DoD's $42.2M IT services contract awarded to The Fresnel Company shows fair value but limited competition

Contract Overview

Contract Amount: $42,243,204 ($42.2M)

Contractor: Fresnel Company, the

Awarding Agency: Department of Defense

Start Date: 2010-01-29

End Date: 2013-07-29

Contract Duration: 1,277 days

Daily Burn Rate: $33.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: PM NSC SYSTEMS ENGINEERING AND TECHNICAL ASSISTANCE SUPPORT SERVICES

Place of Performance

Location: ROCKVILLE, MONTGOMERY County, MARYLAND, 20850

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $42.2 million to FRESNEL COMPANY, THE for work described as: PM NSC SYSTEMS ENGINEERING AND TECHNICAL ASSISTANCE SUPPORT SERVICES Key points: 1. Contract value of $42.2M over 3 years suggests a moderate investment in IT support. 2. Awarded via full and open competition, indicating broad market access. 3. The contract's Time and Materials pricing structure may pose cost control risks. 4. Performance period of over 3 years allows for sustained support but requires diligent oversight. 5. The 'Other Computer Related Services' NAICS code covers a broad range of IT functions. 6. This contract represents a portion of the broader IT services spending within the Department of the Army.

Value Assessment

Rating: fair

The contract's total value of $42.2M over approximately 3.5 years averages to about $12M annually. Without specific benchmarks for 'PM NSC SYSTEMS ENGINEERING AND TECHNICAL ASSISTANCE SUPPORT SERVICES', it's difficult to definitively assess value for money. However, the Time and Materials (T&M) pricing model, while flexible, can lead to cost overruns if not managed closely. Compared to similar large-scale IT support contracts, the annual spend is within a typical range, but the T&M structure warrants careful monitoring of labor hours and rates to ensure fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'FULL AND OPEN COMPETITION', suggesting that all responsible sources were permitted to submit offers. The data indicates 4 offers were received, which is a reasonable number for a contract of this nature. A moderate level of competition generally allows for price discovery and can lead to more competitive pricing for the government. However, the specific nature of the specialized IT services required might limit the pool of truly capable bidders.

Taxpayer Impact: The full and open competition, with 4 bidders, likely resulted in a more competitive price than a sole-source award. This benefits taxpayers by ensuring the government is not overpaying for essential IT support services.

Public Impact

The primary beneficiaries are the personnel within the National Military Command Center (PM NSC) who receive essential systems engineering and technical assistance. Services delivered include a broad range of IT support, crucial for the operational readiness of critical defense systems. The geographic impact is likely concentrated around the primary operating locations of the Department of the Army, potentially in Maryland given the 'MD' state code. Workforce implications include the direct employment of technical staff by The Fresnel Company and potential indirect impacts on government IT personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials (T&M) pricing can lead to uncontrolled cost growth if not rigorously managed.
The broad NAICS code 'Other Computer Related Services' may obscure the specific nature and cost drivers of the services provided.
Lack of detailed performance metrics in the provided data makes it difficult to assess the quality and effectiveness of the services rendered.
The contract duration of over 3 years requires sustained oversight to ensure continued value and alignment with evolving needs.

Positive Signals

Awarded through full and open competition, maximizing potential bidder pool and promoting price discovery.
The contract provides critical systems engineering and technical assistance, supporting vital national defense functions.
The Fresnel Company's selection suggests they met the technical and capability requirements for this specialized support.
A multi-year contract allows for stability and continuity of essential IT services.

Sector Analysis

The IT services sector is a vast and critical component of federal spending, encompassing everything from software development to network management and cybersecurity. This contract falls under 'Other Computer Related Services,' a broad category that includes IT consulting, systems integration, and technical support. The federal government is a major consumer of IT services, with spending often driven by modernization efforts, cybersecurity mandates, and the need to support complex operational systems. Benchmarking this $42.2M contract requires comparing it to similar system engineering and technical assistance contracts within the Department of Defense or other agencies with comparable missions, considering the specific technical requirements and duration.

