DHS awards $19.6M cloud engineering contract to Peraton, highlighting need for IT infrastructure support

Contract Overview

Contract Amount: $19,629,579 ($19.6M)

Contractor: Peraton Technology Services Inc.

Awarding Agency: Department of Homeland Security

Start Date: 2023-08-15

End Date: 2024-08-14

Contract Duration: 365 days

Daily Burn Rate: $53.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: TO PROCURE DHS CLOUD ENGINEERING AND OPERATIONS (CEO) SUPPORT.

Place of Performance

Location: SPRINGFIELD, FAIRFAX County, VIRGINIA, 22150

State: Virginia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $19.6 million to PERATON TECHNOLOGY SERVICES INC. for work described as: TO PROCURE DHS CLOUD ENGINEERING AND OPERATIONS (CEO) SUPPORT. Key points: 1. Contract addresses critical need for cloud engineering and operations support within DHS. 2. Awarded via full and open competition, suggesting a competitive bidding process. 3. Performance period of one year indicates a focus on immediate operational needs. 4. Time and Materials pricing structure may pose cost control challenges if not closely managed. 5. The North American Industry Classification System (NAICS) code 518210 points to a significant market for cloud services. 6. This contract falls under the 'Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services' category.

Value Assessment

Rating: fair

The contract value of $19.6 million for one year of cloud engineering and operations support appears within a reasonable range for large-scale federal IT services. However, the Time and Materials (T&M) pricing model necessitates careful monitoring to ensure cost-effectiveness. Without specific benchmarks for similar DHS cloud support contracts or detailed service level agreements, a definitive value-for-money assessment is challenging. The awarded amount is significantly lower than the reported bid of $53.78 million, which could indicate strong price competition or a difference in scope.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. This approach generally fosters a competitive environment, potentially leading to better pricing and service quality. The specific number of bidders is not provided, but the 'full and open' designation suggests multiple proposals were likely considered, allowing the agency to select the best value.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple vendors to bid, driving down prices and promoting innovation to secure the contract.

Public Impact

The Department of Homeland Security (DHS) will benefit from enhanced cloud engineering and operations capabilities. Services delivered will support the critical IT infrastructure and cloud environments of a major federal agency. The contract's geographic impact is primarily national, supporting DHS operations across its various components. Workforce implications may include the need for specialized cloud engineers and operations personnel, potentially sourced by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Time and Materials (T&M) pricing structure can lead to cost overruns if not managed diligently, as it directly reimburses labor hours and material costs without a fixed ceiling.
Lack of specific performance metrics or Service Level Agreements (SLAs) in the provided data makes it difficult to assess the contractor's performance and ensure accountability.
The significant difference between the awarded amount and the reported bid ($19.6M vs $53.78M) warrants further investigation into the scope and assumptions of each.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process and potential for competitive pricing.
The contract addresses a critical need for cloud engineering and operations support, vital for modernizing government IT infrastructure.
The contractor, Peraton Technology Services Inc., is a known entity in the federal IT services space, implying some level of established capability.

Sector Analysis

The federal IT services market, particularly cloud computing, is a rapidly growing sector driven by agencies' needs to modernize infrastructure, enhance cybersecurity, and improve service delivery. This contract for cloud engineering and operations support falls within the broader category of IT infrastructure and managed services. Spending in this area is substantial across government, with agencies increasingly migrating workloads to cloud environments. Comparable contracts often involve significant dollar values and long-term commitments, reflecting the complexity and criticality of cloud management.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside requirement. However, the prime contractor, Peraton, may engage small businesses as subcontractors to fulfill specific aspects of the contract, depending on their own subcontracting plans and the nature of the services required.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of Homeland Security's Office of Procurement Operations. Performance monitoring, invoice review, and adherence to contract terms are standard oversight mechanisms. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

DHS Cloud Computing Services
Federal Civilian IT Modernization
IT Infrastructure Support Services
Cloud Computing Services (General)

Risk Flags

Potential for cost overruns due to T&M pricing structure.
Short contract duration may limit long-term optimization.
Need for robust government oversight to manage performance and costs.
Significant bid spread requires further analysis for value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $19.6 million to PERATON TECHNOLOGY SERVICES INC.. TO PROCURE DHS CLOUD ENGINEERING AND OPERATIONS (CEO) SUPPORT.

Who is the contractor on this award?

The obligated recipient is PERATON TECHNOLOGY SERVICES INC..

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Office of Procurement Operations).

What is the total obligated amount?

The obligated amount is $19.6 million.

What is the period of performance?

Start: 2023-08-15. End: 2024-08-14.

What is Peraton Technology Services Inc.'s track record with similar DHS cloud contracts?

Peraton Technology Services Inc. has a history of performing IT services for various federal agencies, including DHS. While specific details on their past performance with DHS cloud engineering and operations support contracts are not immediately available in this data snippet, their presence in the federal contracting space suggests experience. A deeper dive into contract databases like FPDS or SAM.gov would be necessary to identify and analyze their prior performance metrics, past issues, and overall success rates on comparable engagements. This would include reviewing past performance evaluations and any debriefings from previous solicitations to gauge their capabilities and reliability in delivering cloud services.

How does the awarded price compare to the highest bid and the estimated value?

The awarded price of $19,629,578.66 is significantly lower than the reported bid of $53,780,000. This substantial difference suggests either a highly competitive bidding environment where Peraton offered a very aggressive price, or that the $53.78M figure represents a much broader scope or a different set of assumptions. Without knowing the government's independent cost estimate or the details of the other bids, it's difficult to definitively assess if the awarded price represents optimal value. However, securing the contract at nearly a third of the highest bid is generally a positive indicator for cost savings.

What are the primary risks associated with a Time and Materials (T&M) contract for cloud services?

The primary risk with a Time and Materials (T&M) contract for cloud services is the potential for cost overruns. Unlike fixed-price contracts, T&M agreements reimburse the contractor for direct labor hours at specified rates and for the actual cost of materials. If the scope of work is not clearly defined, or if project management is weak, the contractor may incur more hours or use more resources than anticipated, leading to a higher final cost. This necessitates robust oversight from the government to monitor labor hours, control material usage, and ensure efficient service delivery to mitigate cost escalation and maintain value for money.

How effective is the 'full and open competition' strategy for procuring complex IT services like cloud engineering?

Full and open competition is generally considered the most effective strategy for procuring complex IT services like cloud engineering, as it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving innovative solutions and competitive pricing. It allows the government to leverage the widest range of industry capabilities and encourages vendors to differentiate themselves on technical merit, past performance, and price. While it can be more resource-intensive to manage a larger number of proposals, the potential benefits in terms of best value and taxpayer savings often outweigh these costs, especially for critical services where performance and cost are paramount.

What is the historical spending trend for DHS cloud computing support services?

Historical spending data for DHS cloud computing support services is not provided in this specific data extract. However, federal agencies, including DHS, have shown a consistent trend towards increasing cloud adoption and spending over the past decade. This shift is driven by the need for greater agility, scalability, cost-efficiency, and enhanced cybersecurity capabilities. Analyzing past DHS obligations for similar NAICS codes (like 518210) or contract vehicles would reveal trends in investment in cloud infrastructure, platform, and software services, likely showing a year-over-year increase as more services are migrated to cloud environments.

What are the potential performance challenges given the one-year duration and T&M structure?

A one-year duration for a cloud engineering and operations support contract, especially under a Time and Materials (T&M) structure, presents potential performance challenges. The short duration may limit the contractor's incentive to invest in long-term optimization or innovation, focusing instead on immediate task completion. The T&M structure, as noted, carries inherent cost control risks. Furthermore, if the contract involves transitioning or managing complex cloud environments, a one-year period might be insufficient for full stabilization or achieving significant performance improvements, potentially leading to a cycle of short-term contracts without realizing the full benefits of cloud modernization.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related 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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 70RTAC23R00000020

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 15050 CONFERENCE CENTER DR, CHANTILLY, VA, 20151

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

Financial Breakdown

Contract Ceiling: $24,301,270

Exercised Options: $19,629,579

Current Obligation: $19,629,579

Actual Outlays: $19,446,693

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: 70RTAC21D00000006

IDV Type: IDC

Timeline