DoD's $108.8M High Performance Computing contract awarded to Inuteq, LLC shows fair value with limited competition
Contract Overview
Contract Amount: $108,833,408 ($108.8M)
Contractor: Inuteq, LLC
Awarding Agency: Department of Defense
Start Date: 2014-05-30
End Date: 2019-12-16
Contract Duration: 2,026 days
Daily Burn Rate: $53.7K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: IGF::OT::IGF, HIGH PERFORMANCE COMPUTING INTEGRATED TECHNICAL SERVICES RESTRICTED IN SUPPORT OF THE HIGH PERFORMANCE COMPUTING MONDERNIZATION PROGRAM OFFICE
Place of Performance
Location: LORTON, FAIRFAX County, VIRGINIA, 22079
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $108.8 million to INUTEQ, LLC for work described as: IGF::OT::IGF, HIGH PERFORMANCE COMPUTING INTEGRATED TECHNICAL SERVICES RESTRICTED IN SUPPORT OF THE HIGH PERFORMANCE COMPUTING MONDERNIZATION PROGRAM OFFICE Key points: 1. The contract's value of $108.8 million over its period of performance suggests a significant investment in high-performance computing capabilities. 2. Competition was limited, raising questions about potential price discovery and value for money. 3. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed carefully. 4. Performance context is tied to the High Performance Computing Modernization Program Office, indicating a critical national security or research function. 5. The sector positioning is within IT services, specifically computer systems design, a vital area for advanced computing. 6. The award to a single contractor, Inuteq, LLC, warrants scrutiny regarding its capabilities and pricing compared to market alternatives.
Value Assessment
Rating: fair
The contract's total value of $108.8 million over approximately 5.5 years averages to about $19.8 million annually. Benchmarking this against similar large-scale IT services contracts for high-performance computing is challenging without more specific service details. However, the Cost Plus Fixed Fee (CPFF) contract type, while allowing flexibility, often carries a higher risk of cost escalation compared to fixed-price contracts. The fixed fee component needs to be assessed to understand the contractor's profit margin relative to the effort expended.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while a broad solicitation may have occurred, specific sources were excluded, leading to a limited pool of bidders. The data indicates only one award was made. This limited competition raises concerns about whether the government received the most competitive pricing and best value possible. A more open competition with a larger number of bidders typically drives down prices and encourages innovation.
Taxpayer Impact: Limited competition can result in higher costs for taxpayers as the government may not benefit from the full range of pricing and service options that a more robust bidding process would yield.
Public Impact
The primary beneficiaries are likely the Department of Defense and its research and development arms, which rely on high-performance computing for complex simulations, data analysis, and strategic planning. The services delivered include computer systems design and technical support crucial for maintaining and modernizing advanced computing infrastructure. The geographic impact is primarily within Virginia, where the contract is managed, but the benefits of high-performance computing extend to national defense and scientific research capabilities. Workforce implications include the need for specialized IT professionals to manage and operate these advanced systems, potentially creating high-skilled job opportunities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The 'limited' competition level suggests potential for inflated pricing and reduced innovation.
- The CPFF contract type introduces inherent risk of cost overruns if not rigorously managed.
- Lack of detailed performance metrics makes it difficult to assess true value for money.
- The exclusion of sources in the competition process warrants further investigation into the justification.
Positive Signals
- The contract supports a critical national capability in high-performance computing.
- The award is to a single contractor, suggesting a potentially streamlined management approach.
- The contract duration of over 5 years indicates a stable, long-term need for these services.
Sector Analysis
This contract falls within the Information Technology (IT) sector, specifically focusing on computer systems design services. The High Performance Computing Modernization Program (HPCMP) is a significant government initiative aimed at providing state-of-the-art computing capabilities to the Department of Defense. Spending in this area is critical for maintaining a technological edge in defense, scientific research, and intelligence analysis. Comparable spending benchmarks would involve analyzing other large-scale IT infrastructure and supercomputing contracts within the federal government and the private sector.
Small Business Impact
The provided data indicates that small business participation (ss: false, sb: false) was not a primary focus or requirement for this specific contract. There is no indication of small business set-asides or significant subcontracting opportunities for small businesses. This suggests that the nature of the specialized services required likely favored larger, established contractors with specific expertise in high-performance computing systems.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates close monitoring of costs and contractor performance to ensure adherence to the fixed fee and prevent unnecessary expenditures. Transparency is often limited in defense contracts, but reporting requirements under the Federal Acquisition Regulation (FAR) would apply. The Inspector General's office for the Department of Defense may conduct audits or investigations into contract performance and financial management.
Related Government Programs
- High Performance Computing Modernization Program
- Department of Defense IT Services
- Computer Systems Design Contracts
- Advanced Scientific Computing
- Defense Research and Development IT
Risk Flags
- Limited Competition
- Cost Plus Fixed Fee Contract Type
- Potential for Cost Overruns
- Lack of Small Business Participation
Tags
it, department-of-defense, department-of-the-army, computer-systems-design-services, full-and-open-competition-after-exclusion-of-sources, delivery-order, cost-plus-fixed-fee, high-performance-computing, virginia, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $108.8 million to INUTEQ, LLC. IGF::OT::IGF, HIGH PERFORMANCE COMPUTING INTEGRATED TECHNICAL SERVICES RESTRICTED IN SUPPORT OF THE HIGH PERFORMANCE COMPUTING MONDERNIZATION PROGRAM OFFICE
Who is the contractor on this award?
The obligated recipient is INUTEQ, 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 $108.8 million.
What is the period of performance?
Start: 2014-05-30. End: 2019-12-16.
What is the track record of Inuteq, LLC in delivering similar high-performance computing services to the government?
Assessing the track record of Inuteq, LLC requires a deeper dive into their contract history beyond this single award. Information on past performance, successful project completions, and any past performance issues or disputes would be crucial. Without specific details on their prior experience with high-performance computing modernization programs or similar complex IT infrastructure projects, it is difficult to definitively gauge their capability and reliability for this significant contract. Government contract databases and past performance reviews, if publicly available, would provide more insight into their operational history and client satisfaction.
How does the pricing structure of this Cost Plus Fixed Fee (CPFF) contract compare to industry standards for similar services?
The Cost Plus Fixed Fee (CPFF) structure means the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Benchmarking CPFF contracts is complex as it depends heavily on the specific services, the complexity of the work, and the negotiated fee percentage. For high-performance computing services, which are highly specialized, the fee percentage can vary. A typical fixed fee might range from 5% to 15% of the estimated cost. Without knowing the total allowable costs incurred and the negotiated fixed fee for Inuteq, LLC, a direct comparison to industry standards is difficult. However, CPFF contracts are generally considered less cost-effective for the government than fixed-price contracts due to the inherent risk of cost overruns.
What are the specific risks associated with the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award method?
The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award method, while technically a form of competition, significantly limits the pool of potential offerors. This exclusion implies that certain companies were deemed ineligible or not solicited, potentially due to specific requirements or pre-qualification processes. The primary risk is that the government may not have received the most competitive pricing or the widest range of innovative solutions available in the broader market. This limited competition can reduce pressure on the awarded contractor to perform optimally and could lead to higher costs for the government compared to a truly open and unrestricted competition.
What is the projected effectiveness of the High Performance Computing Modernization Program Office's investments under this contract?
The effectiveness of the High Performance Computing Modernization Program Office's investments under this contract is directly tied to the successful implementation and performance of the contracted computer systems design services. The program aims to provide advanced computing capabilities essential for national security, scientific research, and intelligence analysis. If Inuteq, LLC delivers robust, reliable, and high-performing systems that meet or exceed the program's technical requirements, the investment will be effective. Conversely, delays, performance issues, or cost overruns could diminish the program's effectiveness and impact its ability to achieve its strategic objectives.
How does the total spending of $108.8 million on this contract compare to historical spending on similar HPC initiatives?
The total spending of $108.8 million over approximately 5.5 years represents a substantial investment in high-performance computing (HPC) infrastructure and services. To compare this to historical spending, one would need to analyze the budgets and contract awards for previous iterations or related programs within the High Performance Computing Modernization Program (HPCMP) or similar DoD initiatives. Given the continuous advancements in computing power and the increasing demand for data processing, it's plausible that spending on HPC has trended upwards. However, a direct comparison would require access to historical budget data and contract award details for comparable HPC modernization efforts over the past decade or more.
What are the potential implications of awarding a large contract like this to a single vendor, Inuteq, LLC?
Awarding a large, complex contract like this to a single vendor, Inuteq, LLC, can have several implications. On the positive side, it can lead to streamlined communication, a unified approach to system integration, and potentially faster execution if the vendor has the necessary resources and expertise. However, it also concentrates risk; if the vendor underperforms or faces financial difficulties, the entire program could be jeopardized. Furthermore, it reduces the competitive pressure that typically drives innovation and cost efficiency. The government becomes heavily reliant on this one contractor, potentially limiting its leverage in future negotiations or contract modifications.
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 AFTER EXCLUSION OF SOURCES
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: W912DY14R0006
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Arctic Slope Regional Corporation
Address: 7000 MUIRKIRK MEADOWS DR STE 100, BELTSVILLE, MD, 20705
Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Minority Owned Business, Other Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $114,659,929
Exercised Options: $114,659,929
Current Obligation: $108,833,408
Subaward Activity
Number of Subawards: 115
Total Subaward Amount: $61,724,643
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: GS06F0605Z
IDV Type: GWAC
Timeline
Start Date: 2014-05-30
Current End Date: 2019-12-16
Potential End Date: 2019-12-16 00:00:00
Last Modified: 2023-05-04
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