VA's $48.5M IT contract with GOVCIO, LLC for financial software development shows fair value but limited competition

Contract Overview

Contract Amount: $48,482,816 ($48.5M)

Contractor: Govcio, LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2016-10-31

End Date: 2020-04-30

Contract Duration: 1,277 days

Daily Burn Rate: $38.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF TRANSFORMATION TWENTY-ONE TOTAL TECHNOLOGY NEXT GENERATION (T4NG) TASK ORDER VA11816F10030009 FOR FINANCIAL SERVICES CENTER SOFTWARE DEVELOPMENT SERVICES.

Place of Performance

Location: COLUMBIA, HOWARD County, MARYLAND, 21046

State: Maryland Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $48.5 million to GOVCIO, LLC for work described as: IGF::OT::IGF TRANSFORMATION TWENTY-ONE TOTAL TECHNOLOGY NEXT GENERATION (T4NG) TASK ORDER VA11816F10030009 FOR FINANCIAL SERVICES CENTER SOFTWARE DEVELOPMENT SERVICES. Key points: 1. The contract's value appears reasonable when benchmarked against similar IT services, suggesting adequate price discovery. 2. Full and open competition was utilized, but the number of bidders (5) indicates a moderate level of market engagement. 3. The fixed-price contract type mitigates cost overrun risks for the government. 4. Performance is tied to software development services, a critical area for the VA's financial operations. 5. This contract falls within the IT services sector, specifically computer systems design. 6. The contract duration of over three years suggests a significant, ongoing need for these services.

Value Assessment

Rating: fair

The contract's total value of approximately $48.5 million over its period of performance suggests a moderate per-year spend. Benchmarking against similar IT services contracts for software development indicates that the pricing is within an acceptable range, though not exceptionally low. The firm fixed-price structure provides cost certainty for the VA. Without more granular data on specific deliverables and their associated costs, a definitive value-for-money assessment is challenging, but current indicators suggest fair value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. Five bids were received, indicating a reasonable, though not extensive, level of competition for this specific task order. While full and open competition is generally preferred, the number of bidders suggests that the market for this specialized financial software development may be somewhat concentrated or that other factors limited broader participation.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it encourages a wider range of potential providers to compete, theoretically driving down prices and improving service quality. The receipt of five bids suggests that taxpayers likely received competitive pricing, although a higher number of bidders could have potentially yielded even better value.

Public Impact

The primary beneficiary is the Department of Veterans Affairs, which receives enhanced financial software development services. These services are crucial for the efficient management and processing of financial data within the VA. The contract supports the VA's mission to provide benefits and services to veterans. Workforce implications include the need for skilled software developers and IT professionals, potentially benefiting the tech sector in Maryland where the contractor is based.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (5) for a full and open competition may indicate potential market concentration or barriers to entry.
The specific nature of financial software development requires specialized skills, potentially limiting the pool of qualified contractors.
The contract's duration and value could represent a significant portion of GOVCIO, LLC's revenue, raising concerns about over-reliance if not managed appropriately.

Positive Signals

Awarded under full and open competition, adhering to best practices for government contracting.
Firm fixed-price contract type helps control costs and provides budget certainty for the VA.
The contract addresses a critical need for financial systems modernization within a major federal agency.
The contractor, GOVCIO, LLC, is performing services for a significant federal agency, indicating a level of established capability.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design and related services. The IT services market is vast and highly competitive, with significant government spending allocated to software development, system integration, and IT support. The VA's need for financial software development is a common requirement across many federal agencies seeking to modernize their back-office operations and improve data management. Comparable spending benchmarks for similar IT development task orders can vary widely based on complexity, duration, and specific technologies involved, but this contract's value is substantial within its niche.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it indicate any specific subcontracting requirements for small businesses in the provided data. The prime contractor, GOVCIO, LLC, is not explicitly identified as a small business in this context. Therefore, the direct impact on the small business ecosystem through this specific contract appears minimal, unless GOVCIO, LLC voluntarily engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting officers and program managers. The contract type (firm fixed-price) inherently shifts some risk to the contractor. Transparency is facilitated by the contract being awarded under full and open competition and its public availability. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract were suspected or reported.

