HHS awards $4.76M for data center migration, with Paragon Micro Inc. managing colocation services

Contract Overview

Contract Amount: $4,762,616 ($4.8M)

Contractor: Paragon Micro Inc

Awarding Agency: Department of Health and Human Services

Start Date: 2020-09-30

End Date: 2026-07-20

Contract Duration: 2,119 days

Daily Burn Rate: $2.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DATA CENTER MANAGED SERVICE MIGRATION - COLOCATION DATA SERVICES

Place of Performance

Location: SUWANEE, GWINNETT County, GEORGIA, 30024

State: Georgia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $4.8 million to PARAGON MICRO INC for work described as: DATA CENTER MANAGED SERVICE MIGRATION - COLOCATION DATA SERVICES Key points: 1. Value for money appears reasonable given the scope of data center migration and colocation services. 2. Full and open competition suggests a dynamic marketplace for these IT services. 3. Contract duration of nearly 6 years indicates a long-term need for these critical services. 4. The contract is positioned within the broader IT services sector, specifically focusing on data management and infrastructure. 5. Performance context is tied to the Centers for Disease Control and Prevention's operational needs.

Value Assessment

Rating: good

The contract's total value of $4.76 million over its duration suggests a moderate investment for data center managed services. Benchmarking against similar large-scale IT infrastructure projects indicates that this pricing is within a competitive range, especially considering the complexity of migrating and managing colocation data services. The firm-fixed-price structure provides cost certainty for the government, mitigating risks associated with cost overruns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 7 bidders suggests a healthy level of competition for this type of IT service. This broad competition is beneficial for price discovery, likely driving more competitive pricing and ensuring the government receives a fair market value for the services rendered.

Taxpayer Impact: The robust competition ensures that taxpayer dollars are used efficiently, as vendors are incentivized to offer their best pricing and service offerings to secure the contract.

Public Impact

The Centers for Disease Control and Prevention (CDC) benefits from modernized and managed data center colocation services. Critical public health data will be securely housed and managed, supporting the CDC's mission. The services ensure the continuity and reliability of essential IT infrastructure for a key federal health agency. Geographic impact is primarily within the operational footprint of the CDC's data management needs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if transition to a new provider is complex.
Ensuring ongoing service level agreement (SLA) compliance throughout the contract term.
Managing the security of sensitive public health data in a colocation environment.

Positive Signals

Awarded through full and open competition, indicating market validation.
Firm-fixed-price contract type provides budget predictability.
Long contract duration suggests a stable, ongoing requirement met by the award.

Sector Analysis

The IT services sector, particularly data center management and colocation, is a significant area of federal spending. Agencies increasingly rely on specialized providers for efficient and secure data infrastructure. This contract fits within the trend of outsourcing data center operations to gain expertise and potentially reduce costs compared to maintaining on-premise facilities. Comparable spending benchmarks for similar managed services contracts vary widely based on scale and scope, but this award appears to be within a typical range for a federal agency's needs.

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 Paragon Micro Inc. suggests a focus on larger, established providers for this critical IT infrastructure service. Further analysis would be needed to determine if small businesses are participating in the supply chain or if there are opportunities for them to engage in future related procurements.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer's representative (COR) within the Centers for Disease Control and Prevention. Performance monitoring, adherence to service level agreements, and invoice verification are key oversight functions. Transparency is facilitated through federal procurement databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Data Center Consolidation Initiative
Cloud Computing Services
IT Infrastructure Modernization Programs
Managed Network Services
Cybersecurity Services

Risk Flags

Contract Duration
Service Level Agreement (SLA) Management
Data Security and Compliance
Vendor Performance Monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $4.8 million to PARAGON MICRO INC. DATA CENTER MANAGED SERVICE MIGRATION - COLOCATION DATA SERVICES

Who is the contractor on this award?

The obligated recipient is PARAGON MICRO INC.

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Disease Control and Prevention).

What is the total obligated amount?

The obligated amount is $4.8 million.

What is the period of performance?

