DoD's $69.4M personnel records system contract awarded to Digital Management LLC shows fair value despite limited competition
Contract Overview
Contract Amount: $69,427,196 ($69.4M)
Contractor: Digital Management LLC
Awarding Agency: Department of Defense
Start Date: 2017-08-10
End Date: 2024-02-09
Contract Duration: 2,374 days
Daily Burn Rate: $29.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 4
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: INTERACTIVE PERSONNEL ELECTRONIC RECORDS MANAGEMENT SYSTEM SUPPORT SERVICES IGF::OT::IGF
Place of Performance
Location: FORT KNOX, HARDIN County, KENTUCKY, 40121
State: Kentucky Government Spending
Plain-Language Summary
Department of Defense obligated $69.4 million to DIGITAL MANAGEMENT LLC for work described as: INTERACTIVE PERSONNEL ELECTRONIC RECORDS MANAGEMENT SYSTEM SUPPORT SERVICES IGF::OT::IGF Key points: 1. The contract's value appears reasonable when benchmarked against similar IT support services. 2. While awarded under full and open competition, only four bids were received, suggesting potential for improved price discovery. 3. The cost-plus-fixed-fee structure introduces some risk of cost overruns, though oversight mechanisms are in place. 4. Performance spans nearly seven years, indicating a long-term need for these critical personnel system services. 5. This contract falls within the broader IT services sector, specifically supporting government IT infrastructure and data management. 6. The absence of small business set-asides means direct subcontracting opportunities for small businesses are not mandated.
Value Assessment
Rating: fair
The contract's total value of approximately $69.4 million over its duration suggests a moderate per-year expenditure for IT support services. Benchmarking against similar government contracts for IT system support and development indicates that the pricing is within an acceptable range, though not exceptionally low. The cost-plus-fixed-fee (CPFF) contract type allows for flexibility but also carries inherent risks of cost escalation if not managed tightly. Without detailed cost breakdowns, a precise value-for-money assessment is challenging, but the overall spend appears aligned with industry standards for complex system support.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded through full and open competition, which is the preferred method for ensuring broad market participation. However, only four bids were received. This level of competition, while meeting the minimum threshold for a competitive process, is on the lower side for a contract of this magnitude and duration. A higher number of bidders could potentially drive prices down further and foster more innovation. The limited number of bidders might suggest specific technical requirements or a concentrated market for these specialized services.
Taxpayer Impact: While the competition was open, the limited number of bidders may have resulted in a slightly higher price for taxpayers than if a more robust competition had occurred. However, the competitive process still likely yielded a better price than a sole-source award.
Public Impact
Serves the Department of the Army by providing essential support for the Interactive Personnel Electronic Records Management System. Ensures the continuity and functionality of critical human resources and personnel data management for military personnel. Impacts the efficiency of administrative processes related to personnel records across the Army. Supports the workforce by maintaining the systems that manage their employment and service information.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus-fixed-fee contract type can lead to cost overruns if not closely monitored.
- Limited number of bidders (4) may indicate less competitive pressure on pricing.
- Long contract duration (nearly 7 years) increases exposure to potential performance issues or evolving technological needs.
- No explicit small business set-aside could limit subcontracting opportunities for smaller firms.
Positive Signals
- Awarded under full and open competition, maximizing potential bidder pool.
- Contract duration suggests a stable, long-term need and successful performance history.
- Digital Management LLC's role in supporting critical personnel systems indicates a level of trust and capability.
- The contract supports essential government functions, ensuring operational continuity.
Sector Analysis
This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. The market for government IT support is substantial, with agencies increasingly reliant on digital systems for operations. Contracts like this, supporting core administrative and personnel functions, are common across federal agencies. Benchmarks for similar IT support contracts often range widely based on complexity, duration, and specific services, but a $69.4 million spend over seven years for a critical system like personnel records management is within the expected parameters for a large federal agency.
Small Business Impact
This contract was not set aside for small businesses, and the data indicates no specific small business participation goals were met. Consequently, there are no direct subcontracting requirements mandated for small businesses under this award. This means that opportunities for small businesses to participate in this specific contract are limited to those that might be engaged by the prime contractor, Digital Management LLC, on a voluntary basis or if they are part of a larger, non-small business teaming arrangement. The absence of a set-aside does not preclude small business involvement but does not actively promote it.
Oversight & Accountability
Oversight for this contract is primarily managed by the Department of the Army, the specific agency within the Department of Defense utilizing the services. As a cost-plus-fixed-fee contract, rigorous financial oversight is expected to monitor expenditures and ensure costs remain reasonable and allocable to the contract's objectives. Performance reviews and quality assurance surveillance plans would be standard mechanisms to assess the contractor's delivery of services. Transparency is generally maintained through contract award databases, though detailed performance metrics and cost breakdowns may not always be publicly accessible. Inspector General (IG) jurisdiction would apply if any allegations of fraud, waste, or abuse arise.
Related Government Programs
- Defense Human Resources Activity (DHRA) Systems Support
- Army Enterprise Systems Integration Services
- DoD Personnel and Pay Systems Modernization
- Federal Civilian Human Capital Management IT Support
- General Services Administration (GSA) IT Schedule Contracts
Risk Flags
- Cost-Plus-Fixed-Fee contract type
- Limited number of bidders received
- Potential for outdated technology stack in legacy systems
- Long contract duration increases exposure to evolving requirements
Tags
it-services, computer-systems-design, department-of-defense, department-of-the-army, delivery-order, full-and-open-competition, cost-plus-fixed-fee, personnel-management-systems, it-support, legacy-systems, ky, kentucky
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $69.4 million to DIGITAL MANAGEMENT LLC. INTERACTIVE PERSONNEL ELECTRONIC RECORDS MANAGEMENT SYSTEM SUPPORT SERVICES IGF::OT::IGF
Who is the contractor on this award?
