State Department awards $401.9M contract for passport center operations to CGI Federal Inc

Contract Overview

Contract Amount: $401,923,760 ($401.9M)

Contractor: CGI Federal Inc.

Awarding Agency: Department of State

Start Date: 2017-11-27

End Date: 2027-04-26

Contract Duration: 3,437 days

Daily Burn Rate: $116.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF OPERATION OF THE TUCSON PASSPORT CENTER AND ARKANSAS PASSPORT CENTER

Place of Performance

Location: HOT SPRINGS NATIONAL PARK, GARLAND County, ARKANSAS, 71913

State: Arkansas Government Spending

Plain-Language Summary

Department of State obligated $401.9 million to CGI FEDERAL INC. for work described as: IGF::OT::IGF OPERATION OF THE TUCSON PASSPORT CENTER AND ARKANSAS PASSPORT CENTER Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price efficiencies. 2. Long-term contract duration of nearly 10 years suggests a need for stable service provision. 3. Firm Fixed Price contract type shifts cost risk to the contractor. 4. No small business set-aside, indicating potential missed opportunities for smaller firms. 5. Contractor CGI Federal Inc. has a significant presence in government IT and support services. 6. Geographic focus on Arkansas and Tucson passport centers highlights specific operational needs.

Value Assessment

Rating: fair

The total contract value of $401.9 million over approximately 9.5 years averages to about $42.3 million annually. Without comparable contracts for similar passport center operations, it is difficult to definitively benchmark the value for money. The firm fixed-price structure is generally favorable for the government in controlling costs, but the lack of competition makes a precise value assessment challenging. Further analysis would require understanding the scope of services and comparing them to industry standards for facility management and administrative support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs than if multiple firms had competed.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive bidding. The government could not leverage market forces to drive down costs.

Public Impact

Citizens applying for or renewing passports will benefit from the operational continuity of these centers. The contract ensures the continued operation of passport processing services, a critical function for international travel. Services are delivered through passport centers located in Tucson, Arizona, and Arkansas. The contract supports jobs within the contractor's organization, contributing to the local economies where these centers operate.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing and reduced innovation.
Sole-source awards can create vendor lock-in, making future transitions more difficult and costly.
Absence of small business participation limits opportunities for smaller, specialized firms.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Long-term contract duration offers stability and predictability for essential services.
Contractor CGI Federal Inc. has extensive experience in government contracting, suggesting a lower risk of performance issues.

Sector Analysis

The support services sector encompasses a wide range of activities, including administrative, operational, and facility management. Government contracts in this area are substantial, supporting various agency functions. Passport processing is a critical administrative function for the Department of State, requiring efficient and secure operations. Benchmarking this contract's value is challenging without specific data on comparable passport center operations, but the annual value of approximately $42.3 million falls within the range of large-scale service contracts.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This means that opportunities for small businesses to participate in delivering these passport services were likely limited. The absence of a set-aside or subcontracting plan may represent a missed opportunity to foster small business growth and leverage their specialized capabilities within the government contracting ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of State's contracting officers and program managers. The firm fixed-price nature of the contract provides a degree of cost control. Transparency regarding the specific performance metrics and any associated Inspector General reviews would depend on public reporting mechanisms for Department of State contracts. The long duration necessitates ongoing monitoring to ensure continued performance and value.

Related Government Programs

Department of State Passport Services
Federal Administrative Support Services
Government Facility Operations Contracts

Risk Flags

Sole-source award lacks competitive pricing.
Long contract duration may not adapt to future needs.
No explicit small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $401.9 million to CGI FEDERAL INC.. IGF::OT::IGF OPERATION OF THE TUCSON PASSPORT CENTER AND ARKANSAS PASSPORT CENTER

Who is the contractor on this award?

The obligated recipient is CGI FEDERAL INC..

Which agency awarded this contract?

Awarding agency: Department of State (Department of State).

What is the total obligated amount?

The obligated amount is $401.9 million.

What is the period of performance?

Start: 2017-11-27. End: 2027-04-26.

What is the track record of CGI Federal Inc. with the Department of State and similar government agencies?

CGI Federal Inc. is a well-established government contractor with a significant history of performing IT and business services for various federal agencies, including the Department of State. They have held numerous contracts for system integration, application development, and operational support. Their experience with the State Department likely includes managing complex, large-scale operations. While specific performance details for past contracts are not provided here, their longevity and continued awards suggest a generally satisfactory performance history. However, a deeper dive into past performance reviews, any contract disputes, or audit findings would be necessary for a comprehensive assessment of their track record.

How does the annual cost of this contract compare to industry benchmarks for similar support services?

The annual cost of this contract, averaging approximately $42.3 million ($401.9M / ~9.5 years), is substantial. However, directly comparing it to industry benchmarks for 'support services' is difficult without a more precise definition of the services provided beyond 'operation of passport centers.' Passport operations involve specific security, processing, and customer service elements that may differ from general administrative support. To benchmark effectively, one would need to identify comparable contracts for large-scale, secure document processing and facility management, ideally with similar volumes and service level agreements. The lack of competition further complicates a direct value-for-money assessment against market rates.

What are the primary risks associated with a sole-source award for essential government services like passport processing?

The primary risks associated with a sole-source award for essential services like passport processing include potential overpricing due to the absence of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market validation for the chosen solution. There's also the risk of vendor lock-in, making it difficult and costly to switch providers in the future. Furthermore, without competition, it's harder to ensure that the government is receiving the best possible value and that the contractor is operating at peak efficiency. This can lead to taxpayer funds being used less effectively than they could be in a competitive environment.

What is the historical spending pattern for passport center operations by the Department of State?

Historical spending data for passport center operations by the Department of State would reveal trends in contract values, durations, and competition levels over time. Without access to this specific historical data, it's challenging to provide a precise pattern. However, it is common for agencies to award long-term contracts for essential operational functions to ensure continuity. The shift towards larger, consolidated contracts or sole-source awards can sometimes occur due to perceived efficiencies or specific market conditions. Analyzing past solicitations and awards for similar services would illuminate whether this $401.9 million sole-source contract represents a deviation from or an evolution of previous procurement strategies for passport services.

What are the implications of the firm fixed-price (FFP) contract type for cost control and risk management?

A Firm Fixed Price (FFP) contract type is generally advantageous for the government as it places the majority of the cost risk on the contractor. Under an FFP agreement, the contractor is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This provides budget certainty for the government and incentivizes the contractor to manage their costs efficiently. If the contractor's costs exceed the fixed price, they absorb the loss. Conversely, if their costs are lower, they retain the profit. This structure is well-suited for services with a clearly defined scope, like passport center operations, where cost overruns are less likely to be driven by unforeseen technical challenges.

How does the duration of this contract (nearly 10 years) impact its overall value and risk profile?

The nearly 10-year duration of this contract offers significant benefits in terms of service continuity and stability for the Department of State's passport operations. It allows the contractor, CGI Federal Inc., to make long-term investments in personnel, processes, and potentially technology, which could lead to efficiencies. For the government, it reduces the administrative burden and costs associated with frequent re-procurement. However, a long duration also increases the risk of the contract becoming outdated if technology or operational needs change significantly, or if the contractor's performance falters over time. Without robust performance management and potential price adjustments or termination clauses, the government might be locked into a suboptimal arrangement for an extended period.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › All Other Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Timken Company

Address: 12601 FAIR LAKES CIR, FAIRFAX, VA, 22033

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $402,237,614

Exercised Options: $402,237,614

Current Obligation: $401,923,760

Subaward Activity

Number of Subawards: 166

Total Subaward Amount: $197,134,401

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline