State Department's $55.8M IT services contract awarded to HCI Management Services Company shows potential value concerns

Contract Overview

Contract Amount: $55,805,181 ($55.8M)

Contractor: HCI Management Services Company

Awarding Agency: Department of State

Start Date: 2019-04-01

End Date: 2025-09-30

Contract Duration: 2,374 days

Daily Burn Rate: $23.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: OBO IRM TASK ORDER FOR PROFESSIONAL IT-RELATED SERVICES

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22209

State: Virginia Government Spending

Plain-Language Summary

Department of State obligated $55.8 million to HCI MANAGEMENT SERVICES COMPANY for work described as: OBO IRM TASK ORDER FOR PROFESSIONAL IT-RELATED SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Time and Materials pricing structure can lead to cost overruns if not closely managed. 3. The contract duration extends to September 2025, indicating a long-term need for these services. 4. The North American Industry Classification System (NAICS) code 541611 suggests management consulting, but the description points to IT-related services, requiring clarification. 5. The contract's value of $55.8 million over its period warrants careful performance monitoring. 6. Lack of competition raises questions about whether the government is receiving the best possible value. 7. The contract is a Delivery Order under an existing contract, suggesting a pre-existing relationship.

Value Assessment

Rating: questionable

The contract's Time and Materials (T&M) pricing structure, combined with a sole-source award, raises concerns about value for money. Without competitive bidding, it is difficult to benchmark pricing against market rates or similar contracts. The total obligated amount of $55.8 million over its term suggests a significant investment. Further analysis would be needed to determine if the rates are reasonable and if the services delivered align with industry standards for IT-related professional services.

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. This limits the number of potential bidders to one, which typically results in less price pressure and potentially higher costs for the government. The absence of competition means that the government did not explore alternative vendors or solutions that might offer better value or pricing.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most competitive pricing available in the market, as there was no opportunity for multiple companies to bid and drive down costs.

Public Impact

The Department of State benefits from IT-related professional services to support its operations. The contract aims to deliver administrative management and general management consulting services, likely focused on IT infrastructure and support. The geographic impact is primarily within the Department of State's operational areas, likely domestic and potentially international. The contract supports the IT workforce within the Department of State or through the contractor's personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potential cost savings.
Time and Materials pricing can lead to cost uncertainty and potential overruns.
The description of services (IT-related) and NAICS code (Management Consulting) appear mismatched, requiring clarification.
Lack of transparency in the procurement process due to sole-source nature.

Positive Signals

Contract supports critical IT services for the Department of State.
Delivery Order structure suggests an existing, potentially vetted, relationship.
Long contract duration indicates a sustained need and potential for stable service delivery.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically management consulting services (NAICS 541611), though the description points to IT services. The IT services market is vast and competitive, with significant government spending. However, sole-source awards in this space can bypass the competitive dynamics that typically drive innovation and cost efficiency. Comparable spending benchmarks for IT professional services vary widely based on scope, duration, and complexity.

Small Business Impact

The provided data indicates that small business participation (ss: false, sb: false) was not a primary consideration for this specific award. There is no indication of a small business set-aside. This means that opportunities for small businesses to participate, either as prime contractors or subcontractors, may be limited unless proactively included by the prime contractor, HCI Management Services Company.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Department of State's contracting officers and program managers. Accountability measures would be tied to performance metrics and deliverables outlined in the contract. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Department of State IT Modernization Programs
Federal IT Professional Services Contracts
Management and Consulting Services for Federal Agencies
IT Support Services for Government Operations

Risk Flags

Sole-source award raises concerns about competition and potential value.
Time and Materials contract type can lead to cost overruns if not managed effectively.
Potential mismatch between NAICS code and service description requires clarification.
Lack of transparency in the procurement process.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $55.8 million to HCI MANAGEMENT SERVICES COMPANY. OBO IRM TASK ORDER FOR PROFESSIONAL IT-RELATED SERVICES

Who is the contractor on this award?

The obligated recipient is HCI MANAGEMENT SERVICES COMPANY.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $55.8 million.

What is the period of performance?

Start: 2019-04-01. End: 2025-09-30.

What is the specific IT-related service being provided under this contract, and how does it align with the NAICS code 541611 (Administrative Management and General Management Consulting Services)?

The contract description states 'OBO IRM TASK ORDER FOR PROFESSIONAL IT-RELATED SERVICES,' while the NAICS code is 541611, which typically covers administrative management and general management consulting. This discrepancy suggests a potential misalignment or a broad interpretation of the NAICS code. It is possible that the 'IT-related services' encompass strategic IT consulting, management of IT projects, or IT policy development, which could fall under management consulting. However, without further details on the specific tasks performed, it's difficult to definitively reconcile the service description with the classification. Clarification from the agency on how these IT services are categorized under management consulting would be beneficial for accurate sector analysis and benchmarking.

Given the sole-source award, what steps were taken by the Department of State to ensure fair and reasonable pricing for these IT services?

When a contract is awarded on a sole-source basis, the procuring agency is responsible for justifying the lack of competition and ensuring fair and reasonable pricing. This typically involves conducting market research to confirm that only one source is capable of meeting the requirement, or that a compelling reason exists to award to a single source (e.g., follow-on to a competitive award, unique capabilities). For pricing, the agency would likely rely on historical pricing data from previous contracts with the same vendor, comparison to similar government contracts (if available), or require the contractor to submit detailed cost proposals that are then analyzed for reasonableness. Without access to the agency's justification and approval (J&A) document for the sole-source award and the cost/price analysis performed, it is difficult to assess the rigor of these steps.

What are the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract, and how is performance being monitored?

The provided data does not include specific details on Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. Typically, for IT services contracts, such metrics would be defined in the contract's Statement of Work (SOW) or Performance Work Statement (PWS). These might include metrics related to system uptime, response times for IT support, project completion rates, adherence to security protocols, or user satisfaction. Performance monitoring is usually conducted by the Contracting Officer's Representative (COR) or the Contracting Officer (CO) through regular progress reports, site visits, and performance reviews. The effectiveness of oversight depends on the clarity of the SOW/PWS and the diligence of the government's performance management team.

How does the total contract value of $55.8 million compare to other IT services contracts awarded by the Department of State or similar federal agencies?

The total contract value of $55.8 million over approximately six years (April 2019 to September 2025) represents a significant investment. To benchmark this value, one would need to compare it against similar IT professional services contracts awarded by the Department of State or other large federal agencies like the Department of Defense or GSA. Factors such as the specific IT services (e.g., cybersecurity, cloud migration, software development, help desk support), contract type (e.g., Time & Materials, Firm-Fixed-Price), and duration would need to be considered. Generally, large-scale IT support and consulting contracts for major federal agencies can range from tens to hundreds of millions of dollars. Without more specific details on the scope of work, a precise comparison is challenging, but $55.8 million is within the expected range for substantial IT support over several years for a large agency.

What is the track record of HCI Management Services Company in performing similar IT services contracts for the federal government?

Information regarding HCI Management Services Company's specific track record on similar IT services contracts is not detailed in the provided data. A comprehensive assessment would require reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), contract history, and any reported issues or successes on previous federal awards. As this is a Delivery Order under a larger contract, understanding the performance on the parent contract would also be crucial. Federal agencies typically consider past performance as a key factor in source selection, especially for follow-on contracts or task orders. A review of federal procurement databases and performance records would be necessary to evaluate HCI Management Services Company's history in delivering IT-related professional services.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services

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

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 19AQMM19Q0034

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Ho-Chunk, Inc.

Address: 1 MISSION DR, WINNEBAGO, NE, 68071

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Tax Exempt, HUBZone Firm, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Tribally Owned Firm, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $124,292,528

Exercised Options: $116,951,634

Current Obligation: $55,805,181

Actual Outlays: $18,808,563

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 19AQMM19D0039

IDV Type: IDC

Timeline