State Department's $213M IT services contract awarded to KCI-Acuity, LLC, faces scrutiny over value and competition

Contract Overview

Contract Amount: $213,043,761 ($213.0M)

Contractor: Kci-Acuity, LLC

Awarding Agency: Department of State

Start Date: 2019-09-16

End Date: 2024-08-30

Contract Duration: 1,810 days

Daily Burn Rate: $117.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: BUREAU OF INFORMATION RESOURCE MANAGEMENT (IRM) SIO APPLICATION SERVICES TASK ORDER

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20006

State: District of Columbia Government Spending

Plain-Language Summary

Department of State obligated $213.0 million to KCI-ACUITY, LLC for work described as: BUREAU OF INFORMATION RESOURCE MANAGEMENT (IRM) SIO APPLICATION SERVICES TASK ORDER Key points: 1. The contract's significant value raises questions about cost-effectiveness and potential for better pricing. 2. Limited competition dynamics may have influenced the final award price. 3. The Time and Materials pricing structure presents inherent risks for cost control. 4. Performance context is crucial to understand if the services delivered justify the expenditure. 5. This contract falls within the IT services sector, a major area of federal spending. 6. The duration of the contract suggests a long-term need for these IT services.

Value Assessment

Rating: fair

The contract's total value of over $213 million over its period of performance is substantial. Benchmarking against similar IT services contracts for application development and maintenance within the federal government is necessary to assess value for money. The Time and Materials (T&M) pricing model, while flexible, can lead to cost overruns if not managed rigorously, suggesting a potential for less predictable value compared to fixed-price contracts. Further analysis of the specific services rendered and their impact on the Bureau of Information Resource Management's mission would provide a clearer picture of the overall value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while competition was sought, certain sources were excluded. The data indicates 5 offers were received. The level of competition, with 5 bidders, is moderate but the exclusion of sources warrants further investigation into the rationale behind it. This could potentially limit the range of innovative solutions and competitive pricing available to the government.

Taxpayer Impact: A moderate level of competition, especially with exclusions, may result in higher costs for taxpayers compared to a truly open and unrestricted competition. It is important to ensure that the exclusion criteria were justified and did not unduly restrict the bidder pool.

Public Impact

The Bureau of Information Resource Management (IRM) is the primary beneficiary, receiving critical IT application services. The contract supports the development, maintenance, and modernization of essential government IT applications. Services are likely concentrated in the Washington D.C. metropolitan area, given the contract's place of performance. This contract supports IT professionals and potentially other roles within KCI-ACUITY, LLC and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials pricing can lead to uncontrolled cost escalation if not closely monitored.
The 'after exclusion of sources' clause requires scrutiny to ensure fair competition.
The significant contract value necessitates robust oversight to prevent waste or fraud.
Long contract duration increases the risk of technology obsolescence or changing requirements.

Positive Signals

Awarded to a single contractor suggests a focused relationship and potential for specialized expertise.
The receipt of 5 offers indicates some level of market interest and potential for competitive tension.
The contract supports critical IT functions for a major federal agency.

Sector Analysis

This contract falls within the Information Technology (IT) services sector, specifically Computer Systems Design Services. The federal IT services market is vast, with agencies consistently investing in application development, maintenance, and modernization. Comparable spending benchmarks would involve analyzing other large-scale IT service contracts awarded by agencies like the Department of State or other cabinet-level departments for similar scope and duration. The market is characterized by a mix of large prime contractors and specialized small businesses, with significant competition for major contract vehicles.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a small business set-aside. However, the prime contractor, KCI-ACUITY, LLC, may choose to subcontract portions of the work to small businesses as part of its overall business strategy or to meet broader federal subcontracting goals, though this is not mandated by the contract type.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of State's Bureau of Information Resource Management (IRM) contracting officers and program managers. Accountability measures would be embedded in the contract's performance work statement, requiring adherence to service level agreements and delivery schedules. Transparency is facilitated through federal procurement databases like FPDS-NG, where contract details are reported. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

IT Application Development Services
Computer Systems Design Services
Department of State IT Modernization Efforts
Federal IT Services Contracts
Time and Materials Contracts
Large Scale IT Service Delivery

Risk Flags

Potential for cost overruns due to Time and Materials pricing.
Limited competition may have impacted price discovery.
Need for robust oversight due to high contract value.
Risk of technology obsolescence over the contract's long duration.

Frequently Asked Questions

What is this federal contract paying for?

Department of State awarded $213.0 million to KCI-ACUITY, LLC. BUREAU OF INFORMATION RESOURCE MANAGEMENT (IRM) SIO APPLICATION SERVICES TASK ORDER

Who is the contractor on this award?

The obligated recipient is KCI-ACUITY, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $213.0 million.

What is the period of performance?

Start: 2019-09-16. End: 2024-08-30.

What is the track record of KCI-ACUITY, LLC with the Department of State and other federal agencies?

A thorough review of KCI-ACUITY, LLC's contract history with the Department of State and other federal agencies is essential. This includes examining past performance evaluations, any documented disputes or contract terminations, and the types and values of previous awards. Understanding their performance on similar IT services contracts, particularly those involving application development and maintenance, will provide insight into their capabilities and reliability. Data from the Federal Procurement Data System (FPDS) can be used to identify past awards, agencies served, and contract values, offering a quantitative basis for assessing their track record. A positive track record with consistent delivery and client satisfaction would mitigate some risks associated with this large contract.

How does the pricing structure of this contract compare to similar IT services contracts awarded by the Department of State?

The Time and Materials (T&M) pricing structure of this $213 million contract warrants comparison with similar IT services contracts awarded by the Department of State. T&M contracts can be advantageous for requirements that are not well-defined upfront, but they carry a higher risk of cost escalation compared to fixed-price contracts. Benchmarking would involve analyzing the average hourly rates for various labor categories (e.g., developers, project managers, analysts) and the typical overhead and profit margins applied in comparable State Department contracts. If KCI-ACUITY, LLC's rates appear significantly higher than the established benchmarks, it could indicate a lack of competitive pricing pressure or an inefficiently structured contract. Conversely, if rates are in line with market averages, the value proposition is more defensible, though still subject to effective cost control.

What are the specific risks associated with the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type?

The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' award type presents specific risks related to competition and potential price inflation. While it signifies an attempt at open competition, the exclusion of certain sources implies that the government had specific reasons for limiting the bidder pool. The risk lies in whether these exclusions were justified and adequately documented. If the exclusions were arbitrary or overly restrictive, it could have artificially limited the number of capable bidders, thereby reducing competitive pressure and potentially leading to a higher contract price than would have been achieved in a truly unrestricted competition. Furthermore, it raises questions about whether all innovative solutions and cost-saving approaches from the excluded sources were considered, potentially impacting the overall value and effectiveness of the awarded contract.

How has the Bureau of Information Resource Management (IRM) managed IT services contracts of this magnitude in the past?

Examining the Department of State's Bureau of Information Resource Management (IRM) past management of large-scale IT services contracts is crucial for assessing the oversight and effectiveness of this current award. This involves reviewing historical data on contract performance, cost control measures, and successful delivery of IT services for similar programs. Understanding how IRM has handled challenges such as scope creep, vendor performance issues, and budget adherence on previous large contracts will provide context for the current contract's management. If IRM has a strong track record of effectively overseeing complex IT procurements, it suggests a higher likelihood of success for the KCI-ACUITY, LLC contract. Conversely, a history of difficulties could indicate potential systemic challenges in managing such significant IT investments.

What is the historical spending trend for IT application services within the Department of State?

Analyzing the historical spending trend for IT application services within the Department of State provides essential context for evaluating the $213 million award to KCI-ACUITY, LLC. This involves examining annual or multi-year spending data on IT services, specifically focusing on application development, maintenance, and support. Understanding whether spending in this category has been increasing, decreasing, or remaining stable can indicate agency priorities and budget pressures. A significant increase in spending might suggest new initiatives or growing needs, while stable or decreasing spending could imply efficiency gains or budget constraints. Comparing the current contract's value against this historical trend helps determine if it represents a typical investment, an expansion, or a potential outlier, informing assessments of its financial justification and strategic alignment.

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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 202 CHURCH ST SE STE 515, LEESBURG, VA, 20175

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Minority Owned Business, Other Minority Owned Business, SBA Certified 8 a Joint Venture, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $234,320,658

Exercised Options: $218,455,613

Current Obligation: $213,043,761

Actual Outlays: $100,551,421

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS00Q17GWD2293

IDV Type: GWAC

Timeline