DoD's $37.2M desktop and laptop purchase for HPI Federal LLC shows fair value with 5 bidders

Contract Overview

Contract Amount: $37,226,563 ($37.2M)

Contractor: HPI Federal LLC

Awarding Agency: Department of Defense

Start Date: 2016-09-27

End Date: 2017-01-18

Contract Duration: 113 days

Daily Burn Rate: $329.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: G6 EOY DESKTOPS&LAPTOPS

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22204

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $37.2 million to HPI FEDERAL LLC for work described as: G6 EOY DESKTOPS&LAPTOPS Key points: 1. The contract represents a significant investment in IT hardware for the Department of Defense. 2. Competition was robust, with five bids received, suggesting a healthy market for these goods. 3. The fixed-price nature of the contract helps mitigate cost overrun risks. 4. Performance duration was relatively short, indicating a focused procurement for immediate needs. 5. The procurement falls under 'Other Computer Peripheral Equipment Manufacturing', a broad category. 6. The value appears reasonable given the quantity and type of equipment procured.

Value Assessment

Rating: good

The total award amount of $37.2 million for desktops and laptops appears to be within a reasonable range for a government procurement of this scale. Benchmarking against similar IT hardware contracts awarded by the Department of Defense or other federal agencies would provide a more precise value-for-money assessment. However, the firm fixed-price contract type suggests that the pricing was determined upfront and is less susceptible to fluctuations, which is a positive indicator for cost control. The number of bidders also suggests that the pricing was likely competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of five bidders suggests a healthy level of competition for this requirement. A higher number of bidders generally leads to more competitive pricing and a wider selection of solutions for the government. The agency's ability to attract multiple bids implies that the market is responsive and that the solicitation was well-defined.

Taxpayer Impact: The full and open competition process, with five bidders, likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition award. This competitive environment helps ensure that government funds are used efficiently.

Public Impact

The primary beneficiaries are Department of Defense personnel who will receive updated desktop and laptop computers. The services delivered include the provision of essential IT hardware to support military and civilian operations. The geographic impact is likely concentrated within the areas where the Department of Defense operates, primarily in Virginia where the contractor is located. Workforce implications include the potential for IT support roles related to deployment and maintenance, as well as the manufacturing and supply chain jobs associated with producing the hardware.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for obsolescence of hardware within the contract's performance period.
Dependence on a single contractor for a significant hardware refresh.
Ensuring compatibility with existing DoD IT infrastructure.

Positive Signals

Firm fixed-price contract limits cost escalation.
Full and open competition suggests competitive pricing.
Award to a contractor with a presence in Virginia may offer logistical advantages.

Sector Analysis

This contract falls within the broader Information Technology sector, specifically concerning the procurement of computer hardware. The market for enterprise-grade desktops and laptops is substantial, with numerous manufacturers and resellers competing for government contracts. Federal agencies are significant buyers in this market, often requiring specific configurations and security features. Comparable spending benchmarks would involve analyzing other large-scale federal IT hardware procurements, particularly those for end-user devices.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award went to HPI Federal LLC, which is likely a larger entity given the contract value. The absence of small business set-asides means that opportunities for smaller firms in this specific procurement were limited, though they may participate in the broader IT hardware market or as subcontractors to larger prime contractors.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. As a delivery order under a larger contract vehicle, its execution would be monitored by the Department of the Army contracting officers. Transparency is generally maintained through contract databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract's performance or award.

Related Government Programs

General Services Administration (GSA) Schedule IT Hardware
Department of Defense Enterprise IT Procurement
Federal Desktop Computer Procurement
Computer Peripheral Equipment Manufacturing Contracts

Risk Flags

Potential for technology obsolescence
Supply chain risks
Cybersecurity vulnerabilities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.2 million to HPI FEDERAL LLC. G6 EOY DESKTOPS&LAPTOPS

Who is the contractor on this award?

The obligated recipient is HPI FEDERAL LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $37.2 million.

What is the period of performance?

Start: 2016-09-27. End: 2017-01-18.

What is the track record of HPI Federal LLC in fulfilling government contracts, particularly for IT hardware?

HPI Federal LLC has a history of receiving federal contracts, primarily within the Department of Defense. Analyzing their past performance on similar IT hardware procurements would reveal their reliability in terms of delivery, quality, and adherence to contract terms. Specific metrics such as past performance ratings, on-time delivery rates, and any documented disputes or contract modifications would provide a comprehensive view of their track record. A review of their contract history can indicate whether they are a consistent and dependable supplier for the government's IT needs.

How does the per-unit cost of these desktops and laptops compare to commercial market rates or other federal contracts?

Without specific unit details (e.g., model, specifications), a precise per-unit cost comparison is challenging. However, the total award of $37.2 million for an unspecified number of desktops and laptops suggests an average unit price. Federal procurement often includes markups for support, warranty, and specific configurations, which can make direct comparison to retail prices difficult. Benchmarking against similar government contracts awarded through GSA Schedules or other competitive vehicles for comparable hardware would be the most effective method to assess value. If the average unit price falls within or below the range of these benchmarks, it indicates good value.

What are the primary risks associated with this type of IT hardware procurement for the Department of Defense?

Key risks include the rapid obsolescence of technology, potential compatibility issues with existing infrastructure, cybersecurity vulnerabilities in the hardware, and supply chain disruptions. For a procurement of desktops and laptops, ensuring that the chosen models meet current and future operational requirements, including security standards, is crucial. Delays in delivery can impact operational readiness. Furthermore, the long-term support and maintenance costs, even if not part of the initial award, represent a potential financial risk that needs to be managed.

How effective is the firm fixed-price contract type in managing costs for IT hardware procurements like this one?

The firm fixed-price (FFP) contract type is generally considered effective for managing costs in IT hardware procurements, especially when the scope of work and specifications are well-defined. It shifts the risk of cost overruns to the contractor, providing budget certainty for the government. For standard items like desktops and laptops, where specifications are clear, FFP helps prevent unexpected increases in price due to contractor inefficiencies or market fluctuations. This contrasts with cost-reimbursement contracts, which offer less price certainty.

What are the historical spending patterns for similar IT hardware procurements by the Department of the Army?

The Department of the Army, as part of the DoD, historically spends significant amounts on IT hardware, including desktops, laptops, and peripherals, to maintain its vast operational network. Annual spending can fluctuate based on modernization cycles, budget allocations, and specific mission requirements. Analyzing historical data from sources like FPDS can reveal trends in contract types (e.g., FFP, IDIQ), competition levels, and average award values for similar procurements. This context helps in evaluating whether the current $37.2 million award is consistent with past spending or represents a significant deviation.

What is the typical duration for delivery orders of desktops and laptops under full and open competition?

The duration for delivery orders of desktops and laptops can vary significantly based on the quantity, complexity of specifications, and the contractor's production and delivery capabilities. For a procurement valued at $37.2 million, with an end date of January 2017 and a start date of September 2016, the duration was approximately 113 days (roughly 3.7 months). This is a relatively short period, suggesting either a streamlined procurement process, readily available stock from the contractor, or a phased delivery schedule within that timeframe. Typical durations can range from a few weeks for smaller orders to several months for large-scale deployments.

Industry Classification

NAICS: Manufacturing › Computer and Peripheral Equipment Manufacturing › Other Computer Peripheral Equipment Manufacturing

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: HP, Inc.

Address: 1299 PENNSYLVANIA AVE NW STE 475, WASHINGTON, DC, 20004

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $37,226,563

Exercised Options: $37,226,563

Current Obligation: $37,226,563

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91QUZ06D0004

IDV Type: IDC

Timeline