbia Government Spending

Plain-Language Summary

Pension Benefit Guaranty Corporation obligated $44.0 million to MORNEAU SHEPELL LTD for work described as: PARAMETER-DRIVEN BENEFIT CALCULATIONS SOFTWARE SYSTEMS MODIFICATION Key points: 1. Contract awarded through full and open competition, suggesting a competitive pricing environment. 2. The contract duration of over 7 years indicates a long-term need for these services. 3. The contract was awarded under the Labor Hours pricing model, which can pose risks if not managed carefully. 4. The specific NAICS code (541511) points to custom computer programming services. 5. The contract was awarded by the Pension Benefit Guaranty Corporation (PBGC). 6. The contract was awarded in 2003 and completed in 2010, reflecting historical IT spending.

Value Assessment

Rating: fair

Benchmarking the value for this specific contract is challenging due to its age and the lack of readily available comparable data for custom software modification services from that era. The Labor Hours pricing model can lead to cost overruns if not tightly managed, making direct value assessment difficult without detailed performance metrics. However, the total award amount of approximately $44 million over nearly 8 years suggests a significant investment in maintaining critical benefits administration systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that multiple vendors had the opportunity to bid. This typically fosters a more competitive environment, potentially leading to better pricing and quality. The presence of two bids suggests a moderate level of competition for this specific requirement.

Taxpayer Impact: A competitive bidding process generally benefits taxpayers by driving down costs and encouraging innovation, ensuring that government funds are used more efficiently.

Public Impact

The primary beneficiaries are participants and beneficiaries of pension plans insured by the PBGC, who rely on accurate and efficient administration of their benefits. The services delivered involved the modification of software systems crucial for managing pension benefits. The contract's impact is primarily national, supporting the PBGC's mission across the United States. The contract supported the IT workforce involved in custom computer programming and software development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Labor Hours pricing model can lead to cost escalation if not closely monitored.
The long duration of the contract could indicate potential for scope creep or evolving requirements over time.
Lack of specific performance metrics makes it difficult to assess the efficiency and effectiveness of the modifications.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The contract supported a critical government function (pension benefit administration).
The contractor successfully delivered the services over a multi-year period.

Sector Analysis

This contract falls within the IT services sector, specifically custom computer programming. The market for such services is vast and highly competitive, with numerous vendors offering specialized skills. The PBGC's spending on IT systems is typical for federal agencies managing large databases and complex administrative processes. Comparable spending benchmarks would involve looking at other agencies' investments in custom software development for benefits administration or similar large-scale data management systems.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses, nor is there information on subcontracting plans. Given the nature of custom software development and the contract value, it is possible that larger firms or teams involving small businesses as subcontractors participated. Further analysis would be needed to determine the extent of small business involvement.

Oversight & Accountability

Oversight for this contract would have been managed by the Pension Benefit Guaranty Corporation. As a federal contract, it would be subject to standard government procurement regulations and oversight mechanisms. Transparency would be expected through contract award databases like FPDS. Specific accountability measures would depend on the contract's performance clauses and reporting requirements, which are not detailed here. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

PBGC IT Modernization Efforts
Federal Benefits Administration Systems
Custom Software Development Contracts
IT Services for Financial Institutions

Risk Flags

Labor Hours Pricing Model Risk
Long Contract Duration
Custom Software Development Complexity

Frequently Asked Questions

What is this federal contract paying for?

Pension Benefit Guaranty Corporation awarded $44.0 million to MORNEAU SHEPELL LTD. PARAMETER-DRIVEN BENEFIT CALCULATIONS SOFTWARE SYSTEMS MODIFICATION

Who is the contractor on this award?

The obligated recipient is MORNEAU SHEPELL LTD.

Which agency awarded this contract?

Awarding agency: Pension Benefit Guaranty Corporation (Pension Benefit Guaranty Corporation).

What is the total obligated amount?

The obligated amount is $44.0 million.

What is the period of performance?

Start: 2003-03-05. End: 2010-12-31.

What was the specific nature of the software modifications performed under this contract?

The contract, valued at approximately $44 million, was for 'PARAMETER-DRIVEN BENEFIT CALCULATIONS SOFTWARE SYSTEMS MODIFICATION.' This suggests the work involved enhancing or altering existing software systems used by the Pension Benefit Guaranty Corporation (PBGC) to calculate and manage pension benefits. These modifications likely aimed to improve the accuracy, efficiency, or compliance of the benefit calculation processes, potentially adapting to changes in regulations, actuarial assumptions, or PBGC's operational needs. The 'parameter-driven' aspect implies that the system's calculations could be adjusted through input parameters rather than requiring extensive code changes, offering flexibility in managing complex benefit formulas.

How does the $44 million award compare to similar IT contracts for benefits administration software?

Comparing the $44 million award for custom software modification over nearly eight years requires context. For the period of 2003-2010, this amount represents a significant investment, but not an outlier for large-scale IT projects within federal agencies managing complex financial data. Agencies like the Social Security Administration or the Department of Veterans Affairs undertake multi-million dollar IT modernization efforts. However, direct comparisons are difficult without knowing the specific scope, complexity, and technological stack of the systems involved. The Labor Hours pricing model also introduces variability, meaning the final cost could differ from the total award amount based on actual hours worked.

What were the primary risks associated with the Labor Hours pricing model used for this contract?

The primary risk associated with the Labor Hours (LH) pricing model is the potential for cost overruns if the contractor's efficiency is low or if the scope of work expands without adequate controls. Unlike fixed-price contracts, LH models pay for the time spent, making it crucial for the government to closely monitor contractor performance, productivity, and the necessity of the hours billed. For the PBGC's $44 million contract, this meant that effective project management and oversight were essential to ensure that the modifications were completed efficiently and within budget. Without strong oversight, the total expenditure could exceed initial projections, diminishing the overall value for money.

What does the contractor's track record reveal about their performance on this contract?

Morneau Shepell Ltd. (now part of Morneau Shepell, a large consulting and technology firm) was awarded this contract. As the contract was completed in 2010, it represents a historical engagement. Without access to detailed performance reviews or contract close-out documentation, it's difficult to definitively assess their track record on this specific project. However, the fact that the contract ran its full course from 2003 to 2010 suggests a level of sustained performance and client satisfaction, or at least a continued need for the services provided. Further investigation into PBGC's vendor performance databases or related contract histories would be needed for a comprehensive evaluation.

Additional Analysis

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What are the implications of this contract's historical spending pattern for current PBGC IT investments?

This contract, awarded in 2003 and completed in 2010 for $44 million, reflects a significant investment in maintaining and modifying critical benefits administration software. Its historical spending pattern highlights the ongoing need for substantial IT resources to support the PBGC's core mission. For current investments, it underscores the potential long-term costs associated with complex software systems and the importance of strategic IT planning. It suggests that modernization and modification are continuous processes, and agencies must budget accordingly. Furthermore, the shift in IT landscapes since 2010 may mean that current investments focus on newer technologies like cloud computing or agile development, potentially altering the cost structure and delivery models compared to this older contract.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lifeworks Inc (UEI: 241319040)

Address: 500 BOUL RENE-LEVESQUE O SUITE 1100, MONTREAL

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

Financial Breakdown

Contract Ceiling: $44,042,939

Exercised Options: $44,042,939

Current Obligation: $44,042,939

Timeline