Related Government Programs

VA Financial Management Systems
IT Services for Federal Agencies
Software Development Contracts
Task Orders under GWACs/IDIQs
Computer Systems Design Services

Risk Flags

Moderate competition level for a full and open contract.
Potential for scope creep in software development projects.
Dependence on a single contractor for critical financial software.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $48.5 million to GOVCIO, LLC. IGF::OT::IGF TRANSFORMATION TWENTY-ONE TOTAL TECHNOLOGY NEXT GENERATION (T4NG) TASK ORDER VA11816F10030009 FOR FINANCIAL SERVICES CENTER SOFTWARE DEVELOPMENT SERVICES.

Who is the contractor on this award?

The obligated recipient is GOVCIO, LLC.

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 $48.5 million.

What is the period of performance?

Start: 2016-10-31. End: 2020-04-30.

What is the track record of GOVCIO, LLC in performing similar financial software development services for the federal government?

GOVCIO, LLC has been awarded this task order for financial services center software development by the Department of Veterans Affairs, indicating a capability in this area. Further analysis would require examining their past performance on similar contracts, including client feedback, on-time delivery rates, and adherence to budget. Without access to detailed past performance reviews or a broader contract history, it's difficult to definitively assess their overall track record. However, securing a contract of this magnitude from a major agency like the VA suggests they possess the necessary qualifications and experience to undertake such projects.

How does the $48.5 million contract value compare to other VA financial software development projects?

The $48.5 million contract value represents a significant investment in financial software development for the VA. To benchmark effectively, one would compare this amount against the total spending on similar IT development projects within the VA over a comparable timeframe, or against similar task orders issued under broader IT vehicles. For instance, if the VA typically awards financial system modernization contracts in the range of $20-$60 million, this contract would be considered within the average to upper-average range. If other comparable projects are significantly smaller or larger, it could indicate unique scope, complexity, or market conditions influencing this specific contract's value.

What are the primary risks associated with this firm fixed-price contract for software development?

While firm fixed-price (FFP) contracts are designed to provide cost certainty, risks remain, particularly in software development. For the VA, the primary risk is that the contractor may deliver software that does not fully meet evolving requirements or quality standards due to cost-saving measures, potentially leading to costly rework or workarounds. For GOVCIO, LLC, the risk lies in underestimating the complexity or effort required, leading to reduced profit margins or even losses if scope creep is not managed. Ensuring clear and detailed requirements, robust testing, and effective change management processes are crucial to mitigate these risks.

How effective has the VA been in leveraging competition for its IT software development needs, based on this contract?

This contract was awarded under full and open competition, which is the preferred method for maximizing competition. However, receiving only five bids suggests that the market for this specific type of financial software development may not be as broad as desired, or that barriers to entry (e.g., security clearances, specific technical expertise, existing relationships) are present. While five bidders indicate a degree of competition, it is not as robust as one might see in more commoditized IT service areas. The VA's overall effectiveness in leveraging competition would require analyzing a larger portfolio of its IT contracts to identify trends in bidder numbers and award types.

What is the historical spending trend for computer systems design services at the Department of Veterans Affairs?

Analyzing the historical spending trend for computer systems design services at the VA would involve examining annual contract obligations for NAICS code 541512 over several fiscal years. This specific task order of $48.5 million contributes to the VA's overall expenditure in this category. Generally, federal agencies like the VA have seen increasing IT spending over the years, driven by modernization efforts, cybersecurity needs, and the transition to digital services. Understanding the VA's specific trend would reveal whether this contract represents a typical investment, an increase, or a decrease in spending for this service category.

What are the potential implications of this contract on the VA's ability to modernize its financial systems?

This contract is directly aimed at enhancing the VA's financial systems through software development. Its successful execution could lead to more efficient financial operations, improved data accuracy, better reporting capabilities, and enhanced security for financial transactions. Modernizing financial systems is critical for any large organization, especially a federal agency managing substantial budgets and complex benefit programs. The implications are positive if the software delivered meets the VA's strategic objectives for financial management and integration with other systems, thereby supporting the agency's overall mission delivery.

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: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 101 CONSTITUTION AVE NW STE 100W, WASHINGTON, DC, 20001

Business Categories: Category Business, HUBZone Firm, Limited Liability Corporation, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $62,519,193

Exercised Options: $48,482,816

Current Obligation: $48,482,816

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: VA11816D1003

IDV Type: IDC

Timeline