DoD's $70M IT contract to Peraton Inc. awarded under full and open competition shows fair value
Contract Overview
Contract Amount: $69,942,494 ($69.9M)
Contractor: Peraton Inc.
Awarding Agency: Department of Defense
Start Date: 2009-09-22
End Date: 2011-09-30
Contract Duration: 738 days
Daily Burn Rate: $94.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: IT SOLUTION SERVICES
Place of Performance
Location: STERLING, LOUDOUN County, VIRGINIA, 20166
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $69.9 million to PERATON INC. for work described as: IT SOLUTION SERVICES Key points: 1. Contract awarded via full and open competition suggests competitive pricing. 2. Fixed-price contract type mitigates cost overrun risks for the government. 3. Contract duration of 738 days (approx. 2 years) is standard for IT services. 4. Performance in Virginia indicates a focus on domestic IT infrastructure. 5. The award amount of $69.9M falls within typical ranges for large-scale IT solutions. 6. No small business set-aside indicates the contract was not specifically targeted for small businesses.
Value Assessment
Rating: good
The contract's value of approximately $70 million over two years for IT solution services appears reasonable when benchmarked against similar large-scale federal IT procurements. The firm fixed-price structure is a positive indicator, as it shifts cost risk to the contractor. While specific performance metrics are not detailed here, the award to Peraton Inc. under full and open competition suggests a competitive bidding process likely resulted in a fair market price.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded through full and open competition, meaning all responsible sources were permitted to submit bids. The presence of 3 bidders indicates a moderate level of competition for this significant IT services contract. While more bidders could potentially drive prices lower, three offers suggest that the market for these services is not overly concentrated and that the government received multiple viable options.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and innovative solutions. The fact that multiple companies bid on this contract suggests that the government secured a fair price through market forces.
Public Impact
The Department of the Army benefits from enhanced IT solution services, crucial for its operational effectiveness. This contract supports the delivery of essential wired telecommunications carrier services. The geographic impact is primarily within Virginia, where the services are likely performed. The contract supports jobs within the IT sector, particularly in telecommunications and related services.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for vendor lock-in if follow-on work is not competed.
- Dependence on a single contractor for critical IT infrastructure could pose risks.
- Scope creep could occur if not managed tightly, leading to cost increases.
Positive Signals
- Firm fixed-price contract type limits the government's exposure to cost overruns.
- Awarded under full and open competition, indicating a competitive selection process.
- Contractor Peraton Inc. has a track record of performing large federal IT contracts.
- The contract duration is defined, providing a clear timeframe for service delivery.
Sector Analysis
This contract falls within the IT services sector, specifically focusing on wired telecommunications. The North American Industry Classification System (NAICS) code 517110, Wired Telecommunications Carriers, represents a market segment involving the infrastructure and services for transmitting voice and data over wired networks. Federal spending in this area is substantial, supporting everything from basic network connectivity to complex data transmission solutions for various agencies.
Small Business Impact
The contract was not awarded as a small business set-aside, and there is no indication of specific subcontracting requirements for small businesses in the provided data. This suggests that the primary focus was on securing the best value from the broader market, rather than specifically targeting small business participation. Consequently, the direct impact on the small business ecosystem for this particular award may be limited unless Peraton Inc. voluntarily engages small businesses as subcontractors.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of the Army contracting officers and program managers. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance monitoring details are not provided here. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Department of Defense IT Modernization Programs
- Army Network Modernization Contracts
- Federal Telecommunications Infrastructure Services
- Large-Scale IT Solution Procurements
Risk Flags
- Potential for cost overruns if scope is not well-defined.
- Risk of vendor lock-in for future services.
- Dependence on contractor performance for critical IT functions.
Tags
it-services, department-of-defense, department-of-the-army, wired-telecommunications, firm-fixed-price, full-and-open-competition, large-contract, virginia, peraton-inc
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $69.9 million to PERATON INC.. IT SOLUTION SERVICES
Who is the contractor on this award?
The obligated recipient is PERATON 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 $69.9 million.
What is the period of performance?
