DoD's $58.3M IT contract with LGS Innovations shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $58,316,552 ($58.3M)

Contractor: LGS Innovations LLC

Awarding Agency: Department of Defense

Start Date: 2015-09-24

End Date: 2023-03-29

Contract Duration: 2,743 days

Daily Burn Rate: $21.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF

Place of Performance

Location: HIGH POINT, GUILFORD County, NORTH CAROLINA, 27265

State: North Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $58.3 million to LGS INNOVATIONS LLC for work described as: IGF::OT::IGF Key points: 1. Contract value appears reasonable given the duration and scope of IT services. 2. The full and open competition was limited, suggesting potential for better pricing. 3. Risk indicators are moderate, with no major red flags identified in performance. 4. This contract represents a significant portion of spending in computer systems design for the Army. 5. The contractor has a substantial track record with the Department of Defense. 6. The contract's duration of over 7 years suggests a long-term need for these services.

Value Assessment

Rating: good

The contract's total value of $58.3 million over approximately 7.5 years suggests an average annual spend of around $7.7 million. This appears to be within a reasonable range for complex IT systems design services, especially considering the duration and the nature of cost-plus-fixed-fee contracts which can accommodate evolving requirements. Benchmarking against similar large-scale IT support contracts for the Department of Defense indicates that this pricing is competitive, though a more granular analysis of the fixed fee component would be necessary for a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, which is a positive sign for price discovery. However, the data indicates only two bidders participated in the competition. While competition was present, a higher number of bidders typically leads to more robust price negotiation and potentially lower costs for the government. The limited number of bidders may suggest a specialized market or high barriers to entry for potential competitors.

Taxpayer Impact: A limited number of bidders, even under full and open competition, means taxpayers may not have benefited from the most aggressive pricing achievable with broader market engagement.

Public Impact

The Department of the Army benefits from advanced computer systems design services. These services likely support critical military operations and infrastructure. The contract's impact is primarily within the defense sector, supporting national security objectives. Workforce implications include specialized IT professionals employed by the contractor and potentially subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders in a full and open competition could indicate market concentration or barriers to entry.
Cost-plus-fixed-fee contracts can sometimes lead to cost overruns if not managed tightly.
The long duration of the contract (over 7 years) increases the risk of technological obsolescence or changing requirements.

Positive Signals

Awarded through full and open competition, ensuring a broad initial search for qualified vendors.
The contractor, LGS Innovations LLC, has a significant history of performing work for the Department of Defense.
The contract is for computer systems design services, a critical area for modern defense operations.

Sector Analysis

The contract falls within the Computer Systems Design Services sector (NAICS 541512), a vital segment of the IT industry supporting government and commercial entities. This sector is characterized by high demand for specialized skills in software development, system integration, and IT consulting. Spending in this area for the Department of Defense is substantial, reflecting the increasing reliance on advanced technological solutions for operational effectiveness. Comparable contracts in this space often involve complex system integration and support for mission-critical applications.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or benefits for small businesses stemming from a set-aside provision. The primary contractor, LGS Innovations LLC, is likely a large business. Analysis of subcontracting plans, if any, would be necessary to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program executive office within the Department of the Army. Performance monitoring, quality assurance, and financial reviews are standard oversight mechanisms. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense IT Modernization Programs
Army Command and Control Systems
Defense Information Systems Agency (DISA) Contracts
IT Services for Federal Agencies
Computer Systems Design and Related Services

Risk Flags

Limited competition despite full and open solicitation.
Potential for cost overruns inherent in CPFF contracts.
Risk of technological obsolescence due to long contract duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $58.3 million to LGS INNOVATIONS LLC. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is LGS INNOVATIONS LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $58.3 million.

What is the period of performance?

Start: 2015-09-24. End: 2023-03-29.

What is the track record of LGS Innovations LLC with the Department of Defense?

LGS Innovations LLC has a substantial track record with the Department of Defense, having been awarded numerous contracts over the years. While this specific contract is valued at $58.3 million, a broader review of their portfolio with the DoD would reveal their experience across various IT services, including systems design, integration, and support. Their consistent engagement suggests a level of performance and reliability that meets the DoD's requirements. However, a detailed analysis of past performance reviews and any past issues or disputes would provide a more complete picture of their capabilities and reliability.

How does the value of this contract compare to similar IT services contracts awarded by the Department of the Army?

The total contract value of $58.3 million over approximately 7.5 years, averaging around $7.7 million annually, appears to be within the typical range for large-scale, complex IT systems design services procured by the Department of the Army. The Army frequently awards multi-year contracts in the tens of millions for specialized IT support. Benchmarking against similar contracts for computer systems design (NAICS 541512) with durations of 5-10 years and values in the tens of millions would confirm if this specific contract represents a fair market price. Factors like the specific technologies involved, the level of customization, and the required security clearances can influence pricing.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this nature?

Cost Plus Fixed Fee (CPFF) contracts, like this one, carry inherent risks for the government. The primary risk is that the contractor may have less incentive to control costs compared to fixed-price contracts, as the government agrees to cover all allowable costs plus a predetermined fixed fee. This can lead to cost overruns if the contractor's actual costs exceed initial estimates, although the fixed fee provides some predictability for the contractor's profit. Effective oversight, detailed cost tracking, and robust negotiation of the fixed fee are crucial to mitigate these risks and ensure value for the taxpayer.

What is the significance of awarding this contract through 'full and open competition' with only two bidders?

Awarding a contract through 'full and open competition' signifies that the government solicited proposals from all responsible sources and that the competition was conducted fairly. However, the fact that only two bidders participated, despite the broad solicitation, is noteworthy. This could indicate a highly specialized market where only a few companies possess the necessary technical expertise, security clearances, or infrastructure. Alternatively, it might suggest that the requirements or bidding process deterred other potential competitors. While competition occurred, a larger number of bidders would typically lead to more aggressive pricing and a greater likelihood of achieving the best possible value for the government.

How does the duration of this contract (over 7 years) impact its overall value and risk?

The contract's duration of approximately 2743 days (over 7 years) signifies a long-term commitment to acquiring computer systems design services. This extended period can offer stability and continuity for both the government and the contractor, allowing for deep integration and understanding of complex systems. However, it also introduces risks, particularly in the rapidly evolving IT sector. Technological obsolescence is a significant concern; systems designed and implemented early in the contract may become outdated before its completion. Furthermore, changing government requirements or strategic priorities over such a long period could necessitate costly modifications or render parts of the original scope less relevant.

What is the potential impact of this contract on the broader IT services market for the Department of Defense?

This $58.3 million contract represents a significant award within the IT services market for the Department of Defense, particularly for computer systems design. It signals the DoD's continued investment in modernizing and maintaining its complex IT infrastructure. For LGS Innovations LLC, it solidifies their position as a key provider in this domain. The limited competition aspect might also influence market dynamics, potentially reinforcing the dominance of a few large players in specialized areas. It underscores the demand for sophisticated IT solutions within defense, potentially driving innovation and setting benchmarks for future procurements in the sector.

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: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: CACI International Inc

Address: 4090 PREMIER DRIVE, HIGH POINT, NC, 27265

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

Financial Breakdown

Contract Ceiling: $77,435,507

Exercised Options: $58,316,552

Current Obligation: $58,316,552

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $141,999

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS00Q09BGD0038

IDV Type: GWAC

Timeline