VA awards $78M IT operations contract to SAIC, highlighting need for robust computer systems design

Contract Overview

Contract Amount: $78,343,280 ($78.3M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-08-01

End Date: 2026-07-31

Contract Duration: 729 days

Daily Burn Rate: $107.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: FINANCIAL SERVICES CENTER IT OPERATIONS SUPPORT SERVICES

Place of Performance

Location: AUSTIN, TRAVIS County, TEXAS, 78744

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $78.3 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: FINANCIAL SERVICES CENTER IT OPERATIONS SUPPORT SERVICES Key points: 1. Contract focuses on essential IT operations support, crucial for maintaining VA's digital infrastructure. 2. SAIC, a large defense contractor, brings significant experience in IT services. 3. The contract's Time and Materials pricing structure may present cost control challenges. 4. Full and open competition suggests a competitive bidding process, potentially leading to better value. 5. The duration of the contract (729 days) indicates a long-term need for these services. 6. This award falls within the broader category of IT services, a significant area of federal spending.

Value Assessment

Rating: good

The contract value of $78.3 million over approximately two years appears reasonable for comprehensive IT operations support. Benchmarking against similar large-scale IT service contracts for federal agencies suggests this pricing is within expected ranges, especially considering the scope of services likely required by the Department of Veterans Affairs. The Time and Materials (T&M) pricing model, while offering flexibility, warrants close monitoring to ensure costs remain aligned with project needs and do not escalate beyond initial estimates. The award to SAIC, a well-established contractor, suggests a level of confidence in their ability to deliver the required services effectively.

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 5 bids suggests a healthy level of competition for this significant IT support requirement. A competitive process like this generally allows for price discovery and encourages offerors to provide their best value proposals, potentially benefiting the government through more favorable pricing and service offerings.

Taxpayer Impact: The full and open competition ensures that taxpayer dollars are likely being used efficiently, as multiple companies vied to provide these critical IT services at the most competitive rates.

Public Impact

Veterans will benefit from improved reliability and performance of VA's IT systems, leading to better access to healthcare and benefits. The contract ensures the continuity of essential IT operations, including network management, system maintenance, and technical support. Services are primarily delivered within Texas, supporting the VA's operational footprint in the region. The contract supports skilled IT professionals, potentially creating or sustaining jobs in the technology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials (T&M) pricing can lead to cost overruns if not managed diligently.
Reliance on a single large contractor for critical IT infrastructure may pose long-term dependency risks.
The specific performance metrics and service level agreements (SLAs) need rigorous oversight to ensure quality.

Positive Signals

Awarded through full and open competition, indicating a competitive market for these services.
Contractor (SAIC) has a strong track record in providing IT services to government agencies.
The contract addresses a critical need for IT operations support within the VA.

Sector Analysis

This contract falls within the Computer Systems Design Services sector (NAICS 541512), a vital component of the broader Information Technology (IT) industry. This sector encompasses establishments primarily engaged in planning and designing computer systems that integrate hardware, software, and communication technologies. Federal spending in IT services is substantial, driven by the need to modernize infrastructure, enhance cybersecurity, and improve service delivery across all agencies. Comparable contracts often involve significant dollar values and long durations, reflecting the complexity and criticality of maintaining government IT operations.

Small Business Impact

This contract was not set aside for small businesses, and the awardee, Science Applications International Corporation (SAIC), is a large prime contractor. While there is no direct small business set-aside, the prime contractor may engage small businesses as subcontractors to fulfill specific aspects of the contract. The extent of small business subcontracting will be a key factor in assessing the broader impact on the small business IT ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Veterans Affairs' contracting officers and program managers. Accountability measures will be embedded within the contract's performance work statement (PWS), including defined service level agreements (SLAs) and reporting requirements. Transparency is typically maintained through contract award databases and public reporting mechanisms, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

VA IT Modernization
Federal Cloud Computing Strategy
IT Operations and Support Services
Computer Systems Design Services
Defense Information Systems Agency (DISA) Contracts

Risk Flags

Potential for cost overruns due to T&M pricing
Contractor performance risk
Cybersecurity vulnerabilities in IT systems
Dependence on a single large contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $78.3 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. FINANCIAL SERVICES CENTER IT OPERATIONS SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $78.3 million.

What is the period of performance?

Start: 2024-08-01. End: 2026-07-31.

What is SAIC's track record with the Department of Veterans Affairs and similar federal agencies for IT operations support?

Science Applications International Corporation (SAIC) has a substantial history of contracting with the Department of Veterans Affairs (VA) and other federal agencies, particularly in the realm of IT services and support. Their portfolio includes numerous contracts for systems integration, cybersecurity, cloud migration, and enterprise IT operations. For the VA specifically, SAIC has been involved in projects aimed at modernizing legacy systems, enhancing electronic health record (EHR) capabilities, and providing network infrastructure support. Their experience often involves managing complex, large-scale IT environments similar to those required for nationwide operations. A review of past performance evaluations and contract histories would provide a detailed understanding of their success rates, adherence to schedules, and overall client satisfaction in delivering comparable services.

How does the $78.3 million contract value compare to similar IT operations support contracts awarded by the VA or other large federal agencies?

The $78.3 million contract value for IT operations support services over approximately two years is substantial and aligns with the typical scale of major IT service contracts awarded to large federal agencies. For context, similar contracts for comprehensive IT infrastructure management, system maintenance, and technical support for agencies like the Department of Defense or the General Services Administration often range from tens to hundreds of millions of dollars annually. The Department of Veterans Affairs, managing a vast network of healthcare facilities and benefits administration systems, requires significant investment in IT. Therefore, this award appears to be within the expected financial parameters for securing robust, long-term IT operational support, reflecting the complexity and critical nature of the services provided.

What are the primary risks associated with the Time and Materials (T&M) pricing structure used in this contract?

The primary risk associated with the Time and Materials (T&M) pricing structure is the potential for cost overruns and a lack of definitive cost control. Unlike fixed-price contracts, T&M contracts reimburse the contractor for the actual labor hours and material costs incurred, plus a fixed fee or profit margin. If the scope of work is not clearly defined, or if project management is weak on either the government or contractor side, the contractor may incur more hours or use more expensive materials than anticipated, leading to a higher final cost. This necessitates rigorous oversight by the government to monitor labor hours, material usage, and ensure that work performed is necessary and efficient. Without strong controls, T&M can become significantly more expensive than initially projected.

How effective is full and open competition in ensuring value for money for this type of IT operations support contract?

Full and open competition is generally considered the most effective method for ensuring value for money in federal contracting, especially for complex IT operations support. By allowing all responsible sources to compete, the government maximizes the pool of potential offerors, fostering a competitive environment that drives down prices and encourages innovation. In this case, with 5 bids received, the Department of Veterans Affairs likely benefited from a range of technical approaches and pricing strategies. This competition pressures bidders to offer their best value, balancing cost with technical capability and past performance. While oversight is still crucial to ensure the chosen solution meets requirements, the competitive process itself is a strong indicator that the government is likely to achieve a favorable outcome for taxpayers.

What are the potential implications of this contract on the VA's ability to deliver services to veterans?

This contract is directly linked to the VA's ability to deliver services to veterans. Reliable and efficient IT operations are the backbone of modern government service delivery, particularly for an agency like the VA that manages sensitive health records, benefits claims, and a vast network of facilities. By ensuring robust IT support, this contract aims to enhance the performance, availability, and security of the systems veterans interact with, whether for scheduling appointments, accessing benefits information, or receiving care. Improved IT infrastructure can lead to faster processing times, reduced system downtime, and a more seamless user experience for both veterans and VA staff, ultimately contributing to better overall service delivery.

How does this contract fit into the broader landscape of federal IT spending and modernization efforts?

This contract represents a significant investment within the federal IT landscape, specifically focused on maintaining and supporting critical IT operations. Federal agencies, including the VA, are continuously engaged in efforts to modernize their IT infrastructure to improve efficiency, enhance cybersecurity, and better serve citizens. Contracts like this, even if focused on ongoing operations, are essential components of modernization. They ensure that the foundational IT systems are stable and well-managed, allowing agencies to then pursue more advanced initiatives such as cloud migration, data analytics, and AI integration. The $78.3 million award underscores the substantial resources dedicated to sustaining the digital backbone of government operations.

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 › IT AND TELECOM - APLLICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 36C10B24R0018

Offers Received: 5

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 12010 SUNSET HILLS RD FL 4, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $205,537,962

Exercised Options: $79,033,340

Current Obligation: $78,343,280

Actual Outlays: $57,147,649

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $69,613,490

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 47QTCK18D0001

IDV Type: GWAC

Timeline