State Department awards $163M contract for computer systems design services to Netcentric Technology, LLC

Contract Overview

Contract Amount: $163,017,801 ($163.0M)

Contractor: Netcentric Technology, LLC

Awarding Agency: Department of State

Start Date: 2018-09-30

End Date: 2025-03-29

Contract Duration: 2,372 days

Daily Burn Rate: $68.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 7

Pricing Type: LABOR HOURS

Sector: IT

Official Description: STS SERVICES FOR CA/CST

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20052

State: District of Columbia Government Spending

Plain-Language Summary

Department of State obligated $163.0 million to NETCENTRIC TECHNOLOGY, LLC for work described as: STS SERVICES FOR CA/CST Key points: 1. Contract value of $163M over approximately 6 years suggests a significant investment in IT infrastructure. 2. The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating a specific, though competitive, procurement process. 3. The duration of the contract (2372 days) points to a long-term need for these services. 4. The primary service category is Computer Systems Design Services, a critical function for modern government operations. 5. The contract's value places it in the mid-to-large range for IT service contracts within the federal government. 6. The award to a single contractor, Netcentric Technology, LLC, warrants scrutiny of performance and pricing over the contract's life.

Value Assessment

Rating: fair

Benchmarking the value of this $163M contract requires detailed comparison to similar IT systems design contracts awarded by the Department of State and other agencies. The 'Computer Systems Design Services' NAICS code (541512) covers a broad range of activities, making direct price comparisons challenging without understanding the specific scope of work. The contract type ('LABOR HOURS') can sometimes lead to cost overruns if not managed tightly, and the total value may fluctuate based on actual hours worked. Further analysis of the per-unit labor rates against market benchmarks would be necessary to definitively assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This procurement method suggests that while the competition was intended to be open, certain sources were excluded, potentially limiting the pool of bidders. The number of bids received (7) indicates some level of competition, but the exclusion clause raises questions about whether the most competitive offers were fully considered. This approach can sometimes be used when specific capabilities are required, but it may also reduce price discovery compared to a truly unrestricted full and open competition.

Taxpayer Impact: Taxpayers may not have benefited from the broadest possible competition, potentially leading to higher prices than if all qualified vendors had been allowed to bid without exclusion.

Public Impact

The Department of State benefits from enhanced computer systems design and support, crucial for its diplomatic and operational functions. This contract ensures the continuity and potential modernization of IT infrastructure supporting national security and foreign policy objectives. The services delivered are likely to impact the efficiency and effectiveness of State Department personnel, both domestically and abroad. Workforce implications may include the need for specialized IT skills within Netcentric Technology, LLC, and potentially within the State Department for oversight.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost creep due to 'LABOR HOURS' contract type if not rigorously managed.
Limited competition due to 'Exclusion of Sources' may impact optimal price discovery.
Long contract duration (over 6 years) increases risk of technological obsolescence or changing requirements.
Dependence on a single contractor for critical IT systems design services.

Positive Signals

Awarded under a competitive process, indicating some level of vetting and selection.
Long-term contract provides stability and predictability for service delivery.
Focus on computer systems design is essential for modernizing government IT infrastructure.
The contractor, Netcentric Technology, LLC, has secured a significant federal award, suggesting capability.

Sector Analysis

The federal IT services market is vast and highly competitive, with significant spending allocated to computer systems design and related services. This contract falls within the broader IT services sector, which is characterized by rapid technological advancements and evolving cybersecurity needs. The Department of State's spending on such services is critical for maintaining its global operations and communication networks. Comparable spending benchmarks would typically look at the average contract value for NAICS 541512 across agencies, as well as the specific types of IT services procured.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). Therefore, the primary impact on small businesses would be through potential subcontracting opportunities if Netcentric Technology, LLC chooses to engage them. Without specific subcontracting plans mandated or reported, it's difficult to assess the direct benefit to the small business ecosystem from this particular award. The focus is on a large prime contractor, suggesting the primary work will be performed by the awardee or its larger partners.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of State's contracting officers and program managers. Accountability measures are typically embedded within the contract terms, including performance standards, delivery schedules, and payment clauses. Transparency is facilitated through contract databases like FPDS, where basic award information is publicly available. The extent of Inspector General (IG) involvement would depend on specific performance issues, allegations of fraud, waste, or abuse, or proactive audits initiated by the IG's office.

Related Government Programs

Department of State IT Modernization Programs
Federal Civilian Agency IT Services Contracts
Computer Systems Design and Related Services
Definitive Contracts
IT Support Services

Risk Flags

Potential for cost overruns due to 'LABOR HOURS' contract type.
Limited competition due to 'Exclusion of Sources' may impact price discovery.
Risk of technological obsolescence due to long contract duration.
Dependence on a single contractor for critical IT services.
Need for robust oversight to ensure value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $163.0 million to NETCENTRIC TECHNOLOGY, LLC. STS SERVICES FOR CA/CST

Who is the contractor on this award?

The obligated recipient is NETCENTRIC TECHNOLOGY, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $163.0 million.

What is the period of performance?

Start: 2018-09-30. End: 2025-03-29.

What is the track record of Netcentric Technology, LLC in performing similar federal IT services contracts?

Assessing the track record of Netcentric Technology, LLC requires a review of their past performance on federal contracts, particularly those involving computer systems design and IT support. Information from sources like the Contractor Performance Assessment Reporting System (CPARS) would be crucial. Key indicators include past performance ratings, any history of contract disputes or terminations, and the successful completion of projects with similar scope and complexity. Without specific CPARS data or a detailed contract history, it's difficult to definitively gauge their reliability and capability for this significant $163M award. However, securing a definitive contract of this magnitude suggests they have met certain pre-qualification criteria and demonstrated some level of competence to the Department of State.

How does the awarded value compare to similar IT systems design contracts within the Department of State?

Comparing the $163M value of this contract to similar IT systems design contracts within the Department of State requires access to historical contract data and a clear definition of 'similar.' The NAICS code 541512 is broad, encompassing various services. To make a meaningful comparison, one would need to identify contracts with comparable scope, duration, and service requirements. Factors like the number of users supported, the criticality of the systems, and the specific technologies involved significantly influence contract value. A preliminary assessment suggests $163M over approximately six years is a substantial investment, indicating a significant scope of work, potentially involving large-scale system design, integration, or modernization efforts critical to the Department's operations.

What are the primary risks associated with a 'LABOR HOURS' contract type for computer systems design services?

The primary risk associated with a 'LABOR HOURS' contract type, like the one awarded to Netcentric Technology, LLC, is the potential for cost overruns. Unlike fixed-price contracts, 'LABOR HOURS' contracts reimburse the contractor based on the actual hours worked by their personnel at pre-negotiated rates. This structure can lead to increased costs if project timelines are extended, if more labor hours are required than initially estimated, or if labor rates are higher than anticipated. Effective oversight, rigorous monitoring of hours worked, and strong project management are essential to mitigate these risks and ensure the government receives good value. Without such controls, the total cost could significantly exceed the initial estimate.

What does the 'Full and Open Competition After Exclusion of Sources' procurement method imply for price discovery?

The 'Full and Open Competition After Exclusion of Sources' method implies a nuanced approach to competition. While it aims for broad participation, the 'exclusion of sources' clause indicates that certain potential bidders were deliberately prevented from participating. This could be due to specific technical requirements, past performance issues with certain vendors, or national security considerations. While it is more competitive than a sole-source award, the exclusion limits the number of potential bidders and may reduce the intensity of price competition compared to a truly unrestricted 'full and open' competition. The government might achieve its specific needs but potentially at a higher cost than if the field of bidders had been wider.

How might the long duration of this contract (over 6 years) impact its effectiveness and cost?

The long duration of this contract, spanning over six years, presents both potential benefits and significant risks. On the positive side, it offers stability and continuity of service for the Department of State, allowing for long-term planning and the development of deep institutional knowledge by the contractor. However, it also carries risks related to technological obsolescence, as IT landscapes evolve rapidly. The government might lock into potentially outdated technologies or methodologies. Furthermore, market prices for IT services can fluctuate over such a long period, potentially leading to the government paying above-market rates in later years if the contract doesn't include robust price adjustment mechanisms. Managing scope creep and ensuring the contract remains relevant to evolving needs are critical.

What are the potential implications for workforce development within the Department of State related to this contract?

This contract primarily focuses on external service delivery by Netcentric Technology, LLC, suggesting that the core IT systems design work will be performed by the contractor's staff. However, it has implications for the Department of State's internal workforce. The Department will need personnel skilled in contract management, oversight, and technical evaluation to effectively manage Netcentric Technology, LLC's performance. There may also be a need for internal IT staff to collaborate with the contractor, integrate delivered solutions, and maintain the systems post-deployment. The contract could potentially reduce the need for certain in-house technical design roles while increasing demand for strategic IT planning and vendor management expertise within the Department.

Industry Classification

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

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: SAQMMA16R0029

Offers Received: 7

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Parent Company: Arctic Slope Regional Corporation

Address: 3349 RTE 138 BLDG A 2ND FL, WALL, NJ, 07719

Business Categories: Alaskan Native Corporation Owned Firm, Category Business, Limited Liability Corporation, Minority Owned Business, Native American Owned Business, Partnership or Limited Liability Partnership, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $169,742,563

Exercised Options: $169,742,563

Current Obligation: $163,017,801

Subaward Activity

Number of Subawards: 75

Total Subaward Amount: $25,273,711

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline