DoD's $116M IT support contract for CONUS network operations awarded to STG LLC

Contract Overview

Contract Amount: $116,093,235 ($116.1M)

Contractor: STG LLC

Awarding Agency: Department of Defense

Start Date: 2014-07-01

End Date: 2017-12-31

Contract Duration: 1,279 days

Daily Burn Rate: $90.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 12

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::CT::IGF CONUS THEATER NETWORK OPERATIONS SECURITY CENTER INFORMATION TECHNOLOGY SUPPORT SERVICES

Place of Performance

Location: FORT HUACHUCA, COCHISE County, ARIZONA, 85613

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $116.1 million to STG LLC for work described as: IGF::CT::IGF CONUS THEATER NETWORK OPERATIONS SECURITY CENTER INFORMATION TECHNOLOGY SUPPORT SERVICES Key points: 1. Contract value of $116M over its period of performance. 2. Awarded to STG LLC, a single contractor. 3. Contract type is Cost Plus Fixed Fee (CPFF). 4. Performance period spans from July 2014 to December 2017. 5. The contract falls under Wired Telecommunications Carriers NAICS code. 6. Awarded under Full and Open Competition after Exclusion of Sources. 7. The contract is for IT support services for network operations security. 8. The contract was awarded in Arizona.

Value Assessment

Rating: fair

The contract's total value of $116M over approximately 3.5 years suggests a significant investment in IT support. Benchmarking this against similar contracts for network operations security centers is challenging without more specific service details. The Cost Plus Fixed Fee (CPFF) pricing structure can sometimes lead to cost overruns if not managed tightly, but it also allows for flexibility in evolving IT needs. The fixed fee component provides some predictability for the contractor's profit.

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 competition was sought, certain sources were excluded. This suggests a potentially limited competitive landscape compared to a truly unrestricted full and open competition. The number of bidders is not explicitly stated, but the 'exclusion of sources' phrasing indicates a deliberate narrowing of the field prior to or during the bidding process.

Taxpayer Impact: The limited competition may have resulted in less aggressive pricing than if a broader range of vendors had been allowed to bid, potentially leading to higher costs for taxpayers.

Public Impact

Provides essential IT support for the CONUS Theater Network Operations Security Center. Ensures the security and operational integrity of critical military networks within the continental United States. Supports the Department of the Army's mission readiness and technological infrastructure. Impacts military personnel and civilian employees relying on secure and functional network services. The contract's performance is geographically focused within CONUS, primarily Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) structure can incentivize higher spending if not closely monitored.
Limited competition ('Exclusion of Sources') may have suppressed price discovery.
Contract duration of over 3 years requires ongoing performance monitoring.
Specific details on service delivery metrics and performance outcomes are not provided.
Potential for scope creep in IT support contracts if requirements are not well-defined.

Positive Signals

Awarded under a competitive process, indicating some level of market vetting.
Focus on IT security and network operations is critical for defense infrastructure.
Contract performance period allows for sustained support and potential for contractor expertise development.
The fixed fee component provides a baseline profit margin, potentially encouraging efficient service delivery.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on telecommunications and network security services. The IT services market is vast and highly competitive, with significant government spending allocated to maintaining and securing critical infrastructure. Comparable spending benchmarks for similar network operations and security contracts can vary widely based on scope, duration, and specific technologies employed. The NAICS code 517110 (Wired Telecommunications Carriers) indicates a focus on the underlying infrastructure and connectivity supporting these IT services.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications or specific impacts on the small business ecosystem stemming from a small business set-aside. Large businesses were likely the primary participants in the competition for this contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is facilitated through contract award databases like FPDS. Accountability measures would be embedded in the contract's performance work statement (PWS) and require regular reporting and evaluation by the government contracting officer and administrative contracting officer.

Related Government Programs

DoD IT Modernization Programs
Network Infrastructure Support Contracts
Cybersecurity Services for Defense
Telecommunications Services for Government

Risk Flags

Limited Competition
Cost Plus Fixed Fee Structure
Potential for Vendor Lock-in
Lack of Performance Outcome Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $116.1 million to STG LLC. IGF::CT::IGF CONUS THEATER NETWORK OPERATIONS SECURITY CENTER INFORMATION TECHNOLOGY SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is STG 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 $116.1 million.

What is the period of performance?

Start: 2014-07-01. End: 2017-12-31.

What was the specific rationale for excluding certain sources in the 'Full and Open Competition after Exclusion of Sources' award?

The rationale for excluding specific sources in a 'Full and Open Competition after Exclusion of Sources' award typically stems from pre-qualification requirements, specific technical capabilities, past performance evaluations, or security clearances that only a subset of potential offerors could meet. For this contract, awarded to STG LLC for IT support services, the exclusion might have been based on the need for specialized knowledge of the CONUS Theater Network Operations Security Center's unique infrastructure, existing security accreditations, or prior successful performance on similar sensitive military networks. Without explicit documentation from the solicitation or award decision, the precise reasons remain speculative, but they generally aim to ensure that only capable and vetted contractors participate, even within a competitive framework.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar IT support services?

The Cost Plus Fixed Fee (CPFF) structure is often used for complex projects where the scope may evolve or is not fully defined at the outset, such as IT support services. It reimburses the contractor for allowable costs incurred plus a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the government to adapt requirements but carries a higher risk of cost growth if not managed diligently. Compared to Cost-Plus-Incentive-Fee (CPIF) or Cost-Plus-Award-Fee (CPAF) contracts, CPFF provides a stable, predictable profit margin for the contractor, whereas CPIF and CPAF offer incentives for cost savings or performance excellence, potentially driving better value but also adding complexity to administration and negotiation. For IT support, the choice often balances the need for flexibility against the desire for cost control.

What are the potential risks associated with a single contractor (STG LLC) holding this significant IT support contract for an extended period?

A single contractor holding a significant IT support contract for an extended period, like STG LLC with this $116M award from 2014-2017, presents several potential risks. Firstly, there's a risk of vendor lock-in, where the government becomes heavily reliant on the incumbent's specific systems, processes, and personnel, making transitions to new vendors difficult and costly. Secondly, without ongoing competitive pressure, the incentive for the contractor to innovate or aggressively reduce costs might diminish over time. Thirdly, institutional knowledge concentrated within one company can be a vulnerability if key personnel depart. Finally, the lack of direct competition during the contract's term means the government may not be achieving the best possible pricing or service levels achievable in a more dynamic market. Robust contract management, performance monitoring, and clear exit strategies are crucial to mitigate these risks.

Can the performance outcomes of this contract be assessed based on the available data?

The available data provides contract details such as the award amount, contractor, period of performance, and contract type, but it does not include specific performance outcomes or metrics. Therefore, a direct assessment of the contract's performance effectiveness is not possible. To evaluate performance, one would need access to contract performance reports, quality assurance surveillance plan (QASP) findings, user feedback, and potentially data on network uptime, security incidents resolved, or response times. Without such qualitative and quantitative performance data, we can only infer potential effectiveness based on the criticality of the service (network operations security) and the contractor's adherence to the contract's terms and conditions.

How does the $116M spending on this contract compare to overall DoD IT spending during the 2014-2017 period?

The $116 million spent on this specific IT support contract for the CONUS Theater Network Operations Security Center represents a fraction of the Department of Defense's (DoD) overall IT spending during the 2014-2017 period. The DoD is one of the largest government IT spenders, with annual IT budgets often in the tens of billions of dollars, covering a vast array of services including infrastructure, cybersecurity, software development, and end-user support across all branches. While $116 million is a substantial sum for a single contract, it is relatively modest when viewed against the total DoD IT expenditure. This contract likely supported a critical, but specialized, function within the broader DoD network security architecture.

Industry Classification

NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W91RUS11R0010

Offers Received: 12

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: STG Group, Inc. (UEI: 079257316)

Address: 12011 SUNSET HILLS RD STE 1200, RESTON, VA, 20190

Business Categories: Asian Pacific American Owned Business, Category Business, Manufacturer of Goods, Minority Owned Business, Small Business, Special Designations, Subchapter S Corporation, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $116,312,320

Exercised Options: $116,312,320

Current Obligation: $116,093,235

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline