Department of State's $39.2M IT support contract awarded to STG LLC shows a long performance period

Contract Overview

Contract Amount: $39,258,836 ($39.3M)

Contractor: STG LLC

Awarding Agency: Department of State

Start Date: 2008-01-22

End Date: 2017-06-30

Contract Duration: 3,447 days

Daily Burn Rate: $11.4K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: DEPARTMENT OF STATE WORLDWIDE FINANCIAL SYSTEM SUPPORT

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of State obligated $39.3 million to STG LLC for work described as: DEPARTMENT OF STATE WORLDWIDE FINANCIAL SYSTEM SUPPORT Key points: 1. The contract's duration of over 9 years suggests a need for sustained IT support services. 2. Awarded as a competitive delivery order, indicating multiple bids were considered. 3. The 'Other Computer Related Services' NAICS code points to a broad scope of IT support. 4. The contract's cost-plus-fixed-fee structure can incentivize cost control by the contractor. 5. The total award value of $39.2M over the contract's life needs to be benchmarked against similar IT support contracts. 6. The absence of small business set-aside flags suggests this was not specifically targeted for small business participation.

Value Assessment

Rating: fair

Benchmarking the $39.2 million award over a 9-year period requires detailed comparison with similar IT support contracts for federal agencies. The cost-plus-fixed-fee (CPFF) pricing structure, while common, can lead to cost overruns if not managed diligently. Without specific performance metrics or a breakdown of services rendered, a definitive value-for-money assessment is challenging. However, the long duration implies a consistent need and potentially a stable, albeit high, cost for ongoing support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

This contract was awarded as a competitive delivery order, suggesting that multiple vendors were invited to bid and that the Department of State selected the best offer. The presence of two bids indicates some level of competition, but the exact number of bidders and the evaluation criteria are crucial for a full understanding of the competitive landscape. A limited number of bidders can sometimes lead to less favorable pricing.

Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers as it likely resulted in a more optimized price compared to a sole-source procurement. However, the true savings depend on the number of bids received and the rigor of the evaluation process.

Public Impact

The Department of State benefits from continuous IT system support, ensuring operational efficiency. Federal employees within the Department of State are the primary users of the supported IT systems. The services delivered likely encompass a range of IT functions, from system maintenance to user support. The geographic impact is primarily within the Department of State's operational locations, which are often worldwide.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep in CPFF contracts if not closely monitored.
Scope definition for 'Other Computer Related Services' could be broad, leading to potential ambiguities.
Long contract duration may not always reflect the most current technological solutions.
Dependence on a single contractor for critical IT infrastructure over an extended period.

Positive Signals

Competitive award process suggests potential for good value.
Long performance period indicates contractor stability and potentially deep institutional knowledge.
CPFF structure can provide clarity on profit margins for the contractor.
Awarded by a major federal agency, implying adherence to stringent procurement standards.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on IT services and support. The market for federal IT services is substantial, with agencies constantly seeking to modernize infrastructure and enhance cybersecurity. Comparable spending benchmarks would involve analyzing other large-scale IT support contracts awarded to system integrators and service providers by agencies like the Department of Defense or Homeland Security. The 'Other Computer Related Services' NAICS code (541519) covers a wide array of IT consulting and integration services.

Small Business Impact

The contract was not awarded as a small business set-aside, and the 'sb' field is false, indicating no specific provision for small businesses in the prime contract. This means large businesses were likely the primary participants in the competition. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity to engage the small business IT ecosystem.

Oversight & Accountability

Oversight for this contract would typically reside with the Department of State's contracting officers and program managers. The contract's long duration necessitates regular performance reviews and audits to ensure compliance and value. Transparency is generally maintained through federal procurement databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of State IT Modernization Programs
Federal Civilian Agency IT Support Services
IT Services for Global Operations
Worldwide Financial System Support Contracts

Risk Flags

Long contract duration may indicate potential for vendor lock-in.
CPFF contracts require robust oversight to manage costs effectively.
Broad NAICS code could obscure specific service delivery details.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $39.3 million to STG LLC. DEPARTMENT OF STATE WORLDWIDE FINANCIAL SYSTEM SUPPORT

Who is the contractor on this award?

The obligated recipient is STG LLC.

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $39.3 million.

What is the period of performance?

Start: 2008-01-22. End: 2017-06-30.

What specific IT services were included under the 'Other Computer Related Services' NAICS code for this contract?

The NAICS code 541519, 'Other Computer Related Services,' is broad and can encompass a wide range of IT activities. For this specific Department of State contract, it likely included services such as IT infrastructure management, network support, help desk operations, software maintenance and support, system integration, and potentially cybersecurity services. Without the detailed Statement of Work (SOW), the precise scope remains general. However, given the contract's duration and award value, it suggests comprehensive, long-term support for critical IT systems essential to the Department's global operations.

How does the $39.2 million award value compare to similar IT support contracts awarded by the Department of State or other agencies?

Benchmarking the $39.2 million award requires comparing it against IT support contracts of similar scope and duration. For a contract spanning over 9 years (from 2008 to 2017), the average annual value is approximately $4.35 million. This figure needs to be contextualized within the broader federal IT spending landscape. Large agencies like the Department of Defense or the General Services Administration often award multi-year IT support contracts ranging from tens to hundreds of millions of dollars. The Department of State's spending on IT support is significant, and this contract's value appears moderate for a comprehensive, long-term engagement, but a precise comparison would necessitate access to detailed contract line item data and market research reports for comparable services.

What were the key performance indicators (KPIs) used to evaluate STG LLC's performance under this contract?

Specific Key Performance Indicators (KPIs) for this contract are not publicly detailed in the provided data. However, for IT support contracts, common KPIs typically include system uptime percentages, response times for help desk tickets, resolution rates for technical issues, adherence to security protocols, and successful implementation of system upgrades or maintenance. The Department of State would have established performance standards within the contract's Statement of Work (SOW) and monitored STG LLC's performance against these metrics throughout the contract's duration. Regular performance reviews and potentially award-term provisions would be linked to meeting or exceeding these KPIs.

What is the significance of the Cost Plus Fixed Fee (CPFF) contract type in terms of risk and cost control?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor (STG LLC) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure shifts some cost risk to the government, as the final cost can fluctuate based on actual expenses. However, the fixed fee provides the contractor with a defined profit margin, incentivizing efficiency to manage costs within the anticipated range. For the government, CPFF is often used when the scope of work is not precisely defined or involves significant uncertainty. Effective oversight is crucial to ensure costs are reasonable and allocable, preventing potential overruns.

How has the Department of State's spending on IT support evolved since the completion of this contract in 2017?

Since the completion of this STG LLC contract in June 2017, the Department of State's IT spending landscape has likely evolved significantly, driven by ongoing digital transformation initiatives, increasing cybersecurity threats, and the need for more agile IT solutions. Federal IT spending, in general, has seen a continued rise, with a greater emphasis on cloud computing, data analytics, and modernizing legacy systems. The Department of State, like other agencies, would have likely re-competed or re-aligned its IT support services to incorporate newer technologies and address emerging requirements. Analyzing subsequent contracts and budget allocations would reveal trends in modernization efforts and shifts in technology adoption.

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: COMPETITIVE DELIVERY ORDER

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 11710 PLAZA AMERICA DR, RESTON, VA, 20190

Business Categories: Asian Pacific American Owned Business, Category Business, Minority Owned Business, Small Business

Financial Breakdown

Contract Ceiling: $64,682,398

Exercised Options: $39,258,916

Current Obligation: $39,258,836

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: DOCCM130105CT0048

IDV Type: GWAC

Timeline