Small Business Impact

The provided data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). Therefore, the primary contractor, The Fresnel Company, is likely a large business. There is no explicit information regarding subcontracting plans for small businesses within this data snippet. Without this information, it's difficult to assess the direct impact on the small business ecosystem. However, large prime contracts often have subcontracting goals, which could provide opportunities for small businesses if implemented.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be embedded in the contract's terms, including performance standards, delivery schedules, and payment clauses tied to satisfactory performance. Transparency is generally facilitated through contract award databases like FPDS, where basic information is publicly available. The Inspector General (IG) for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Defense Information Technology Contracting Organization (DITCO) Services
General Services Administration (GSA) IT Schedule Contracts
Department of Defense Enterprise IT Services
Systems Engineering and Technical Assistance (SETA) Contracts
National Military Command Center (NMCC) Support

Risk Flags

Cost Overrun Risk (Time and Materials Pricing)
Scope Creep Potential (Broad NAICS Code)
Performance Monitoring Challenges (Lack of Specific Metrics)
Vendor Lock-in Risk (Long Duration)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.2 million to FRESNEL COMPANY, THE. PM NSC SYSTEMS ENGINEERING AND TECHNICAL ASSISTANCE SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is FRESNEL COMPANY, THE.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $42.2 million.

What is the period of performance?

Start: 2010-01-29. End: 2013-07-29.

What is the track record of The Fresnel Company in performing similar systems engineering and technical assistance contracts for the Department of Defense?

Assessing The Fresnel Company's track record requires a deeper dive into their contract history beyond this single award. Publicly available data (like FPDS) can reveal past performance ratings on similar contracts, any past disputes or terminations, and the types of services they have previously provided to the DoD. A review of their past performance would focus on their ability to deliver complex IT support, meet deadlines, manage costs effectively, and satisfy customer requirements. Positive past performance on comparable contracts would increase confidence in their ability to execute this current award successfully, while negative indicators would raise concerns about potential risks.

How does the average annual value of this contract compare to other IT support services contracts awarded by the Department of the Army?

This contract has an average annual value of approximately $12M ($42.2M / ~3.5 years). To benchmark this, one would compare it against the average annual value of other IT support services contracts within the Department of the Army, particularly those falling under similar NAICS codes (like 541519) or those providing systems engineering and technical assistance. If the average annual value for comparable contracts is significantly higher or lower, it could indicate that this contract is either unusually large/small or priced differently. Data from sources like FPDS or specialized contract analysis tools would be necessary to establish these benchmarks and assess if the $12M annual spend is typical, high, or low for the services rendered.

What are the specific risks associated with the Time and Materials (T&M) pricing structure for this contract?

The primary risk of a Time and Materials (T&M) contract is the potential for cost escalation. Unlike fixed-price contracts, T&M agreements reimburse the contractor for direct labor hours at specified rates and for the actual cost of materials. This structure provides flexibility but offers less incentive for the contractor to control costs efficiently. For the government, risks include potential overspending if labor hours are not closely monitored, if rates are inflated, or if the scope of work expands without adequate controls. Effective oversight, including detailed review of timesheets, labor rates, and material costs, is crucial to mitigate these risks and ensure the government receives good value.

What is the potential impact of 'Other Computer Related Services' (NAICS 541519) on the specificity and manageability of this contract?

The NAICS code 541519, 'Other Computer Related Services,' is very broad and encompasses a wide array of IT functions, including consulting, systems integration, data processing, and technical support. While it allows flexibility in service provision, it can also lead to a lack of specificity regarding the exact tasks and deliverables expected under the contract. This ambiguity can make it challenging for both the government and the contractor to clearly define scope, measure performance, and manage costs effectively. It necessitates robust contract management and clear statements of work to ensure the services provided align with the government's needs and that performance is adequately assessed.

How does the number of bids (4) in this full and open competition influence the government's negotiating position and potential for cost savings?

Receiving 4 bids in a full and open competition generally indicates a healthy level of market interest and provides the government with a reasonable basis for price negotiation. With multiple offers, the government can compare pricing structures, technical approaches, and proposed labor rates. This competition creates pressure on bidders to offer competitive terms to win the contract. While 4 bids are positive, the optimal number for maximizing competition can vary depending on the contract's complexity and the size of the relevant market. More bids typically lead to better price discovery and potentially greater cost savings for the taxpayer compared to fewer bids or a sole-source situation.

What are the implications of the contract's duration (over 3 years) for long-term IT strategy and vendor lock-in?

A contract duration of over three years provides stability and continuity for essential IT services, allowing the contractor to develop deep institutional knowledge and potentially achieve economies of scale. This can be beneficial for complex systems requiring sustained support. However, long-term contracts also carry the risk of vendor lock-in, where the government becomes heavily reliant on a single provider, potentially stifling innovation from other vendors and making it difficult to switch providers later. It also means that the government's IT strategy must be carefully aligned with the contract's scope to avoid obsolescence or misalignment with evolving technological needs over its term.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: W91QUZ07R0007

Offers Received: 4

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 11035 CANDLELIGHT LN, POTOMAC, MD, 20854

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $63,275,821

Exercised Options: $55,046,327

Current Obligation: $42,243,204

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ08D0006

IDV Type: IDC

Timeline