DoD's $22M computer systems contract with Eaton Corporation shows fair value, but limited competition concerns

Contract Overview

Contract Amount: $22,089,524 ($22.1M)

Contractor: Eaton Corporation

Awarding Agency: Department of Defense

Start Date: 2015-09-26

End Date: 2020-07-17

Contract Duration: 1,756 days

Daily Burn Rate: $12.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF UPS, GENERATORS AND CHILLER REPLACEMENT

Place of Performance

Location: BLYTHE, RICHMOND County, GEORGIA, 30805

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $22.1 million to EATON CORPORATION for work described as: IGF::OT::IGF UPS, GENERATORS AND CHILLER REPLACEMENT Key points: 1. Contract value of $22.1M over 5 years for computer systems design services. 2. Awarded to Eaton Corporation, a significant player in the industrial sector. 3. Full and open competition was utilized, but only 3 bids were received. 4. The contract type is Firm Fixed Price, which shifts risk to the contractor. 5. Performance period spans nearly 5 years, indicating a substantial project. 6. Geographic location of performance is Georgia. 7. No small business set-aside was applied to this contract.

Value Assessment

Rating: fair

The contract's total value of $22.1 million over approximately 5 years for computer systems design services appears within a reasonable range for the scope of work. However, without specific details on the services rendered and comparable contract data for similar systems design projects within the Department of Defense, a definitive value-for-money assessment is challenging. The firm fixed-price structure suggests an attempt to control costs, but the ultimate value depends on the successful delivery of the specified systems.

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 bids. However, only three bids were received, which is a relatively low number for a contract of this size and scope. This limited competition could potentially impact price discovery and may suggest that fewer companies were either aware of the opportunity, capable of bidding, or interested in pursuing this specific contract.

Taxpayer Impact: While full and open competition is generally beneficial for taxpayers, the low number of bidders in this instance might have led to a higher price than could have been achieved with more robust competition. Taxpayers may not have received the full benefit of competitive pricing.

Public Impact

The Department of Defense benefits from the acquisition of necessary computer systems design services. The contract supports the operational readiness and technological infrastructure of the Army. Services are delivered within Georgia, potentially impacting the local economy and workforce. The contract likely supports specialized IT professionals and engineers involved in systems design.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (3) for a full and open competition may indicate potential issues with market reach or contractor interest, possibly leading to suboptimal pricing.
The contract duration of 1756 days (nearly 5 years) is substantial, increasing the risk of scope creep or unforeseen cost escalations if not managed tightly.
Lack of specific details on the 'Computer Systems Design Services' makes it difficult to benchmark performance and assess true value for money.

Positive Signals

Awarded under 'Full and Open Competition', which is the preferred method for maximizing market participation and achieving competitive pricing.
The contract is 'Firm Fixed Price', which transfers cost overrun risk to the contractor, providing budget certainty for the government.
The contractor, Eaton Corporation, is a well-established entity, suggesting a degree of reliability and experience.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader Information Technology (IT) industry. This sector encompasses a wide range of activities, including designing and integrating computer hardware and software, as well as providing consulting services. The market for such services is substantial, driven by continuous technological advancements and the need for robust IT infrastructure across government and commercial entities. Comparable spending benchmarks would typically involve analyzing other DoD contracts for similar IT design and integration services, considering factors like contract duration, complexity, and specific technological requirements.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award went to Eaton Corporation, a large entity. This means that opportunities for small businesses to directly participate in this specific contract were likely limited, and the primary benefits would accrue to the prime contractor and potentially its larger subcontractors.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. As a Delivery Order under a larger contract vehicle, its execution is monitored by the Department of the Army. The Firm Fixed Price nature provides a degree of financial oversight by locking in costs. Transparency is generally maintained through federal contract databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract's performance or administration.

Related Government Programs

IT Services
Computer Systems Design
Defense IT Procurement
Army IT Contracts
Information Technology Services

Risk Flags

Limited Competition
Potential for Overpricing
Contract Duration Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.1 million to EATON CORPORATION. IGF::OT::IGF UPS, GENERATORS AND CHILLER REPLACEMENT

Who is the contractor on this award?

The obligated recipient is EATON 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 $22.1 million.

What is the period of performance?

Start: 2015-09-26. End: 2020-07-17.

What specific computer systems design services were provided under this contract, and how do they align with the Army's broader IT modernization goals?

