DoD's $398.7M High Performance Computing contract awarded to SAIC shows strong competition and fair value
Contract Overview
Contract Amount: $398,663,532 ($398.7M)
Contractor: Science Applications International Corporation
Awarding Agency: Department of Defense
Start Date: 2016-06-13
End Date: 2022-04-18
Contract Duration: 2,135 days
Daily Burn Rate: $186.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS INCENTIVE FEE
Sector: IT
Official Description: IGF::CL,CT::IGF HIGH PERFORMANCE COMPUTING MODERNIZATION PROGRAM INTEGRATED TECHNICAL SERVICES (HITS) UNRESTRICTED REAWARD
Place of Performance
Location: MCLEAN, FAIRFAX County, VIRGINIA, 22102
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $398.7 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: IGF::CL,CT::IGF HIGH PERFORMANCE COMPUTING MODERNIZATION PROGRAM INTEGRATED TECHNICAL SERVICES (HITS) UNRESTRICTED REAWARD Key points: 1. Contract awarded to a single, large incumbent contractor, suggesting potential for stable but possibly less innovative solutions. 2. The contract's Cost Plus Incentive Fee (CPIF) structure incentivizes performance and cost control, aligning contractor and government interests. 3. A high number of bids (3) indicates robust market interest and competition for this significant IT services requirement. 4. The contract duration of 2135 days (approx. 5.8 years) allows for long-term planning and sustained support for critical HPC modernization. 5. The contract's focus on Computer Systems Design Services positions it within a key segment of the IT services market. 6. The award value suggests a substantial investment in advanced computing capabilities for the Department of Defense.
Value Assessment
Rating: good
While specific per-unit cost data is not provided, the total award value of $398.7 million over approximately 5.8 years for high-performance computing modernization services appears reasonable given the scope and complexity. The CPIF contract type allows for performance-based adjustments, suggesting an effort to ensure value for money. Benchmarking against similar large-scale HPC modernization contracts would provide a more precise assessment, but the competitive nature of the award suggests pricing was scrutinized.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, with three bidders participating. This level of competition is generally positive, indicating that multiple capable vendors were interested and able to bid, which should drive more competitive pricing and a wider range of technical solutions. The presence of three bidders suggests a healthy market for these specialized IT services.
Taxpayer Impact: The full and open competition ensures that taxpayer dollars are likely being used efficiently by fostering a competitive environment that pushes for better pricing and service quality.
Public Impact
The Department of Defense benefits from modernized high-performance computing capabilities, crucial for advanced simulations, data analysis, and research. This contract supports critical national security missions by providing the computational power needed for complex defense-related tasks. The services delivered likely enhance the Army's ability to conduct research, development, and operational planning. The contract's impact is primarily within the federal government and defense sector, with potential indirect benefits to the scientific and technological research community.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for vendor lock-in due to the long-term nature and specialized services.
- Reliance on a single contractor for critical HPC infrastructure could pose risks if performance degrades or strategic needs shift.
- The CPIF contract type, while incentivizing, can sometimes lead to complex billing and oversight requirements.
Positive Signals
- The full and open competition indicates a healthy market and likely competitive pricing.
- The CPIF contract structure incentivizes both cost efficiency and performance.
- The award to a large, established contractor like SAIC suggests a high likelihood of successful execution and stability.
- The contract duration allows for sustained investment and development in critical HPC capabilities.
Sector Analysis
This contract falls within the Information Technology sector, specifically focusing on high-performance computing (HPC) modernization. HPC is a critical component of advanced research, scientific discovery, and complex modeling across various industries, including defense, weather forecasting, and scientific research. The market for HPC solutions is characterized by significant technological advancements and substantial investments, with major players like SAIC offering integrated technical services to meet complex government and commercial needs.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale IT services contract awarded under full and open competition, it is unlikely to have significant direct subcontracting opportunities specifically targeted at small businesses unless mandated by the prime contractor. The focus is on large system integration and modernization, typically handled by larger firms.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of the Army's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates robust financial oversight to ensure costs are reasonable and performance targets are met. Transparency is generally maintained through contract reporting requirements, and potential issues could be addressed by the agency's Inspector General if performance or financial irregularities arise.
Related Government Programs
- High Performance Computing Modernization Program (HPCMP)
- Department of Defense IT Modernization Initiatives
- Cloud Computing Services Contracts
- Advanced Research and Development IT Support
Risk Flags
- Long contract duration may not keep pace with rapid HPC technology advancements.
- CPIF contract type requires diligent oversight to manage costs and performance.
- Potential for vendor lock-in with a single large provider for critical infrastructure.
Tags
it-services, department-of-defense, army, high-performance-computing, systems-integration, full-and-open-competition, cost-plus-incentive-fee, large-contract, virginia, science-applications-international-corporation, hpc-modernization
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $398.7 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. IGF::CL,CT::IGF HIGH PERFORMANCE COMPUTING MODERNIZATION PROGRAM INTEGRATED TECHNICAL SERVICES (HITS) UNRESTRICTED REAWARD
Who is the contractor on this award?
The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $398.7 million.
What is the period of performance?
Start: 2016-06-13. End: 2022-04-18.
What is SAIC's track record with similar large-scale IT modernization contracts for the Department of Defense?
Science Applications International Corporation (SAIC) has a long history of supporting the Department of Defense (DoD) with complex IT services, including systems integration, modernization, and high-performance computing. They have held numerous large prime contracts across various military branches and agencies. Their experience often involves managing large, multi-year programs with significant budgets, similar to the IGF HIGH PERFORMANCE COMPUTING MODERNIZATION PROGRAM INTEGRATED TECHNICAL SERVICES (HITS) contract. SAIC's performance on such contracts is typically evaluated based on factors like on-time delivery, adherence to technical specifications, cost control, and overall customer satisfaction. While specific performance metrics for past contracts are not detailed here, their continued success in winning competitive bids for substantial DoD programs suggests a generally positive track record in delivering complex IT solutions.
How does the $398.7 million award value compare to other HPC modernization efforts within the DoD?
The $398.7 million award value for the IGF HIGH PERFORMANCE COMPUTING MODERNIZATION PROGRAM INTEGRATED TECHNICAL SERVICES (HITS) contract represents a significant investment in HPC capabilities. This figure is substantial but aligns with the scale of major IT modernization programs within the Department of Defense, which often involve multi-year efforts and cutting-edge technology. For context, other large-scale HPC initiatives or related IT infrastructure contracts within the DoD can range from tens of millions to hundreds of millions of dollars annually, depending on the scope, duration, and specific technological requirements. The value of this particular contract, spread over its approximate 5.8-year duration, suggests a consistent and substantial allocation of resources towards maintaining and advancing the DoD's high-performance computing infrastructure, which is critical for complex simulations and data analysis.
What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract structure for this type of service?
The primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for high-performance computing modernization revolve around cost certainty and oversight complexity. While CPIF aims to incentivize both cost savings and performance targets, it can lead to less predictable final costs compared to fixed-price contracts. The government bears the risk of cost overruns if the contractor fails to meet targets, although the incentive fee mechanism is designed to mitigate this. There's also a risk of 'gold plating' or unnecessary scope expansion if incentive targets are not carefully defined and monitored. Effective oversight is crucial to scrutinize costs, validate performance metrics, and ensure the contractor is genuinely working towards the agreed-upon objectives. Without robust oversight, the potential for costs to escalate beyond initial projections increases.
How effective is the 'full and open competition' approach in ensuring value for money for taxpayer dollars in large IT contracts?
The 'full and open competition' approach is generally considered the most effective method for ensuring value for taxpayer money in large IT contracts. By allowing all responsible sources to submit bids, it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive pricing and innovative solutions. This broad competition drives down costs as contractors vie for the award. Furthermore, it provides the government with a wider range of technical approaches to choose from, enabling selection of the best overall value, not just the lowest price. The presence of multiple bidders, as seen with three bidders in this case, validates the competitive nature and suggests that the government received proposals that were likely well-priced and technically sound relative to market capabilities.
What are the potential performance implications of awarding a long-term contract (over 5 years) for evolving HPC technology?
Awarding a long-term contract, such as this one spanning approximately 5.8 years, for rapidly evolving High-Performance Computing (HPC) technology presents both opportunities and risks. The primary benefit is stability and continuity, allowing the contractor to make strategic investments in infrastructure and personnel, and enabling the government to benefit from sustained expertise and predictable support. This is crucial for complex, long-term modernization efforts. However, the risk lies in technological obsolescence. HPC technology advances at a rapid pace, and a contract structured over several years might not adequately accommodate the latest innovations or shifts in technological paradigms unless it includes flexible mechanisms for incorporating new technologies. The CPIF structure and clear performance metrics are vital to ensure the contractor remains agile and responsive to evolving needs throughout the contract's duration.
What does the contract type 'Computer Systems Design Services' (NAICS 541512) typically entail in the context of HPC modernization?
The NAICS code 541512, 'Computer Systems Design Services,' encompasses a broad range of activities related to planning, designing, and integrating computer systems. In the context of High-Performance Computing (HPC) modernization, this typically involves designing and implementing complex computing architectures, including supercomputers, clusters, and associated infrastructure. Services often include requirements analysis, system architecture development, hardware and software integration, network design, performance tuning, and ensuring interoperability between various components. For this DoD contract, it likely means SAIC is responsible for designing, building, and integrating the systems that provide the necessary computational power for advanced defense simulations, data analytics, and research, ensuring these systems meet stringent performance, security, and reliability standards.
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
Solicitation ID: W912DY13R0004
Offers Received: 3
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Address: 12010 SUNSET HILLS RD, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $576,021,853
Exercised Options: $523,975,377
Current Obligation: $398,663,532
Actual Outlays: $16,735,352
Subaward Activity
Number of Subawards: 612
Total Subaward Amount: $636,533,175
Contract Characteristics
Consolidated Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: GS00Q09BGD0048
IDV Type: GWAC
Timeline
Start Date: 2016-06-13
Current End Date: 2022-04-18
Potential End Date: 2022-04-18 00:00:00
Last Modified: 2025-07-22
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