State Department awards $23.5M contract to STG Inc. for global compensation system migration

Contract Overview

Contract Amount: $23,466,315 ($23.5M)

Contractor: STG LLC

Awarding Agency: Department of State

Start Date: 2014-08-22

End Date: 2016-08-21

Contract Duration: 730 days

Daily Burn Rate: $32.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: : THIS IS A TWO YEAR BRIDGE CONTRACT WITH STG INC, TO COMPLETE THE MIGRATION OF MULTIPLE, LEGACY COMPENSATION SYSTEMS TO THE GLOBAL FOREIGN AFFAIRS COMPENSATION SYSTEM (GFACS), IT SUPPORT FOR IMPLEMENTATION OF THE DOS AMERICAN PAYROLL, AND FOR FOREIGN SERVICES NATIONALS IN 180 COUNTRIES. IGF::OT::IGF

Place of Performance

Location: NORTH CHARLESTON, CHARLESTON County, SOUTH CAROLINA, 29415

State: South Carolina Government Spending

Plain-Language Summary

Department of State obligated $23.5 million to STG LLC for work described as: : THIS IS A TWO YEAR BRIDGE CONTRACT WITH STG INC, TO COMPLETE THE MIGRATION OF MULTIPLE, LEGACY COMPENSATION SYSTEMS TO THE GLOBAL FOREIGN AFFAIRS COMPENSATION SYSTEM (GFACS), IT SUPPORT FOR IMPLEMENTATION OF THE DOS AMERICAN PAYROLL, AND FOR FOREIGN SERVICES NATIONALS IN 180… Key points: 1. Contract aims to modernize legacy compensation systems for U.S. and foreign national employees. 2. STG Inc. is the sole awardee, raising questions about competition and potential price discovery. 3. The contract's Time and Materials (T&M) pricing structure could pose a risk for cost overruns. 4. IT support for payroll implementation across 180 countries indicates significant operational complexity.

Value Assessment

Rating: questionable

The contract value of $23.5M over two years for a complex IT migration and support project appears reasonable on its face. However, without detailed breakdowns of labor categories and rates, a true assessment of value is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as competitive pressures are absent.

Taxpayer Impact: The lack of competition for a significant IT modernization project may result in taxpayers paying more than necessary for the services rendered.

Public Impact

Modernization of critical compensation systems impacts thousands of U.S. and foreign national employees. Successful migration is crucial for accurate and timely payroll processing globally. Potential delays or failures in this migration could disrupt essential government functions and employee pay.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition.
Time and Materials pricing increases cost risk.
Lack of detailed cost breakdown hinders value assessment.

Positive Signals

Addresses critical IT modernization need.
Supports global operations across 180 countries.

Sector Analysis

The IT services sector, particularly for large-scale system migrations and support, often involves significant investment. Benchmarks for similar projects vary widely based on scope and complexity, but this award falls within a typical range for such undertakings.

Small Business Impact

This contract was awarded to STG LLC, and there is no indication that small businesses were involved as subcontractors or partners in this specific award. Further analysis would be needed to determine if small business participation was considered or mandated.

Oversight & Accountability

The Department of State is responsible for overseeing this contract. Given the critical nature of payroll systems, robust oversight is essential to ensure timely completion, adherence to budget, and successful system integration.

Related Government Programs

Software Publishers
Department of State Contracting
Department of State Programs

Risk Flags

Sole-source award limits competition.
Time and Materials pricing poses cost overrun risk.
Lack of detailed cost breakdown hinders value assessment.
Complexity of global implementation increases execution risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $23.5 million to STG LLC. : THIS IS A TWO YEAR BRIDGE CONTRACT WITH STG INC, TO COMPLETE THE MIGRATION OF MULTIPLE, LEGACY COMPENSATION SYSTEMS TO THE GLOBAL FOREIGN AFFAIRS COMPENSATION SYSTEM (GFACS), IT SUPPORT FOR IMPLEMENTATION OF THE DOS AMERICAN PAYROLL, AND FOR FOREIGN SERVICES NATIONALS IN 180 COUNTRIES. 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 $23.5 million.

What is the period of performance?

Start: 2014-08-22. End: 2016-08-21.

What specific factors justified the sole-source award, and were alternatives explored?

The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without access to the contract's justification documentation, it's impossible to confirm the specific reasons. Exploring alternatives, even if ultimately deemed unsuitable, is a standard part of procurement best practices to ensure fair pricing and competition.

How will the Time and Materials (T&M) pricing be managed to prevent cost overruns?

Managing T&M contracts requires stringent oversight, including detailed tracking of labor hours, defined labor categories with pre-negotiated rates, and clear task orders with estimated completion times. The government contracting officer must actively monitor progress and expenditures, implementing cost controls and potentially establishing ceiling prices to mitigate the inherent risk of cost overruns associated with T&M arrangements.

What are the key performance indicators (KPIs) for this contract, and how will success be measured?

Key performance indicators for this contract would likely include successful migration of legacy data, system uptime and performance post-migration, accuracy of payroll processing, and user satisfaction. Success measurement would involve regular performance reviews against these KPIs, milestone achievement tracking, and potentially independent verification and validation of the new system's functionality and security.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 12011 SUNSET HILLS RD 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: $23,466,315

Exercised Options: $23,466,315

Current Obligation: $23,466,315

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline