SEC awards $3.4M for DPS O&M Support to CGI Federal Inc., a sole-source contract

Contract Overview

Contract Amount: $3,424,219 ($3.4M)

Contractor: CGI Federal Inc.

Awarding Agency: Securities and Exchange Commission

Start Date: 2026-02-18

End Date: 2027-02-17

Contract Duration: 364 days

Daily Burn Rate: $9.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DISGORGEMENT AND PENALTY SYSTEM (DPS) OPERATIONS AND MAINTENANCE (O&M) SUPPORT

Place of Performance

Location: FAIRFAX, FAIRFAX County, VIRGINIA, 22033

State: Virginia Government Spending

Plain-Language Summary

Securities and Exchange Commission obligated $3.4 million to CGI FEDERAL INC. for work described as: DISGORGEMENT AND PENALTY SYSTEM (DPS) OPERATIONS AND MAINTENANCE (O&M) SUPPORT Key points: 1. Contract focuses on essential operations and maintenance for the Disgorgement and Penalty System. 2. Sole-source award raises questions about potential cost efficiencies and market alternatives. 3. Contract duration of one year suggests a need for ongoing support or a bridge to a future solution. 4. The IT services sector is characterized by rapid technological change, requiring adaptable support. 5. Performance context is critical to ensure the DPS remains operational and secure.

Value Assessment

Rating: questionable

The contract value of $3.42 million for one year of IT operations and maintenance support appears to be within a reasonable range for specialized systems. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or assess if the government received the best possible value. The absence of competition limits the ability to compare pricing structures and service level agreements offered by other potential vendors. Further analysis would require understanding the specific technical requirements and the uniqueness of CGI Federal's solution.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, CGI Federal Inc., was solicited. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified contractors. Sole-source awards are generally justified when only one vendor possesses the necessary capabilities, proprietary technology, or when urgency dictates a rapid award. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may not benefit from the cost savings that typically arise from a competitive bidding environment. The absence of multiple bids means the government could be paying a premium for the services provided.

Public Impact

The Securities and Exchange Commission (SEC) benefits directly through the continued operation of its Disgorgement and Penalty System. Essential IT services, including operations and maintenance, are delivered to support the SEC's enforcement and regulatory functions. The geographic impact is primarily within the SEC's operational centers, likely in Washington D.C. and other key offices. Workforce implications are minimal for the public, but critical for the internal IT staff supporting the DPS.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can limit innovation by not exploring alternative solutions from the market.
Dependence on a single vendor for critical system maintenance can create long-term risks.

Positive Signals

CGI Federal Inc. is an established government contractor with experience in IT services.
The contract is for essential operations and maintenance, ensuring continuity of critical government functions.
The firm-fixed-price contract type provides cost certainty for the government.

Sector Analysis

The IT services sector, particularly custom computer systems design and related services (NAICS 541512), is a significant area of federal spending. This contract falls within the broader category of IT support services, which are crucial for government agencies to maintain and operate complex systems. The market for such services is competitive, with many firms offering specialized expertise. However, for highly specific or legacy systems, sole-source or limited competition awards can occur. Benchmarking requires comparing the scope of work and service levels to similar O&M contracts for specialized government IT systems.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature of the award, there are no direct subcontracting opportunities for small businesses mandated by this specific contract. The impact on the small business ecosystem is neutral, as it does not actively promote or hinder small business participation in this instance.

Oversight & Accountability

Oversight for this contract will be managed by the Securities and Exchange Commission's contracting officers and program managers. Accountability measures are embedded within the firm-fixed-price contract terms, requiring CGI Federal Inc. to deliver specified services. Transparency is limited due to the sole-source nature of the award, as the justification and details of the procurement are not publicly debated through a competitive process. The SEC's Office of Inspector General may conduct audits or investigations if concerns arise regarding performance or cost.

Related Government Programs

SEC IT Modernization Efforts
Financial Systems Operations and Maintenance
Government IT Services Contracts
Disgorgement and Penalty Systems

Risk Flags

Sole-source award lacks competitive pricing.
Potential for vendor lock-in.
Limited transparency in procurement.

Frequently Asked Questions

What is this federal contract paying for?

Securities and Exchange Commission awarded $3.4 million to CGI FEDERAL INC.. DISGORGEMENT AND PENALTY SYSTEM (DPS) OPERATIONS AND MAINTENANCE (O&M) SUPPORT

Who is the contractor on this award?

