DHS awards $34.3M IT services contract to 24x7 Systems, Inc. for cloud modernization

Contract Overview

Contract Amount: $34,329,374 ($34.3M)

Contractor: 24x7systems, Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2022-09-22

End Date: 2025-05-08

Contract Duration: 959 days

Daily Burn Rate: $35.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: LABOR HOURS

Sector: IT

Official Description: CLOUD MODERNIZATION EFFORT (CME) IT PROFESSIONAL SERVICES

Place of Performance

Location: ASHBURN, LOUDOUN County, VIRGINIA, 20147

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $34.3 million to 24X7SYSTEMS, INC. for work described as: CLOUD MODERNIZATION EFFORT (CME) IT PROFESSIONAL SERVICES Key points: 1. Contract focuses on critical IT professional services for cloud modernization. 2. Competition level indicates a potentially competitive bidding environment. 3. Contract duration of nearly 3 years suggests a significant, ongoing need. 4. The award is a delivery order under a larger contract vehicle. 5. Services are categorized under Custom Computer Programming, a key IT sector. 6. Virginia is the primary location for contract performance. 7. The contract is not set aside for small businesses.

Value Assessment

Rating: good

The contract's value of $34.3 million over approximately 3 years for IT professional services appears reasonable given the scope of cloud modernization. Benchmarking against similar large-scale IT service contracts suggests this figure is within expected ranges. The pricing structure, likely based on labor hours, will be a key factor in assessing overall value for money as the contract progresses. Without specific performance metrics or detailed cost breakdowns, a definitive value assessment is challenging, but the initial indication is positive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that all responsible sources were permitted to submit bids. The number of bidders is not specified, but the 'full and open' designation generally implies a robust competitive process. This approach is intended to foster price discovery and ensure the government receives the best possible value by considering a wide range of qualified vendors.

Taxpayer Impact: Taxpayers benefit from full and open competition through the potential for lower prices and higher quality services due to vendor rivalry. This process helps ensure that public funds are used efficiently by driving down costs and encouraging innovation among contractors.

Public Impact

U.S. Customs and Border Protection (CBP) will benefit from enhanced IT capabilities. Services delivered will support the critical mission of cloud modernization. The primary geographic impact is in Virginia, where the contractor is based. The contract will likely support a workforce of IT professionals, including programmers and system administrators. Improved IT infrastructure can lead to more efficient border security operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if labor hours are not managed effectively.
Dependence on a single contractor for critical cloud modernization services.
Risk of scope creep if requirements are not clearly defined and controlled.

Positive Signals

Awarded through full and open competition, suggesting competitive pricing.
Contract duration indicates a stable, long-term need for these services.
Focus on cloud modernization aligns with government-wide IT modernization goals.

Sector Analysis

This contract falls within the IT professional services sector, specifically focusing on custom computer programming. The market for cloud modernization services is substantial and growing, driven by federal mandates and the desire for more agile, secure, and cost-effective IT infrastructure. Comparable spending benchmarks for large-scale IT modernization projects often run into tens or hundreds of millions of dollars, making this $34.3 million award a significant, but not outlier, investment in this critical area.

Small Business Impact

This contract was not set aside for small businesses, as indicated by the 'sb': false parameter. Consequently, there are no direct subcontracting requirements mandated for small businesses under this specific award. The absence of a small business set-aside means that larger, established firms were likely the primary focus of the competition. This could limit opportunities for small businesses to participate directly in this particular contract, though they may be involved as subcontractors to the prime if the prime contractor chooses to engage them.

Oversight & Accountability

Oversight for this contract will likely be managed by the U.S. Customs and Border Protection (CBP) contracting officers and program managers. Transparency is expected through standard federal procurement reporting mechanisms. Accountability measures will be tied to the performance work statement and delivery schedules. The Department of Homeland Security's Office of Inspector General may conduct audits or investigations if specific concerns arise regarding contract performance or financial management.

Related Government Programs

Cloud Computing Services
IT Professional Services
Custom Computer Programming
Department of Homeland Security IT Modernization

Risk Flags

Potential for cost overruns
Scope creep risk
Technical complexity of cloud modernization

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $34.3 million to 24X7SYSTEMS, INC.. CLOUD MODERNIZATION EFFORT (CME) IT PROFESSIONAL SERVICES

Who is the contractor on this award?

