HHS awards $18.9M contract for IT operations and maintenance to ZOLON PCS, LLC

Contract Overview

Contract Amount: $18,895,766 ($18.9M)

Contractor: Zolon PCS, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2023-09-30

End Date: 2026-06-24

Contract Duration: 998 days

Daily Burn Rate: $18.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: OCIO OPERATIONS AND MAINTENANCE SUPPORT SERVICES

Place of Performance

Location: ASHBURN, LOUDOUN County, VIRGINIA, 20147

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $18.9 million to ZOLON PCS, LLC for work described as: OCIO OPERATIONS AND MAINTENANCE SUPPORT SERVICES Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract is for IT operations and maintenance, a critical function for agency operations. 3. The duration of the contract extends to mid-2026, indicating a long-term need. 4. The award amount of $18.9 million represents a significant investment in IT support. 5. The North American Industry Classification System (NAICS) code 541519 points to 'Other Computer Related Services'. 6. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 7. The award was made as a Delivery Order, implying it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar vehicle.

Value Assessment

Rating: good

The contract value of $18.9 million for IT operations and maintenance over approximately three years appears reasonable given the scope of services typically required for such support. Benchmarking against similar contracts for IT operations and maintenance at federal agencies of similar size and complexity would provide a more precise value-for-money assessment. The firm fixed-price structure is generally favorable for the government as it caps costs.

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. With seven bidders participating, the competition level appears healthy, which typically drives more competitive pricing and better value for the government. The presence of multiple bidders suggests that the market has sufficient capacity and interest in providing these services.

Taxpayer Impact: A competitive bidding process for this contract is beneficial for taxpayers as it likely resulted in a lower price than a sole-source or limited competition award, maximizing the value of federal dollars spent.

Public Impact

The Department of Health and Human Services (HHS) benefits from reliable IT operations and maintenance. Essential IT services are delivered to support the agency's mission. The contract's impact is primarily within the federal government's IT infrastructure. The contract supports the workforce employed by ZOLON PCS, LLC.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if services are highly specialized and difficult to transition.
Reliance on a single contractor for critical IT infrastructure could pose a risk if performance degrades.
Ensuring continued innovation and cost-efficiency over the contract's duration requires diligent oversight.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
Firm Fixed Price contract type helps manage cost certainty for the government.
The contractor, ZOLON PCS, LLC, has secured a significant federal contract, suggesting established capabilities.
The contract duration allows for stable IT support, crucial for agency operations.

Sector Analysis

The IT services sector is a vast and critical component of federal spending, encompassing a wide range of support, development, and maintenance activities. This contract for IT operations and maintenance falls within the broader category of IT professional services. Federal spending in this area is consistently high, driven by the need to modernize legacy systems, enhance cybersecurity, and support agency-wide digital transformation initiatives. Comparable contracts often involve significant dollar values due to the complexity and essential nature of IT infrastructure.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. The award to ZOLON PCS, LLC, a company whose size is not specified here, means that opportunities for small business participation may be limited unless ZOLON PCS voluntarily engages them. Further analysis would be needed to determine if subcontracting plans exist or if small businesses are indirectly benefiting.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Health and Human Services' contracting officers and program managers. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver services within the agreed-upon price. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

HHS IT Support Services
Federal IT Operations and Maintenance Contracts
IT Professional Services
General Services Administration (GSA) IT Schedules
Department of Health and Human Services IT Contracts

Risk Flags

Potential for performance issues
Cybersecurity risks
Vendor lock-in

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $18.9 million to ZOLON PCS, LLC. OCIO OPERATIONS AND MAINTENANCE SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is ZOLON PCS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Office of the Assistant Secretary for Financial Resources).

What is the total obligated amount?

The obligated amount is $18.9 million.

What is the period of performance?

Start: 2023-09-30. End: 2026-06-24.

What is the track record of ZOLON PCS, LLC in performing similar federal IT operations and maintenance contracts?

Assessing the track record of ZOLON PCS, LLC requires a review of their past performance on federal contracts, particularly those involving IT operations and maintenance. This would involve examining past performance evaluations, any awards or penalties received, and the types and scale of services previously delivered. A history of successful contract completion, positive performance reviews, and adherence to timelines and budgets would indicate a strong capability. Conversely, a history of performance issues, contract disputes, or significant cost overruns would raise concerns about their ability to meet the requirements of this new HHS contract. Without specific past performance data for ZOLON PCS, LLC, it is difficult to definitively assess their reliability for this $18.9 million contract.

How does the awarded price compare to market rates for similar IT operations and maintenance services?

To compare the awarded price of $18.9 million to market rates, one would need to benchmark it against similar IT operations and maintenance contracts awarded by other federal agencies or even within the commercial sector. Key factors for comparison include the scope of services (e.g., network management, help desk support, system administration, cybersecurity maintenance), the level of service (e.g., uptime guarantees, response times), the geographic location of service delivery, and the specific technologies involved. The firm fixed-price nature of this contract suggests that the government has negotiated a set price, which, if based on competitive bidding, is likely aligned with market expectations. However, a detailed market analysis or comparison with publicly available contract data for similar services would be necessary for a definitive assessment of value for money.

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

Primary risks associated with this IT operations and maintenance contract include potential performance failures by the contractor, leading to disruptions in essential HHS IT services; cost overruns if the firm fixed-price contract is poorly defined or if unforeseen technical challenges arise; and cybersecurity vulnerabilities if the contractor's security practices are inadequate. Mitigation strategies typically involve robust contract oversight by HHS officials, clearly defined performance metrics and service level agreements (SLAs), regular performance reviews, and stringent cybersecurity requirements stipulated in the contract. The firm fixed-price structure itself mitigates cost overrun risk for the government, shifting it to the contractor. However, ensuring the contractor has the technical expertise and financial stability to manage these risks is crucial.

How effective is the chosen competition level (full and open) in ensuring optimal value for taxpayers?

A full and open competition strategy is generally considered the most effective method for ensuring optimal value for taxpayers in federal contracting. By allowing all responsible sources to compete, it maximizes the pool of potential bidders, thereby increasing the likelihood of receiving competitive proposals that offer the best combination of price, quality, and technical approach. The fact that seven bidders participated in this contract award suggests that the full and open competition approach was successful in attracting a diverse range of interested parties. This level of competition typically drives down prices and encourages innovation as contractors strive to differentiate their offerings. Therefore, for this $18.9 million contract, full and open competition likely served the taxpayers' interests well by fostering a competitive environment that pressured ZOLON PCS, LLC to offer a compelling price and service package.

What are the historical spending patterns for IT operations and maintenance at HHS or similar agencies?

Historical spending patterns for IT operations and maintenance at HHS and similar large federal agencies typically show a consistent and significant investment in these services. Agencies rely heavily on robust IT infrastructure to deliver their missions, making ongoing maintenance and operational support a perpetual requirement. Spending in this category often fluctuates based on modernization initiatives, system upgrades, cybersecurity enhancements, and the overall IT lifecycle. Analyzing historical data would reveal trends in contract values, the number of incumbent contractors, and the types of services procured. For HHS, a large agency with complex IT needs, annual spending on operations and maintenance could range from tens to hundreds of millions of dollars, depending on the scope and scale of their IT environment. This $18.9 million award represents a portion of that ongoing investment.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Other Computer 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: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 44345 PREMIER PLZ STE 120, ASHBURN, VA, 20147

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, SBA Certified 8 a Joint Venture, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $36,094,710

Exercised Options: $18,895,766

Current Obligation: $18,895,766

Actual Outlays: $14,877,261

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 47QTCA19D00F2

IDV Type: FSS

Timeline