The obligated recipient is CGI FEDERAL INC..

Which agency awarded this contract?

Awarding agency: Securities and Exchange Commission (Securities and Exchange Commission).

What is the total obligated amount?

The obligated amount is $3.4 million.

What is the period of performance?

Start: 2026-02-18. End: 2027-02-17.

What is the specific nature of the Disgorgement and Penalty System (DPS) and why is its O&M support critical for the SEC?

The Disgorgement and Penalty System (DPS) is a crucial component of the Securities and Exchange Commission's (SEC) enforcement and regulatory framework. It is used to manage and track funds collected from individuals and entities found to have violated securities laws. These funds, often referred to as disgorgement, are typically ordered to be paid back to harmed investors or used for public benefit. The system's operations and maintenance (O&M) are critical because any downtime or malfunction could impede the SEC's ability to effectively manage these financial recoveries, potentially delaying restitution to victims or the proper allocation of penalty funds. Ensuring the DPS is operational, secure, and efficient is paramount for the SEC to fulfill its mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.

What are the justifications for awarding this contract on a sole-source basis to CGI Federal Inc.?

Sole-source contract awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available or capable of providing the required services. For this contract, the justification for a sole-source award to CGI Federal Inc. likely stems from factors like proprietary knowledge of the existing DPS system, unique technical expertise required for its maintenance, or a need for continuity of operations that could be disrupted by transitioning to a new vendor. Without access to the specific Justification for Other Than Full and Open Competition (JOFOC) document, the precise reasons remain speculative. However, common justifications include the need to maintain compatibility with existing infrastructure, specialized skills possessed by the incumbent contractor, or urgent requirements where a competitive process would be impractical or detrimental to the government's interests.

How does the firm-fixed-price (FFP) contract type benefit the SEC in this scenario?

The firm-fixed-price (FFP) contract type is generally advantageous for the government when the scope of work is well-defined and the risks of cost overruns are manageable. In this case, awarding the Disgorgement and Penalty System (DPS) O&M support on an FFP basis provides the SEC with cost certainty. CGI Federal Inc. is obligated to perform the specified services for the agreed-upon price, regardless of their actual costs incurred. This shifts the risk of cost overruns from the government to the contractor. For the SEC, this means a predictable expenditure for a critical IT support function, allowing for more accurate budgeting and financial planning. It also incentivizes the contractor to manage its resources efficiently to maintain profitability.

What are the potential risks associated with a sole-source IT O&M contract, and how might they be mitigated?

Sole-source IT O&M contracts carry several potential risks. Firstly, the lack of competition can lead to higher prices than might be achieved through a competitive process, as the contractor faces less pressure to offer the most cost-effective solution. Secondly, there's a risk of vendor lock-in, where the government becomes overly reliant on a single provider, making it difficult and costly to switch vendors in the future. Thirdly, without market comparison, the quality and efficiency of the services might not be optimized. Mitigation strategies include rigorous performance monitoring, establishing clear service level agreements (SLAs), conducting regular market research to assess potential alternatives, and potentially negotiating shorter contract terms or incorporating options for future competition to encourage ongoing performance improvements and cost management by the incumbent.

How does this contract align with the SEC's broader IT modernization or system sustainment strategies?

This contract for Disgorgement and Penalty System (DPS) Operations and Maintenance (O&M) support likely aligns with the SEC's broader strategy of ensuring the reliable and secure functioning of its critical IT infrastructure. While the contract itself is for sustainment of an existing system, it could serve multiple strategic purposes. It might be a necessary step to maintain operational continuity while the SEC plans for a future modernization or replacement of the DPS. Alternatively, it could be part of a strategy to keep the current system fully functional and secure until its end-of-life, ensuring no disruption to enforcement activities. The one-year duration suggests it may be a bridge contract or a standard annual sustainment effort, indicating that the SEC is actively managing the lifecycle of its IT assets, whether through ongoing maintenance or planning for future upgrades.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 50310226R0014

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Timken Company

Address: 12601 FAIR LAKES CIR, FAIRFAX, VA, 22033

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

Financial Breakdown

Contract Ceiling: $3,424,219

Exercised Options: $3,424,219

Current Obligation: $3,424,219

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $297,887

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 50310223D0002

IDV Type: IDC

Timeline