State Department's $93.8M contract for passport system support awarded to STG LLC, spanning over 6 years

Contract Overview

Contract Amount: $93,754,966 ($93.8M)

Contractor: STG LLC

Awarding Agency: Department of State

Start Date: 2013-03-18

End Date: 2020-01-31

Contract Duration: 2,510 days

Daily Burn Rate: $37.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 8

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SUPPORT, MAINTENANCE, AND ENHANCEMENT FOR PASSPORT SERVICES' MAJOR SYSTEMS AND TOOLS. IGF::OT::IGF

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20522

State: District of Columbia Government Spending

Plain-Language Summary

Department of State obligated $93.8 million to STG LLC for work described as: SUPPORT, MAINTENANCE, AND ENHANCEMENT FOR PASSPORT SERVICES' MAJOR SYSTEMS AND TOOLS. IGF::OT::IGF Key points: 1. The contract value of $93.8 million over 6 years suggests a significant investment in maintaining critical passport systems. 2. Awarded through full and open competition, this indicates a potentially competitive bidding process that could drive value. 3. The firm-fixed-price contract type shifts performance risk to the contractor, STG LLC. 4. The duration of the contract (2510 days) points to a long-term need for these IT support services. 5. The contract was awarded to STG LLC, whose performance history and capacity for such a large-scale IT project warrant review. 6. The absence of small business set-aside flags suggests this was not specifically targeted for small business participation.

Value Assessment

Rating: good

The total contract value of $93.8 million over approximately 6.8 years averages to about $13.8 million annually. This figure needs to be benchmarked against similar IT support contracts for large-scale government systems. Without specific comparable data, it's difficult to definitively assess value for money. However, the firm-fixed-price nature suggests that the contractor bears the risk of cost overruns, which can be a positive indicator for the government if managed effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The data shows 8 bids were received, suggesting a healthy level of competition for this requirement. A competitive environment typically leads to better pricing and service offerings as contractors vie for the award.

Taxpayer Impact: A competitive award process like this generally benefits taxpayers by ensuring the government receives fair market value for the services rendered, preventing inflated costs that might arise from a sole-source or limited competition scenario.

Public Impact

Citizens applying for or renewing passports benefit from the reliable functioning of the passport systems supported by this contract. The Department of State's ability to process passport applications efficiently is directly supported, impacting national security and international travel facilitation. The contract supports IT infrastructure and services within the District of Columbia, where the Department of State is headquartered. The contract likely supports a workforce of IT professionals employed by STG LLC and potentially its subcontractors, contributing to the IT services sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if knowledge transfer and system documentation are not robust.
Dependence on a single contractor for critical passport system maintenance could pose risks if the contractor faces financial or operational difficulties.
Ensuring the contractor's cybersecurity practices meet evolving government standards is crucial for protecting sensitive data.

Positive Signals

The firm-fixed-price contract type incentivizes the contractor to manage costs efficiently.
Full and open competition suggests a potentially competitive pricing structure was achieved.
The long-term nature of the contract indicates a stable and reliable support solution for essential government systems.

Sector Analysis

This contract falls within the Custom Computer Programming Services sector (NAICS 541511), a vital segment of the IT industry focused on developing and maintaining specialized software and systems. The market for government IT support services is substantial, with agencies continually investing in modernizing and maintaining their complex technological infrastructures. This contract represents a significant portion of spending within this niche, supporting the core operational needs of a major federal agency.

Small Business Impact

The data indicates this contract was not awarded as a small business set-aside (ss: false, sb: false). This means that while small businesses could have bid, there was no specific requirement for them to receive a portion of the work through a set-aside. The prime contractor, STG LLC, may still engage small businesses as subcontractors, but this is not mandated by the contract's award structure. The impact on the small business ecosystem would depend on STG LLC's subcontracting strategy.

Oversight & Accountability

The contract's oversight would typically involve the Department of State's contracting officers and program managers responsible for monitoring performance, ensuring compliance with contract terms, and approving deliverables. The Inspector General's office for the Department of State would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract. Transparency is generally maintained through contract award databases and reporting requirements.

