DoD awards $79.5M for offensive cyber capabilities, raising questions about competition and value
Contract Overview
Contract Amount: $79,519,445 ($79.5M)
Contractor: Parsons Government Services Inc.
Awarding Agency: Department of Defense
Start Date: 2019-12-20
End Date: 2023-03-31
Contract Duration: 1,197 days
Daily Burn Rate: $66.4K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: THIS TASK ORDER IS AWARDED TO PROVIDE OFFENSIVE CYBER CAPABILITIES FOR THE SAVANT CATALYST EFFORT.
Place of Performance
Location: CENTREVILLE, FAIRFAX County, VIRGINIA, 20120
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $79.5 million to PARSONS GOVERNMENT SERVICES INC. for work described as: THIS TASK ORDER IS AWARDED TO PROVIDE OFFENSIVE CYBER CAPABILITIES FOR THE SAVANT CATALYST EFFORT. Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of nearly four years suggests a long-term need for these specialized services. 3. The 'offensive cyber capabilities' focus indicates a high-stakes, sensitive area of defense spending. 4. Performance is tied to the 'Savant Catalyst' effort, implying a specific, ongoing project. 5. The cost-plus-fixed-fee structure can incentivize spending, requiring close oversight. 6. Lack of competition raises concerns about whether the government secured the best possible value.
Value Assessment
Rating: questionable
The contract's value of $79.5 million over nearly four years for offensive cyber capabilities is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-fixed-fee (CPFF) contract type, while allowing flexibility, can lead to higher costs if not managed diligently, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure necessitates robust oversight to ensure cost efficiency and prevent unnecessary expenditures.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This approach is typically used when only one source is capable of meeting the requirement, often due to unique capabilities, proprietary technology, or urgent needs. However, the absence of competition means the Department of Defense did not benefit from a bidding process that could have driven down prices and fostered innovation among multiple vendors. The rationale for this sole-source award would need to be clearly documented to justify the lack of broader market engagement.
Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure. Without competing offers, there is less assurance that the price reflects the most economical option available in the market.
Public Impact
The primary beneficiary is the Department of Defense, specifically the Army, which gains access to critical offensive cyber capabilities. The services delivered are aimed at enhancing national security through advanced cyber operations. The geographic impact is likely national, supporting defense operations across various theaters. Workforce implications include the need for highly specialized cybersecurity professionals within the contractor's organization.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
- Cost-plus-fixed-fee contract type requires diligent oversight to manage costs effectively.
- The sensitive nature of 'offensive cyber capabilities' implies significant risks if not managed properly.
- Lack of transparency in the justification for sole-source award could mask inefficiencies.
Positive Signals
- Awarding specialized offensive cyber capabilities addresses a critical national security need.
- The long-term nature of the contract (nearly 4 years) suggests a sustained commitment to developing these vital skills.
- Parsons Government Services Inc. is a known entity in the government contracting space, implying some level of established performance history.
Sector Analysis
This contract falls within the Information Technology (IT) and Defense sectors, specifically focusing on custom computer programming services related to cybersecurity. The market for offensive cyber capabilities is highly specialized and dominated by a few key players due to the technical expertise and security clearances required. Spending in this area is critical for national defense, and contracts often involve significant investment in research, development, and specialized personnel. Benchmarking is challenging due to the classified or sensitive nature of the work and the limited number of qualified providers.
Small Business Impact
This contract was not set aside for small businesses, nor does it appear to have significant subcontracting implications for small businesses based on the provided data. The nature of offensive cyber capabilities often requires highly specialized, large-scale resources that may be beyond the scope of many small businesses. Therefore, this award is unlikely to directly benefit the small business ecosystem in terms of set-asides or prime contracting opportunities.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense. Given the CPFF structure, rigorous financial oversight is crucial to monitor allowable costs and ensure the fixed fee is earned appropriately. Transparency may be limited due to the sensitive nature of offensive cyber operations. Inspector General (IG) jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.
Related Government Programs
- Department of Defense Cyber Command Contracts
- Information Technology Services for National Security
- Custom Computer Programming Services
- Cybersecurity Solutions for Government Agencies
- Offensive Cyber Operations Support
Risk Flags
- Sole-source award
- Cost-plus-fixed-fee contract type
- Lack of competitive benchmarking
- Sensitive nature of services (offensive cyber)
Tags
defense, department-of-defense, department-of-the-army, it-services, custom-computer-programming, cybersecurity, offensive-cyber, sole-source, cost-plus-fixed-fee, parsons-government-services-inc, virginia, task-order
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $79.5 million to PARSONS GOVERNMENT SERVICES INC.. THIS TASK ORDER IS AWARDED TO PROVIDE OFFENSIVE CYBER CAPABILITIES FOR THE SAVANT CATALYST EFFORT.
Who is the contractor on this award?
The obligated recipient is PARSONS GOVERNMENT SERVICES INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $79.5 million.
What is the period of performance?
Start: 2019-12-20. End: 2023-03-31.
What is the specific justification for awarding this contract on a sole-source basis?
The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. Typically, sole-source awards are justified when only one responsible source is available to meet the agency's needs. This could be due to unique technical capabilities, proprietary technology, or urgent and compelling circumstances where soliciting bids would be impractical or detrimental to the government's interests. For this specific contract, the justification would likely center on the highly specialized and potentially classified nature of 'offensive cyber capabilities' required for the 'Savant Catalyst' effort, suggesting that only Parsons Government Services Inc. possessed the requisite expertise, clearances, or infrastructure at the time of the award. A formal Justification for Other Than Full and Open Competition (JOFOC) would contain the detailed rationale.
How does the cost-plus-fixed-fee (CPFF) structure impact the overall value and risk for this contract?
The Cost-Plus-Fixed-Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. For a contract focused on developing offensive cyber capabilities, this structure offers flexibility, allowing the scope to adapt as threats and technologies evolve. However, it shifts significant risk to the government. The government bears the risk of cost overruns, as all allowable costs are reimbursed. The fixed fee provides the contractor with a stable profit margin regardless of the final cost, which can reduce their incentive to control expenses. Effective oversight is paramount to scrutinize costs, ensure they are reasonable and allocable, and prevent scope creep that inflates the overall expenditure without commensurate value.
What are the potential risks associated with procuring offensive cyber capabilities, especially through a sole-source award?
Procuring offensive cyber capabilities carries inherent risks, including the potential for misuse, escalation of cyber conflicts, and the development of capabilities that could be turned against the U.S. if compromised. A sole-source award exacerbates these risks by limiting oversight and accountability that competition typically provides. Without competitive benchmarking, it's harder to ensure the capabilities are developed cost-effectively and ethically. Furthermore, relying on a single provider for such critical and sensitive functions creates a dependency that could be exploited or become a single point of failure if the contractor underperforms or faces unforeseen issues. The lack of transparency inherent in sole-source justifications for sensitive defense work can also obscure potential vulnerabilities or inefficiencies.
Can the performance of Parsons Government Services Inc. on similar contracts be used to assess the value of this award?
Assessing the value of this specific award is challenging without direct comparison data. While Parsons Government Services Inc. has a track record in government contracting, the unique and sensitive nature of 'offensive cyber capabilities' for the 'Savant Catalyst' effort makes direct comparisons difficult. Standard performance metrics for IT services might not fully capture the effectiveness or value of specialized cyber operations. Information on their past performance on similar classified or sensitive projects, including cost control, timeliness, and mission success, would be necessary for a robust assessment. However, the sole-source nature of this award limits the availability of such comparative data, making it difficult to definitively benchmark against other potential providers or historical spending patterns for equivalent services.
What is the historical spending trend for offensive cyber capabilities within the Department of Defense?
Historical spending on offensive cyber capabilities within the Department of Defense (DoD) has been steadily increasing over the past decade, driven by the growing recognition of cyber threats and the need for robust defense and deterrence strategies. While specific figures for 'offensive cyber capabilities' are often classified or aggregated within broader IT and intelligence budgets, public reports and budget documents indicate significant investments in cyber warfare, cyber command, and related technologies. This $79.5 million task order represents a portion of that larger trend. The DoD's overall cyber budget runs into the tens of billions annually, encompassing defensive, offensive, and intelligence-related cyber activities. This contract aligns with the DoD's strategic priorities to maintain superiority in the cyber domain.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Parsons Corporation
Address: 5875 TRINITY PKWY STE 230, CENTREVILLE, VA, 20120
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $79,519,445
Exercised Options: $79,519,445
Current Obligation: $79,519,445
Subaward Activity
Number of Subawards: 20
Total Subaward Amount: $5,753,261
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: W56KGY20D0001
IDV Type: IDC
Timeline
Start Date: 2019-12-20
Current End Date: 2023-03-31
Potential End Date: 2023-03-31 12:03:00
Last Modified: 2023-02-03
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