Leidos SMS Inc. awarded $72M for VA IT support, raising questions on value and competition

Contract Overview

Contract Amount: $72,011,413 ($72.0M)

Contractor: Leidos SMS Inc

Awarding Agency: Department of Veterans Affairs

Start Date: 2015-06-26

End Date: 2018-01-15

Contract Duration: 934 days

Daily Burn Rate: $77.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF T4 TO FOR VISTA EVOLUTION AND INTEROPERABILITY PLANNING, TECHNICAL AND IMPLEMENTATION SUPPORT

Place of Performance

Location: SYRACUSE, ONONDAGA County, NEW YORK, 13212

State: New York Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $72.0 million to LEIDOS SMS INC for work described as: IGF::OT::IGF T4 TO FOR VISTA EVOLUTION AND INTEROPERABILITY PLANNING, TECHNICAL AND IMPLEMENTATION SUPPORT Key points: 1. Contract awarded for IT support services to the Department of Veterans Affairs. 2. The contract was competed under full and open competition. 3. The contract duration was 934 days. 4. The contract type was Firm Fixed Price. 5. The award was a Delivery Order. 6. The contractor is Leidos SMS Inc. 7. The place of performance was New York.

Value Assessment

Rating: fair

The contract value of $72 million for IT support services over approximately 2.5 years appears to be within a reasonable range for large-scale government IT projects. However, without specific performance metrics or detailed breakdowns of services rendered, a precise value-for-money assessment is challenging. Benchmarking against similar contracts for IT systems design and integration services would provide a clearer picture of whether the pricing was competitive and reflected efficient resource utilization. The firm fixed-price nature suggests a defined scope, but the actual cost-effectiveness depends on the successful delivery of those defined services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. The presence of 4 bidders suggests a moderately competitive environment. While full and open competition is generally preferred for maximizing price discovery and ensuring fair access to government contracts, the actual level of competition and its impact on pricing depend on the specific market dynamics for these specialized IT services and the clarity of the solicitation requirements.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to lower prices and better quality services. The participation of multiple bidders increases the likelihood that the government secures the best value proposition.

Public Impact

Veterans Affairs IT systems and infrastructure are expected to benefit from enhanced planning, technical, and implementation support. The services provided are crucial for the modernization and interoperability of VA's IT systems, potentially improving services for veterans. The contract's place of performance in New York may have implications for the local IT workforce and economy. The successful execution of this contract could lead to more efficient and reliable IT services for the VA, indirectly benefiting veterans.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if initial planning and technical support are not clearly defined.
Risk of vendor lock-in if interoperability solutions are proprietary.
Dependence on contractor expertise could pose challenges during transition or if performance issues arise.

Positive Signals

Firm fixed-price contract structure incentivizes cost control and predictable budgeting.
Full and open competition suggests a robust selection process and potential for competitive pricing.
Award to an established contractor like Leidos SMS Inc. may indicate a track record of successful government IT project execution.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader IT services industry. This sector is characterized by a high demand for specialized expertise in areas such as system integration, software development, and IT consulting. The market size for government IT services is substantial, with agencies like the VA consistently investing in technology to improve operations and service delivery. This contract aligns with the trend of federal agencies seeking external support for complex IT modernization and interoperability initiatives.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. This suggests that the primary award went to a large business, and the direct impact on the small business ecosystem may be limited unless Leidos SMS Inc. actively engages small businesses as subcontractors. Further analysis would be needed to determine if subcontracting opportunities were pursued or mandated.

Oversight & Accountability

The contract was awarded under full and open competition, which implies a degree of transparency in the procurement process. As a Delivery Order under a larger contract vehicle, oversight mechanisms would likely be tied to the parent contract's terms and conditions. The firm fixed-price nature provides some cost control. Accountability would be managed through performance monitoring and contract close-out procedures. The specific Inspector General jurisdiction would be that of the Department of Veterans Affairs.

Related Government Programs

VA IT Modernization Programs
Federal Civilian IT Services
Enterprise Resource Planning (ERP) Systems Support
Health IT Services

Risk Flags

Potential for cost overruns if scope is not well-defined.
Risk of vendor lock-in with proprietary solutions.
Dependence on contractor performance for critical IT functions.
Adequacy of competition for optimal value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $72.0 million to LEIDOS SMS INC. IGF::OT::IGF T4 TO FOR VISTA EVOLUTION AND INTEROPERABILITY PLANNING, TECHNICAL AND IMPLEMENTATION SUPPORT

Who is the contractor on this award?