The obligated recipient is DIGITAL MANAGEMENT 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 $69.4 million.
What is the period of performance?
Start: 2017-08-10. End: 2024-02-09.
What is the track record of Digital Management LLC in supporting large-scale federal IT systems, particularly personnel management systems?
Digital Management LLC (DMI) has a history of supporting federal agencies with IT services, including personnel and HR systems. Their portfolio often includes system modernization, integration, and sustainment. For instance, DMI has been involved in projects related to enterprise resource planning (ERP) systems and other critical infrastructure for various government entities. While specific details on past performance for the Army's Interactive Personnel Electronic Records Management System (IPERMS) prior to this contract award are not detailed here, DMI's broader experience suggests a capability to handle complex IT environments. Evaluating their past performance on similar contracts, including client satisfaction, adherence to schedule and budget, and technical execution, would provide a more comprehensive understanding of their reliability for this specific system.
How does the cost-plus-fixed-fee (CPFF) structure impact the overall value and risk for this contract compared to other pricing models?
The Cost-Plus-Fixed-Fee (CPFF) structure means the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This model is often used when the scope of work is not precisely defined or is expected to evolve, offering flexibility. For the government, the primary risk is potential cost overruns if actual costs exceed estimates significantly, as the fee is fixed but the cost base can expand. However, the fixed fee provides the contractor with an incentive to control costs to maximize their profit margin. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government but greater flexibility. Compared to Cost-Plus-Incentive-Fee (CPIF), the profit potential for the contractor is capped, which can sometimes reduce the incentive for extreme cost efficiency if not paired with strong oversight.
What are the key performance indicators (KPIs) used to measure the success of the Interactive Personnel Electronic Records Management System Support Services?
While specific KPIs for this contract are not publicly detailed, typical performance indicators for IT system support services, especially for critical personnel management systems, would likely include system uptime and availability, response times for user requests and issue resolution, data accuracy and integrity, security compliance (e.g., adherence to NIST standards, PII protection), successful deployment of updates and patches, and user satisfaction ratings. The contract's duration and renewal (if applicable) would implicitly suggest satisfactory performance. Formal performance evaluations, often conducted periodically, would assess the contractor's adherence to these metrics, influencing future contract decisions or award terms.
What is the historical spending trend for similar personnel records management IT support services within the Department of Defense over the last five years?
Historical spending on personnel records management IT support within the DoD has generally been substantial and increasing, driven by the need for modernization, cybersecurity enhancements, and integrated human capital management solutions. Agencies like the Army, Navy, and Air Force, as well as broader DoD entities like the Defense Human Resources Activity (DHRA), consistently invest in these systems. Spending trends reflect a move towards cloud-based solutions, data analytics, and improved user interfaces. While specific figures for 'personnel records management IT support' as a distinct category can be difficult to isolate from broader IT services spending, the overall IT budget for the DoD runs into the tens of billions annually, with a significant portion dedicated to maintaining and upgrading personnel and readiness systems. Contracts like the one awarded to Digital Management LLC represent a segment of this larger investment.
Are there any known risks associated with the specific technology stack or architecture of the Interactive Personnel Electronic Records Management System that could impact this contract?
The Interactive Personnel Electronic Records Management System (IPERMS) is a critical system, and like many legacy government systems, it may face risks related to its technology stack. Older systems can be more vulnerable to cybersecurity threats, harder to integrate with modern applications, and more expensive to maintain due to a shrinking pool of expertise for outdated technologies. If IPERMS relies on legacy software or hardware, risks could include difficulties in applying security patches, challenges in achieving interoperability with newer DoD-wide systems (like the Defense Integrated Military Human Resources System - DIMHRS), and potential performance bottlenecks. The contract's scope likely includes mitigating these risks through updates, maintenance, and potentially phased modernization efforts, but the underlying architecture remains a key factor in assessing long-term viability and supportability.
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: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 6550 ROCK SPRING DR FLR 7, BETHESDA, MD, 20817
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $69,427,196
Exercised Options: $69,427,196
Current Obligation: $69,427,196
Subaward Activity
Number of Subawards: 2
Total Subaward Amount: $4,436,387
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: GS00Q09BGD0061
IDV Type: GWAC
Timeline
Start Date: 2017-08-10
Current End Date: 2024-02-09
Potential End Date: 2024-02-09 00:00:00
Last Modified: 2024-05-29
More Contracts from Digital Management LLC
- "vanguard 2.1" IT Help Desk and Desktop Support Services — $257.4M (Department of State)
- Aples Base Task Order - Base Period. POP: 1/1/13-12/31/13 Itar: AAP: Spend Plan: SEE Spend Plan Numbers Individual Items Listed Below. Igf::cl,Ct::igf — $115.4M (Department of Homeland Security)
- Aples Idiq Task Order 0001 — $100.3M (Department of Homeland Security)
- Cost Plus Fixed FEE Labor — $52.8M (Department of Defense)
- FOR Critical Functions Mobile Device Management Solution and Services (mdmss) — $46.9M (Department of the Treasury)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)