Related Government Programs

Department of State IT Modernization Efforts
Passport Services IT Infrastructure
Federal Civilian Agency IT Support Contracts
Custom Computer Programming Services Spending
Large-Scale Government System Maintenance

Risk Flags

Potential for cost overruns if scope is not clearly defined.
Risk of technological obsolescence over the contract's long duration.
Dependence on a single contractor for critical systems.
Ensuring adequate cybersecurity measures are maintained.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $93.8 million to STG LLC. SUPPORT, MAINTENANCE, AND ENHANCEMENT FOR PASSPORT SERVICES' MAJOR SYSTEMS AND TOOLS. IGF::OT::IGF

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 $93.8 million.

What is the period of performance?

Start: 2013-03-18. End: 2020-01-31.

What is STG LLC's track record with the Department of State and similar federal IT contracts?

STG LLC has a history of performing IT services for various government agencies, including the Department of State. Analyzing their past performance on contracts of similar size and scope is crucial. This includes reviewing past performance evaluations, any documented issues or disputes, and their ability to meet deadlines and quality standards. For this specific contract, understanding their experience with passport systems and major IT infrastructure maintenance would provide insight into their capability to fulfill the requirements effectively. A review of their financial stability and capacity to manage a contract of this magnitude is also important to assess potential risks.

How does the annual cost of this contract compare to industry benchmarks for similar IT support services?

The annual cost for this contract averages approximately $13.8 million ($93.8M / 6.8 years). To benchmark this value, one would compare it against the average annual cost of IT support and maintenance contracts for large-scale, mission-critical systems in both the public and private sectors. Factors such as the complexity of the systems, the level of service required (e.g., 24/7 support, specific response times), and the geographic scope of services would need to be considered. If comparable government contracts for similar services are significantly lower or higher, it would indicate whether this contract represents good or questionable value for money. Industry reports on IT outsourcing and managed services pricing can also provide a basis for comparison.

What are the primary risks associated with a long-term (over 6 years) contract for critical IT systems?

Long-term contracts for critical IT systems, like this passport services contract, carry several inherent risks. One significant risk is technological obsolescence; the systems and technologies supported may become outdated over the contract's duration, requiring costly upgrades or replacements. Another risk is vendor lock-in, where the government becomes overly dependent on a single contractor, making it difficult and expensive to switch providers. Performance degradation over time is also a concern, as contractor motivation or capability might wane. Furthermore, changes in government requirements or priorities could necessitate contract modifications, potentially leading to cost increases or scope creep. Finally, the contractor's financial stability or strategic direction could change, impacting their ability to deliver services consistently.

How effective are firm-fixed-price contracts in ensuring value for money for complex IT services?

Firm-fixed-price (FFP) contracts are generally considered effective in controlling costs and ensuring value for money when the scope of work is well-defined and unlikely to change significantly. In an FFP contract, the contractor assumes the risk of cost overruns, incentivizing them to manage resources efficiently and deliver the agreed-upon services within the fixed price. For complex IT services, the effectiveness of FFP hinges on the clarity and completeness of the contract's statement of work. If the requirements are ambiguous or subject to frequent changes, an FFP contract can lead to disputes, change orders, or a contractor cutting corners to maintain profitability, potentially compromising quality. In such cases, other contract types like cost-plus-incentive-fee might be more appropriate.

What is the historical spending trend for passport system IT support at the Department of State?

To assess historical spending trends, one would need to examine the Department of State's budget allocations and contract awards specifically for passport system IT support over several preceding years. This analysis would reveal whether spending has been consistent, increasing, or decreasing. Understanding these trends can help determine if the current contract value is in line with historical investments or represents a significant shift. It can also highlight patterns in contract types, durations, and awarded contractors, providing context for the current award. For instance, a steady increase in spending might indicate growing system complexity or user demand, while a decrease could suggest efficiency gains or system consolidation.

Industry Classification

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

Offers Received: 8

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

Address: 11091 SUNSET HILLS RD STE 200, RESTON, VA, 20190

Business Categories: 8(a) Program Participant, Category Business, Self-Certified Small Disadvantaged Business, Small Business, Small Disadvantaged Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $110,190,329

Exercised Options: $110,190,329

Current Obligation: $93,754,966

Parent Contract

Parent Award PIID: SAQMMA12A0069

IDV Type: BPA

Timeline