The obligated recipient is LEIDOS SMS INC.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $72.0 million.

What is the period of performance?

Start: 2015-06-26. End: 2018-01-15.

What is Leidos SMS Inc.'s track record with the Department of Veterans Affairs and similar IT contracts?

Leidos SMS Inc., as part of the larger Leidos organization, has a significant history of contracting with the Department of Veterans Affairs (VA) and other federal agencies for IT services. Leidos has been involved in numerous large-scale IT projects for the VA, including electronic health record modernization, data center consolidation, and various IT infrastructure support initiatives. Their track record generally indicates experience in managing complex, high-value contracts. However, like many large contractors, they have likely encountered both successes and challenges in past performance. A detailed review of past performance evaluations, contract awards, and any associated disputes or corrective actions would be necessary for a comprehensive assessment of their specific track record on similar IT planning, technical, and implementation support contracts.

How does the awarded amount compare to similar IT support contracts for federal agencies?

The $72 million award for IT planning, technical, and implementation support over approximately 2.5 years is substantial, reflecting the complexity and scale typical of major federal IT initiatives. To benchmark this value, one would compare it to contracts for similar services (e.g., systems design, integration, technical support) awarded by other large federal agencies like the Department of Defense or HHS. Factors such as the specific scope of work, duration, number of users supported, and the level of technical specialization required significantly influence contract values. Without a direct comparison of detailed statements of work and performance periods, it's difficult to definitively state if $72 million represents a premium or a discount. However, the firm fixed-price structure and full and open competition suggest an effort to achieve competitive pricing.

What are the primary risks associated with this contract for the VA?

Key risks for the VA in this contract include potential performance deficiencies where the contractor may not meet the required technical specifications or delivery timelines, leading to delays in IT modernization efforts. There's also a risk of cost overruns if the firm fixed-price contract doesn't adequately account for unforeseen technical challenges or scope adjustments, although the FFP structure aims to mitigate this for the government. Another significant risk is the potential for vendor lock-in, especially if the implemented solutions are not based on open standards, making future transitions or integrations difficult and costly. Furthermore, a lack of adequate knowledge transfer or insufficient documentation could create long-term dependencies on the contractor for system maintenance and evolution.

How effective is the firm fixed-price (FFP) contract type in managing IT projects of this nature?

The Firm Fixed-Price (FFP) contract type is generally favored by the government for IT projects where the scope of work can be clearly defined and is unlikely to change significantly. It shifts the risk of cost overruns to the contractor, providing budget certainty for the agency. For IT planning, technical, and implementation support, FFP can be effective if the requirements are well-understood upfront. However, in rapidly evolving IT environments, the inflexibility of FFP can sometimes hinder necessary adjustments or innovation, potentially leading to change orders or disputes if the scope needs to evolve. The success of FFP in this context depends heavily on the thoroughness of the initial requirements definition and the contractor's ability to manage their costs within the fixed price.

What does the level of competition (4 bidders) indicate about the market for these IT services?

Having four bidders for this contract suggests a moderately competitive market for the specific IT planning, technical, and implementation support services required by the VA. This number indicates that there are multiple capable vendors interested and able to compete for such work. A higher number of bidders typically correlates with stronger price competition and potentially better value for the government. Conversely, a very low number might suggest market concentration, high barriers to entry, or a poorly defined solicitation. Four bidders strike a balance, implying that while competition exists, it might not be as intense as in markets with numerous participants, potentially influencing the final negotiated price and service offerings.

What is the historical spending pattern for similar IT support services at the Department of Veterans Affairs?

The Department of Veterans Affairs has historically allocated significant funding towards IT modernization and support services. Agencies like the VA face continuous needs to upgrade legacy systems, enhance cybersecurity, improve data interoperability (especially for veteran healthcare records), and implement new technologies to serve a large and diverse veteran population. Spending in this area often fluctuates based on strategic initiatives, budget appropriations, and the urgency of identified IT needs. Analyzing VA's historical IT spending trends, particularly in areas like systems design, integration, and technical support, would reveal patterns of investment, identify key contract vehicles used, and provide context for the scale and duration of awards like the one to Leidos SMS Inc.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design 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: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leidos Holdings, Inc. (UEI: 611641312)

Address: ONE NORTHERN CONCOURSE, SYRACUSE, NY, 13212

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

Financial Breakdown

Contract Ceiling: $176,433,682

Exercised Options: $72,011,413

Current Obligation: $72,011,413

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA11811D1000

IDV Type: IDC

Timeline