The provided data indicates the contract is for 'Computer Systems Design Services' (NAICS 541512) awarded to Eaton Corporation. However, the specific nature of these services is not detailed. Typically, such services can range from architectural design of complex IT systems, network infrastructure planning, integration of hardware and software components, to cybersecurity architecture development. To assess alignment with the Army's IT modernization goals, one would need to examine the Army's strategic IT plans and compare the contract's deliverables against those objectives. For instance, if the Army is focused on cloud migration, the design services might involve planning for hybrid cloud environments. If the focus is on enhancing battlefield communication, the services could pertain to designing resilient and secure network systems. Without the Statement of Work (SOW) or a more detailed description, this alignment remains speculative.

How does the awarded price of $22.1 million compare to similar computer systems design contracts awarded by the Department of Defense in the same period?

Benchmarking the $22.1 million price requires comparing it against similar contracts for computer systems design services awarded by the Department of Defense (DoD) around the 2015-2020 timeframe. Key comparison factors would include the contract's duration (1756 days), the specific services rendered (which are broadly defined here), the complexity of the systems designed, and the number of bidders. For example, if other DoD contracts for similar scope and duration involved more bidders and resulted in lower total prices or lower annual costs, this contract might be considered less competitive on price. Conversely, if the systems designed were highly specialized or involved cutting-edge technology, the price might be justified. Accessing detailed contract databases and performing a granular analysis of comparable SOWs and pricing structures would be necessary for a robust comparison.

What is Eaton Corporation's track record with the federal government, particularly in IT services and large-scale system design contracts?

Eaton Corporation is a diversified power management company with a significant presence in various sectors, including aerospace, electrical, and hydraulics. While known for its industrial and electrical products, its involvement in federal IT services and large-scale computer systems design contracts needs specific examination. Federal procurement data would reveal the extent of their past performance in this specific NAICS code (541512). A review of their contract history with the DoD and other federal agencies would indicate their experience, past performance ratings, and any history of contract disputes or performance issues. A strong track record in similar IT design projects would bolster confidence in their ability to deliver on this contract, while a limited or problematic history would raise concerns.

Given the 'Firm Fixed Price' contract type, what are the potential risks and benefits for the government regarding cost control and scope management?

The 'Firm Fixed Price' (FFP) contract type is generally favored by the government for its predictability in cost. The primary benefit is that the contractor assumes the risk of cost overruns. This means the government knows the total cost upfront and is protected if the contractor's expenses exceed estimates. This enhances budget certainty. However, risks exist. If the FFP price was set too high due to inadequate competition or poor estimation by the contractor, the government might overpay. Furthermore, contractors under FFP may be incentivized to cut corners on quality or scope to protect their profit margin, necessitating strong government oversight to ensure deliverables meet specifications. Scope management is also critical; any changes to the original scope require formal contract modifications (change orders), which can be complex and potentially costly.

What does the relatively low number of bidders (3) in a 'Full and Open Competition' suggest about the market for these specific computer systems design services?

A low number of bidders (3) in a 'Full and Open Competition' for a contract valued at over $22 million can suggest several possibilities about the market. Firstly, it might indicate a concentrated market with only a few companies possessing the necessary technical expertise, security clearances, or capacity to perform the required services. Secondly, the specific requirements of the contract might have been highly specialized, deterring broader participation. Thirdly, the timing or marketing of the solicitation could have been insufficient to attract a wider range of interested vendors. It could also imply that the perceived profit margin or risk associated with the contract was not attractive enough for more companies to bid. This limited competition raises concerns about whether the government received the best possible pricing and value.

How has federal spending on Computer Systems Design Services (NAICS 541512) trended over the past decade, and where does this contract fit within that trend?

Federal spending on Computer Systems Design Services (NAICS 541512) has generally shown an upward trend over the past decade, driven by the increasing reliance on technology across all government agencies and the continuous need for IT modernization, cybersecurity enhancements, and digital transformation initiatives. This specific $22.1 million contract awarded in 2015 fits within this broader trend of significant federal investment in IT services. Its duration of nearly five years means it represents a sustained commitment to acquiring these specialized design capabilities. To place it precisely within the trend, one would analyze the total annual federal spending on NAICS 541512 during the contract's performance period (2015-2020) and compare the contract's value as a proportion of that total. It represents one component of the larger federal IT services procurement landscape.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: INSTALLATION OF EQUIPMENT › INSTALLATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: W912DY12R0015

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Eaton Corporation Public Limited Company

Address: 8609 SIX FORKS RD, RALEIGH, NC, 27615

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,089,524

Exercised Options: $22,089,524

Current Obligation: $22,089,524

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W912DY15D0003

IDV Type: IDC

Timeline