DoD's $28.7M software development contract with Empower AI, Inc. shows fair value despite limited competition
Contract Overview
Contract Amount: $28,725,800 ($28.7M)
Contractor: Empower AI, Inc.
Awarding Agency: Department of Defense
Start Date: 2011-03-31
End Date: 2016-03-31
Contract Duration: 1,827 days
Daily Burn Rate: $15.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: SOFTWARE DEVELOPMENT
Place of Performance
Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $28.7 million to EMPOWER AI, INC. for work described as: SOFTWARE DEVELOPMENT Key points: 1. Contract value of $28.7M over 5 years suggests a moderate annual spend. 2. The contract was awarded under full and open competition, indicating a broad search for qualified vendors. 3. A limited number of bidders (2) may have impacted price competitiveness. 4. The fixed-price contract type shifts performance risk to the contractor. 5. This contract falls within the custom computer programming services sector. 6. The contract duration of 1827 days (approx. 5 years) is typical for complex software development projects.
Value Assessment
Rating: fair
Benchmarking this contract's value is challenging without specific service details. However, the total award of $28.7M over five years averages to approximately $5.7M annually. This figure appears reasonable for custom software development services, especially considering the complexity often involved in Department of Defense projects. The firm fixed-price structure suggests that the government has a clear understanding of the scope and cost, aiming for predictable expenditures.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. However, only two bids were received. While the competition was open, the low number of bidders could suggest potential barriers to entry for other firms or a highly specialized market. This limited participation might have constrained the government's ability to secure the most competitive pricing.
Taxpayer Impact: A limited number of bidders, even under open competition, can lead to higher prices for taxpayers as the government may not benefit from the full spectrum of market competition.
Public Impact
The primary beneficiary is the Department of Defense, which receives custom computer programming services. The services delivered are critical for supporting military operations and administrative functions through specialized software. The geographic impact is likely concentrated within the Department of the Army's operational areas. Workforce implications include the employment of software developers, engineers, and project managers by Empower AI, Inc.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited number of bidders (2) may indicate a lack of robust competition, potentially leading to higher costs.
- The specific nature of 'custom computer programming services' can sometimes lead to scope creep if not tightly managed.
- Reliance on a single contractor for critical software development could pose a risk if performance issues arise.
Positive Signals
- Awarded under full and open competition, ensuring a fair process for all potential vendors.
- Firm fixed-price contract type transfers cost overrun risk to the contractor.
- The contract duration of 5 years allows for continuity and deep development expertise.
Sector Analysis
This contract falls within the Information Technology sector, specifically under the category of Custom Computer Programming Services (NAICS 541511). This is a significant market within federal IT spending, supporting a wide range of government functions. The total federal spending on IT services is in the hundreds of billions annually, with custom software development representing a substantial portion. This contract's value of $28.7M is moderate within the broader context of large federal IT procurements.
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 mandated by a small business set-aside. The prime contractor, Empower AI, Inc., is likely a large business. The absence of a small business set-aside means that opportunities for small businesses would primarily depend on Empower AI's voluntary subcontracting decisions, which are not detailed here.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and the relevant program managers within the Department of the Army. The firm fixed-price nature of the contract provides a degree of accountability by tying payment to deliverables. Transparency is generally maintained through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Custom Software Development Services
- IT Services
- Department of Defense IT Contracts
- Software Engineering Services
- Information Technology Professional Services
Risk Flags
- Limited competition may have impacted price
- Potential for scope creep in custom development
- Contractor performance risk
Tags
it, defense, department-of-defense, department-of-the-army, custom-computer-programming-services, firm-fixed-price, full-and-open-competition, delivery-order, software-development, empower-ai-inc, virginia
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $28.7 million to EMPOWER AI, INC.. SOFTWARE DEVELOPMENT
Who is the contractor on this award?
The obligated recipient is EMPOWER AI, 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 $28.7 million.
What is the period of performance?
Start: 2011-03-31. End: 2016-03-31.
What is the track record of Empower AI, Inc. with federal contracts, particularly within the Department of Defense?
Empower AI, Inc. has a history of federal contracting, primarily serving defense and civilian agencies. Analyzing their past performance requires reviewing contract databases for awards, task orders, and performance evaluations. Key metrics to consider include on-time delivery, adherence to budget, quality of work, and any past performance issues or disputes. For this specific $28.7M contract, understanding their prior experience with similar-sized and complex software development projects for the DoD would be crucial for assessing their capability and reliability. A review of their contract history might reveal patterns in contract types, agencies served, and overall satisfaction levels, providing context for their current engagement.
How does the pricing of this contract compare to similar custom computer programming services procured by the federal government?
Directly comparing the pricing of this $28.7M contract requires detailed knowledge of the specific services rendered, labor categories, hours, and rates. However, we can benchmark the average annual spend of approximately $5.7M against similar custom software development contracts. Federal procurement data often shows a wide range for such services, influenced by complexity, security requirements, and geographic location. If this contract involved highly specialized or mission-critical software, the price might be justified. Conversely, if the services were more routine, the price could be considered high, especially given only two bidders. A thorough analysis would involve comparing the contract's CLINs (Contract Line Item Numbers) and associated rates against government-wide contract vehicles or publicly available pricing data for comparable services.
What are the primary risks associated with this contract, and how are they being mitigated?
The primary risks include potential cost overruns (mitigated by the firm fixed-price structure), schedule delays, and performance deficiencies. Given that it's custom software development, scope creep is a significant risk, which requires robust change management processes. The limited competition (2 bidders) also presents a risk of suboptimal pricing. Mitigation strategies likely involve strong contract oversight by the Army, clear performance metrics, regular progress reviews, and potentially incentivizing efficient delivery. The contractor, Empower AI, Inc., bears the primary financial risk for cost overruns due to the FFP nature of the contract.
How effective has Empower AI, Inc. been in delivering custom computer programming services under this contract?
Assessing the effectiveness requires access to performance reports, user feedback, and potentially contract modifications or termination data. Since the contract ended in 2016, historical performance data should be available through federal procurement systems or agency records. Key indicators of effectiveness would include whether the software met the specified requirements, was delivered on time and within budget (as defined by the FFP), and if it has been successfully utilized by the Department of the Army. Without specific performance metrics or evaluations, it's difficult to definitively state the effectiveness, but the completion of the contract suggests a level of successful delivery.
What has been the historical spending pattern for custom computer programming services by the Department of the Army, and how does this contract fit?
The Department of the Army consistently spends significant amounts on IT services, including custom software development, reflecting its complex operational and administrative needs. Historical spending patterns show a trend towards outsourcing these services to specialized contractors. This $28.7M contract, awarded between 2011 and 2016, represents a moderate investment within the broader context of the Army's IT budget over that period. It aligns with the general trend of leveraging external expertise for developing tailored software solutions that meet specific military requirements, rather than relying solely on internal development capabilities.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming 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: W9133L11R0023
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: NCI, Inc.
Address: 8260 GREENSBORO DR # 400, MC LEAN, VA, 22102
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $29,210,262
Exercised Options: $28,777,873
Current Obligation: $28,725,800
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Parent Contract
Parent Award PIID: GS35F4014G
IDV Type: FSS
Timeline
Start Date: 2011-03-31
Current End Date: 2016-03-31
Potential End Date: 2016-03-31 00:00:00
Last Modified: 2024-09-27
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