The obligated recipient is 24X7SYSTEMS, INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $34.3 million.

What is the period of performance?

Start: 2022-09-22. End: 2025-05-08.

What is the track record of 24x7 Systems, Inc. with federal contracts, particularly in IT professional services?

A review of federal procurement data indicates that 24x7 Systems, Inc. has a history of receiving federal contracts, primarily within the IT services domain. While specific details on past performance for large-scale cloud modernization efforts are not immediately available from the provided data, their presence in the federal contracting space suggests experience. Further analysis would involve examining their past performance evaluations, contract values, and the types of services rendered on previous awards to assess their capability and reliability for this significant cloud modernization effort. Understanding their history with similar complexity and scale is crucial for evaluating risk.

How does the awarded amount of $34.3 million compare to similar cloud modernization contracts within DHS or other agencies?

The $34.3 million award for cloud modernization IT professional services over approximately 959 days (roughly 2.6 years) is a substantial investment. When compared to similar large-scale IT modernization and cloud migration projects across federal agencies, this figure appears to be within a common range for comprehensive service delivery. Many federal cloud initiatives involve multi-year efforts with budgets often in the tens of millions. For instance, other agencies undertaking significant infrastructure overhauls have awarded contracts in similar or higher value brackets. The specific scope and deliverables will ultimately determine if this represents exceptional or standard value.

What are the primary risks associated with this contract, and how are they being mitigated?

Key risks include potential cost overruns due to the labor-hour pricing model, the possibility of scope creep if requirements are not tightly managed, and technical challenges inherent in cloud modernization. Mitigation strategies likely involve robust project management, clearly defined performance metrics, regular progress reviews, and strong contract oversight by CBP officials. The contractor's experience and the competitive nature of the award may also serve as risk mitigators by ensuring a capable provider is engaged and incentivized to perform well. Continuous monitoring of deliverables and budget adherence will be critical.

How effective is the 'full and open competition' approach likely to be in ensuring value for money for this specific contract?

The 'full and open competition' approach is generally considered the most effective method for ensuring value for money in federal contracting. By allowing all eligible sources to compete, it fosters a competitive environment that drives down prices and encourages innovation. For this $34.3 million cloud modernization contract, this approach likely resulted in multiple bids, allowing CBP to select a vendor offering the best combination of technical capability and cost-effectiveness. The success in achieving value will depend on the clarity of the solicitation, the evaluation criteria, and the rigor of post-award contract management to ensure the selected vendor delivers as promised.

What is the historical spending pattern for custom computer programming services (NAICS 541511) by U.S. Customs and Border Protection?

Historical spending data for U.S. Customs and Border Protection (CBP) on custom computer programming services (NAICS 541511) would reveal the agency's consistent investment in IT development and modernization. While the specific total for CBP is not provided here, federal agencies collectively spend billions annually on such services. CBP, as a large operational component of DHS, relies heavily on IT systems for its mission. Therefore, it is expected that CBP has a significant and likely increasing expenditure in this category to maintain and upgrade its complex technological infrastructure, including efforts related to cloud migration and data management.

Are there any specific performance indicators or metrics tied to this contract that will measure its success?

While the provided data does not detail specific performance indicators, contracts of this nature and value typically include a robust Performance Work Statement (PWS). This PWS would outline measurable metrics related to service delivery, system uptime, security compliance, project milestones, and potentially cost efficiency targets. CBP contracting officers would monitor these metrics throughout the contract's duration. Success would be evaluated based on the contractor's ability to meet or exceed these defined Key Performance Indicators (KPIs), ensuring the cloud modernization effort achieves its intended objectives effectively and efficiently.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming 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: 70B04C22Q00000252

Offers Received: 1

Pricing Type: LABOR HOURS (Z)

Evaluated Preference: NONE

Contractor Details

Address: 100 BARTON PL, ALPHARETTA, GA, 30005

Business Categories: 8(a) Program Participant, Category Business, Corporate Entity Not Tax Exempt, DoT Certified Disadvantaged Business Enterprise, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $42,308,481

Exercised Options: $34,329,374

Current Obligation: $34,329,374

Actual Outlays: $34,329,374

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47QTCA18D005J

IDV Type: FSS

Timeline