Start: 2009-09-22. End: 2011-09-30.
What is Peraton Inc.'s track record with similar large-scale IT contracts for the Department of Defense?
Peraton Inc. has a significant history of performing large-scale IT and telecommunications contracts for various U.S. federal agencies, including the Department of Defense. They have been awarded numerous prime contracts and task orders valued in the tens and hundreds of millions of dollars, covering areas such as network modernization, cybersecurity, enterprise IT services, and mission-critical communications. Their experience often involves complex systems integration and support for high-demand government operations. While this specific contract is for $69.9 million, Peraton's broader portfolio demonstrates a capacity to manage and execute contracts of this magnitude and complexity, often within competitive environments. Their performance history on these prior contracts would be a key factor in the DoD's decision-making process for awarding new work.
How does the $69.9 million contract value compare to other similar IT solution services contracts awarded by the Department of the Army?
The $69.9 million contract value for IT solution services awarded to Peraton Inc. by the Department of the Army is a substantial but not extraordinary amount for large federal IT procurements. The Department of the Army, like other branches of the DoD, frequently awards IT contracts in the tens to hundreds of millions of dollars, and sometimes billions, for enterprise-wide solutions, network infrastructure, and specialized IT support. This contract's value falls within the mid-to-upper range for a single delivery order or a focused project over a two-year period. Benchmarking against similar contracts for wired telecommunications or broader IT solutions would reveal that this amount is competitive and reflects the scale and scope of services typically required for a major government agency's IT needs.
What are the primary risks associated with this firm fixed-price contract, and how are they mitigated?
The primary risk associated with a firm fixed-price (FFP) contract is that the contractor may face financial losses if their costs exceed the agreed-upon price, potentially leading to reduced quality, performance issues, or even contractor default. However, FFP contracts are generally favored by the government because they shift cost risk to the contractor and provide budget certainty. Mitigation strategies employed by the government include thorough pre-award cost analysis, clearly defined contract scope and specifications to prevent scope creep, and robust contract surveillance to ensure the contractor is meeting performance requirements. For Peraton Inc., the risk is managing their internal costs effectively to remain profitable within the fixed price. The government's mitigation lies in careful contract definition and oversight.
What does the 'full and open competition' award status imply about the effectiveness of the bidding process for this contract?
The 'full and open competition' award status implies that the Department of the Army followed statutory requirements to solicit bids from all responsible sources, ensuring a broad range of potential contractors could participate. This process is designed to maximize competition, which theoretically leads to the best value for the government through competitive pricing, innovative solutions, and higher quality services. The fact that the contract was awarded under this umbrella suggests that the agency did not impose restrictive barriers to entry and that multiple qualified vendors were likely considered. The presence of 3 bidders indicates a reasonable, though not exceptionally high, level of competition, suggesting the process was effective in attracting multiple interested parties and facilitating price discovery.
How does this contract align with the Department of the Army's broader IT modernization or telecommunications strategy?
This contract for IT solution services, specifically falling under wired telecommunications carriers, likely aligns with the Department of the Army's ongoing efforts in IT modernization and maintaining robust communication infrastructure. Modernizing telecommunications is fundamental to enhancing network capabilities, improving data transmission speeds, ensuring secure communications, and supporting advanced technologies like cloud computing and AI. By procuring these services, the Army is investing in the foundational network infrastructure necessary for its digital transformation initiatives. The specific services procured would dictate the precise strategic alignment, but generally, such contracts are crucial for ensuring reliable, secure, and high-performance communication networks essential for military operations and administrative functions.
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
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 3
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Veritas Capital Fund Management, L.L.C. (UEI: 078628925)
Address: 12975 WORLDGATE STE 7322, HERNDON, VA, 20170
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $70,471,908
Exercised Options: $69,942,494
Current Obligation: $69,942,494
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W91QUZ07D0001
IDV Type: IDC
Timeline
Start Date: 2009-09-22
Current End Date: 2011-09-30
Potential End Date: 2011-09-30 00:00:00
Last Modified: 2017-12-07
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