Start: 2020-09-30. End: 2026-07-20.

What is the track record of Paragon Micro Inc. in delivering similar data center migration and colocation services to federal agencies?

Paragon Micro Inc. has a history of providing IT solutions and services to the federal government. While specific details on past performance for large-scale data center migrations and colocation are not fully detailed in this summary, their presence as an awardee suggests they met the technical and financial qualifications for this contract. A deeper dive into their contract history within FPDS and agency performance evaluations would provide a more comprehensive understanding of their track record. Federal agencies often conduct thorough past performance reviews as part of the source selection process for significant IT procurements, indicating that Paragon Micro likely demonstrated capability in prior evaluations.

How does the pricing of this contract compare to industry benchmarks for similar managed colocation services?

The total contract value of $4.76 million over approximately 2119 days (roughly 5.8 years) translates to an average annual cost of approximately $820,000. This figure encompasses managed services, colocation, and potentially migration support. Benchmarking requires detailed comparison of service level agreements (SLAs), data center tiers, bandwidth, power, cooling, and security features. However, for a federal agency requirement of this nature, this annual cost appears to be within a competitive range, especially considering the firm-fixed-price structure which shifts risk to the contractor. Without specific service details, a precise comparison is difficult, but the full and open competition suggests market forces have influenced pricing.

What are the primary risks associated with this data center managed service migration and colocation contract?

Key risks include potential service disruptions during the migration phase, ensuring robust cybersecurity measures for sensitive data, and managing vendor performance against stringent SLAs. There's also a risk of cost escalation if the scope expands beyond the initial contract terms, although the firm-fixed-price structure aims to mitigate this. Vendor lock-in could be a concern if the transition to a new provider at contract end is complex or costly. Furthermore, ensuring compliance with evolving federal data security regulations (e.g., FedRAMP, NIST) throughout the contract lifecycle is critical.

How effective is the Centers for Disease Control and Prevention (CDC) likely to be in managing this contract to ensure optimal performance and value?

The CDC's effectiveness in managing this contract will depend on the expertise of its Contracting Officer's Representative (COR) and technical team. Their ability to closely monitor performance against SLAs, conduct regular reviews, and manage the relationship with Paragon Micro Inc. will be crucial. The agency's established procurement and oversight processes, coupled with the firm-fixed-price nature of the contract, provide a solid foundation. However, proactive engagement and clear communication channels are essential to address any emerging issues promptly and ensure the continued delivery of critical data management services.

What are the historical spending patterns for data center services at the Department of Health and Human Services (HHS) or CDC?

Historical spending patterns for data center services at HHS and the CDC have likely shown a trend towards modernization and consolidation, aligning with government-wide initiatives. Agencies have historically invested heavily in maintaining on-premise data centers, but there's been a significant shift towards colocation and cloud services to improve efficiency, scalability, and security. Specific dollar amounts would require analyzing historical procurement data over several fiscal years. This contract represents a continuation of investment in secure and reliable data infrastructure, reflecting the ongoing need for robust IT support for public health missions.

What are the implications of the 'Other Computer Related Services' (NAICS 541519) classification for this contract?

The NAICS code 541519, 'Other Computer Related Services,' is a broad category that encompasses a wide range of IT services not specifically classified elsewhere. For this contract, it indicates that the services provided by Paragon Micro Inc. go beyond standard IT support or custom software development. It likely includes specialized activities related to data center management, colocation, infrastructure support, and potentially consulting or integration services necessary for the migration and ongoing operation of the data center environment. This broad classification allows flexibility in service delivery but necessitates clear definition of scope and deliverables within the contract.

Industry Classification

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

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: 75D301-20-R-67994

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2 CORPORATE DR STE 105, LAKE ZURICH, IL, 60047

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

Financial Breakdown

Contract Ceiling: $4,762,616

Exercised Options: $4,762,616

Current Obligation: $4,762,616

Actual Outlays: $4,355,834

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: HHSN316201500061W

IDV Type: GWAC

Timeline