State Department Spends $59.9M on COTS Software to Replace DOS Payroll Systems

Contract Overview

Contract Amount: $59,869,023 ($59.9M)

Contractor: STG LLC

Awarding Agency: Department of State

Start Date: 2009-05-21

End Date: 2016-05-25

Contract Duration: 2,561 days

Daily Burn Rate: $23.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COMBINATION (APPLIES TO AWARDS WHERE TWO OR MORE OF THE ABOVE APPLY)

Sector: IT

Official Description: COTS SOFTWARE, MAINTENANACE AND INTEGRATION TO REPLACE THE DOS PAYROLL SYSTEMS FOR FSNS, ANNUITANTS AND THE AMERICAN PAYROLL, 100,000 SEAT LICENSE.

Place of Performance

Location: NORTH CHARLESTON, CHARLESTON County, SOUTH CAROLINA, 29405

State: South Carolina Government Spending

Plain-Language Summary

Department of State obligated $59.9 million to STG LLC for work described as: COTS SOFTWARE, MAINTENANACE AND INTEGRATION TO REPLACE THE DOS PAYROLL SYSTEMS FOR FSNS, ANNUITANTS AND THE AMERICAN PAYROLL, 100,000 SEAT LICENSE. Key points: 1. Significant investment in modernizing payroll systems for 100,000 seats. 2. Contract awarded to STG LLC, indicating a specific vendor relationship. 3. Full and open competition was utilized, suggesting a robust procurement process. 4. The contract duration is substantial at 2561 days, implying long-term reliance.

Value Assessment

Rating: fair

The total award amount of $59.9 million for 100,000 seats suggests a per-seat cost of approximately $599. This needs to be benchmarked against similar COTS software and integration contracts for government or large enterprises to assess value.

Cost Per Unit: $599

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which typically fosters competitive pricing. However, the specific pricing structure and any subsequent modifications would determine the ultimate price discovery effectiveness.

Taxpayer Impact: Taxpayer funds are being used to upgrade critical payroll infrastructure, aiming for improved efficiency and reduced long-term maintenance costs compared to legacy systems.

Public Impact

Modernization of a critical financial system impacting a large user base. Potential for improved payroll processing accuracy and efficiency. Transition from legacy DOS systems to a COTS solution may introduce new training and support needs. Long-term contract suggests ongoing financial commitment from the agency.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns during integration.
Risk of vendor lock-in with COTS solutions.
Dependence on STG LLC for ongoing maintenance and support.

Positive Signals

Replacement of outdated systems with modern technology.
Utilized full and open competition.
Aims to improve operational efficiency.

Sector Analysis

This contract falls within the Software Publishers sector, specifically for COTS software, maintenance, and integration. Benchmarks for similar large-scale COTS deployments in government are crucial for evaluating cost-effectiveness.

Small Business Impact

The data indicates this contract was not awarded to small businesses (ss: false, sb: false). Further analysis would be needed to determine if small businesses had opportunities to participate as subcontractors.

Oversight & Accountability

The contract was awarded by the Department of State, indicating agency-level oversight. The use of definitive contracts and full and open competition suggests established procurement processes are in place.

Related Government Programs

Software Publishers
Department of State Contracting
Department of State Programs

Risk Flags

High total contract value.
Long contract duration.
Reliance on a single vendor for maintenance and integration.
Potential for integration complexities with legacy systems.
No indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $59.9 million to STG LLC. COTS SOFTWARE, MAINTENANACE AND INTEGRATION TO REPLACE THE DOS PAYROLL SYSTEMS FOR FSNS, ANNUITANTS AND THE AMERICAN PAYROLL, 100,000 SEAT LICENSE.

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 $59.9 million.

What is the period of performance?

Start: 2009-05-21. End: 2016-05-25.

What is the expected return on investment from replacing the DOS payroll systems with this COTS solution, considering the $59.9 million expenditure?

The ROI is expected to stem from increased payroll processing efficiency, reduced maintenance costs of legacy systems, and improved accuracy. Quantifying these benefits against the upfront and ongoing costs of the COTS solution, including licensing, integration, and support, is essential for a comprehensive ROI assessment. The long contract duration suggests a long-term strategic investment.

What are the primary risks associated with integrating a COTS software solution for a large payroll system, and how are they being mitigated?

Key risks include data migration challenges from legacy systems, potential compatibility issues with existing infrastructure, user adoption hurdles, and vendor lock-in. Mitigation strategies likely involve thorough testing, phased implementation, comprehensive training programs, and clearly defined service level agreements with the vendor, STG LLC, to ensure ongoing support and performance.

How does the per-unit cost of $599 for this COTS software license and integration compare to industry benchmarks for similar government or enterprise-level payroll systems?

A per-unit cost of $599 for a 100,000-seat license and integration needs careful benchmarking. Industry averages for enterprise resource planning (ERP) modules or specialized payroll software can vary widely based on features, vendor, and support levels. Comparing this figure against similar government procurements or large commercial deals is critical to determine if it represents good value or if it is on the higher end.

Industry Classification

NAICS: Information › Software Publishers › Software Publishers

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COMBINATION (APPLIES TO AWARDS WHERE TWO OR MORE OF THE ABOVE APPLY) (2)

Evaluated Preference: NONE

Contractor Details

Parent Company: STG Group, Inc. (UEI: 079257316)

Address: 11710 PLAZA AMERICA DR STE 1200, RESTON, VA, 20190

Business Categories: Asian Pacific American Owned Business, Category Business, Manufacturer of Goods, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $64,842,407

Exercised Options: $64,706,039

Current Obligation: $59,869,023

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline