VA awards $444.5M contract for custom computer programming services to Philips North America LLC

Contract Overview

Contract Amount: $4,445,445 ($4.4M)

Contractor: Philips North America LLC

Awarding Agency: Department of Veterans Affairs

Start Date: 2022-03-10

End Date: 2027-03-09

Contract Duration: 1,825 days

Daily Burn Rate: $2.4K/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: ICCA

Place of Performance

Location: CAMBRIDGE, MIDDLESEX County, MASSACHUSETTS, 02141

State: Massachusetts Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $4.4 million to PHILIPS NORTH AMERICA LLC for work described as: ICCA Key points: 1. Contract awarded via a non-competitive process, raising questions about potential cost savings and market responsiveness. 2. The contract duration of 1825 days suggests a long-term need for these services. 3. Fixed-price contract type aims to control costs, but the lack of competition may limit price negotiation. 4. The specific NAICS code 541511 indicates a focus on custom software development. 5. Awarded by the Department of Veterans Affairs, likely supporting critical healthcare IT infrastructure or patient services. 6. The absence of small business set-aside suggests the primary contractor is not a small business, and subcontracting opportunities are not guaranteed.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bidding. Without comparison to other offers or market rates for similar custom programming services, it's difficult to ascertain if the $444.5 million price tag represents a fair market value. The fixed-price nature provides some cost certainty, but the absence of competition means the VA may not have secured the most economical solution available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under the 'NOT COMPETED UNDER SAP' category, indicating it was not competed through the standard simplified acquisition procedures. This suggests a sole-source or limited competition award, likely due to specific circumstances or existing relationships. The lack of open competition limits the number of potential bidders and may result in less aggressive pricing than a fully competed contract.

Taxpayer Impact: Taxpayers may be paying a premium for these services due to the absence of competitive pressure to drive down costs. The VA did not have the opportunity to evaluate multiple proposals and select the best value at the lowest price.

Public Impact

Veterans will benefit from improved or new IT systems and services developed under this contract. The contract supports the delivery of custom computer programming, likely impacting the functionality and efficiency of VA healthcare systems. The geographic impact is national, as the Department of Veterans Affairs serves veterans across the United States. Workforce implications could include the need for specialized IT professionals within the VA or its contractors to manage and implement the custom software.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award raises concerns about transparency and potential for vendor lock-in.
Long contract duration could present risks if technology needs or vendor performance change significantly.

Positive Signals

Fixed-price contract type provides cost certainty for the government.
Award to a known entity (Philips) might imply a level of trust or existing integration.
The contract is for custom programming, suggesting a tailored solution to specific VA needs.

Sector Analysis

The IT services sector, particularly custom computer programming, is a significant area of federal spending. This contract falls within the broader IT services market, which is characterized by rapid technological advancements and a diverse range of specialized providers. Federal agencies often rely on custom software development to meet unique operational requirements that off-the-shelf solutions cannot address. Comparable spending benchmarks for custom programming services vary widely based on complexity, duration, and the specific technologies involved.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and the primary contractor, Philips North America LLC, is likely a large business. There is no explicit information regarding subcontracting plans for small businesses. This means that opportunities for small businesses to participate in this contract may be limited unless the prime contractor voluntarily includes them in their supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Veterans Affairs' contracting officer and program managers. Accountability measures are inherent in the fixed-price contract structure, which obligates the contractor to deliver specific services for an agreed-upon price. Transparency is limited by the sole-source nature of the award; however, contract details are generally available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Veterans Health Administration IT Modernization
Department of Veterans Affairs Electronic Health Record Modernization Program
Federal Health IT Spending
Custom Software Development Contracts

Risk Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $4.4 million to PHILIPS NORTH AMERICA LLC. ICCA

Who is the contractor on this award?

The obligated recipient is PHILIPS NORTH AMERICA LLC.

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 $4.4 million.

What is the period of performance?

Start: 2022-03-10. End: 2027-03-09.

What is the track record of Philips North America LLC in delivering custom computer programming services to the federal government, particularly the Department of Veterans Affairs?

Philips North America LLC has a history of providing various healthcare technology solutions and services, including IT-related offerings, to government agencies. While specific details on their track record for custom computer programming under sole-source awards to the VA are not fully detailed in this data, their broader experience in the healthcare IT sector suggests familiarity with the agency's environment. A deeper dive into past performance reviews, contract modifications, and any reported issues on similar VA contracts would be necessary for a comprehensive assessment. The nature of this specific award, being a large, long-term, fixed-price contract, implies a certain level of confidence from the VA in Philips' capability to deliver the required custom solutions over the contract's lifespan.

How does the estimated value of this contract compare to similar custom computer programming services procured by the VA or other federal agencies?

Direct comparison of the $444.5 million contract value for custom computer programming services is difficult without knowing the specific scope, complexity, and duration of the work. However, large-scale IT development contracts for federal agencies can range from tens to hundreds of millions of dollars. The VA's Electronic Health Record Modernization program, for instance, involves significant IT investments. The lack of competition for this specific contract prevents a direct benchmark against other bids, making it hard to determine if this represents a competitive market price. Analyzing the per-year cost ($444.5M / 5 years = ~$88.9M/year) against industry averages for custom software development of similar scale and complexity would be a more appropriate, albeit still challenging, comparison method.

What are the primary risks associated with a sole-source award of this magnitude for custom computer programming?

The primary risks associated with a sole-source award of this magnitude include potential overpayment due to the absence of competitive pricing, reduced incentive for the contractor to innovate or optimize costs once the contract is secured, and the risk of vendor lock-in. Without competition, the VA may not be receiving the best possible value for its investment. Furthermore, if the contractor's performance falters or if unforeseen technical challenges arise, the VA has limited leverage to renegotiate terms or switch providers without significant disruption and cost. The long duration of the contract also increases the risk of technological obsolescence or misalignment with evolving VA needs if not managed proactively.

What is the expected impact of this contract on the VA's IT infrastructure and service delivery to veterans?

This contract is expected to have a significant impact on the VA's IT infrastructure and, consequently, its service delivery to veterans. As it involves custom computer programming, it likely aims to develop, enhance, or maintain critical software systems. These systems could range from patient management and electronic health records to administrative and operational platforms. The successful execution of this contract should lead to more efficient, reliable, and potentially advanced IT capabilities, which are essential for providing timely and effective healthcare and benefits to veterans. Conversely, any delays or failures in delivering the custom programming could negatively impact these services.

How has the VA's spending on custom computer programming services trended over the past five years, and how does this award fit into that pattern?

Analyzing the VA's spending trends on custom computer programming services over the past five years would require access to historical procurement data beyond this single award. However, federal agencies, including the VA, have consistently invested heavily in IT modernization and custom software development to meet evolving demands and improve service delivery. This $444.5 million award represents a substantial single investment within this category. Its significance lies in its size and the fact that it's a sole-source award, suggesting a specific, perhaps urgent or highly specialized, need that the VA addressed through direct negotiation rather than open competition. Understanding the context of this award within broader VA IT spending patterns would reveal if it's part of a larger strategic initiative or an isolated procurement.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 222 JACOBS ST 3RD FL, CAMBRIDGE, MA, 02141

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $6,223,623

Exercised Options: $4,445,445

Current Obligation: $4,445,445

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 36C10G22A0001

IDV Type: BPA

Timeline