HHS awards $22.75M contract for Data Center services in New York City

Contract Overview

Contract Amount: $22,752,229 ($22.8M)

Contractor: NEW York City Health and Hospitals Corporation

Awarding Agency: Department of Health and Human Services

Start Date: 2022-09-29

End Date: 2026-09-28

Contract Duration: 1,460 days

Daily Burn Rate: $15.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DATA CENTER NYC HH

Place of Performance

Location: NEW YORK, NEW YORK County, NEW YORK, 10002

State: New York Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $22.8 million to NEW YORK CITY HEALTH AND HOSPITALS CORPORATION for work described as: DATA CENTER NYC HH Key points: 1. Contract aims to ensure robust data center operations for public health programs. 2. Competition was full and open, suggesting a competitive bidding process. 3. Fixed-price contract type may offer cost certainty for the government. 4. Contract duration of 4 years provides a stable operational period. 5. The award is managed by CDC, a key agency within HHS. 6. Geographic focus on New York City highlights regional public health needs.

Value Assessment

Rating: good

The contract value of $22.75 million over four years averages to approximately $5.69 million annually. Benchmarking this against similar data center service contracts is challenging without more specific service details. However, the firm fixed-price structure suggests an expectation of predictable costs. The number of bids received (3) is moderate, which could indicate a reasonable, though not exceptionally high, level of competition influencing price.

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 a bid. Three bids were received, which suggests a moderate level of competition. While more bidders could potentially drive prices lower, three offers often provide sufficient market information for price discovery and selection.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by encouraging vendors to offer their best pricing and service terms.

Public Impact

Benefits public health initiatives managed by the Centers for Disease Control and Prevention (CDC). Ensures the availability and reliability of critical data infrastructure for health programs. Services are geographically focused on New York City, supporting local public health needs. Supports the operational workforce involved in managing and maintaining data center infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Moderate number of bidders (3) could limit aggressive price competition.
Firm Fixed Price contracts can sometimes lead to scope creep if not managed tightly.
Reliance on a single contract for critical data center services presents a potential single point of failure risk.

Positive Signals

Full and open competition promotes a wider pool of potential vendors.
Fixed-price contract provides cost predictability for the agency.
Longer contract duration (4 years) allows for stable service delivery and planning.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on data center operations and administration. The market for data center services is highly competitive, with numerous providers ranging from large cloud providers to specialized colocation facilities. Spending in this area is critical for government agencies to manage vast amounts of data, particularly in public health where data integrity and accessibility are paramount. Comparable spending benchmarks would depend on the specific services rendered (e.g., colocation, managed services, cloud integration).

Small Business Impact

The provided data does not indicate if this contract included small business set-asides or subcontracting goals. Given the nature of data center services, which often require significant infrastructure and specialized expertise, it's possible that larger, established firms were the primary bidders. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

The contract is managed by the Department of Health and Human Services (HHS), specifically the Centers for Disease Control and Prevention (CDC). Oversight would typically involve contract officers, program managers, and potentially an Inspector General's office within HHS to ensure compliance, performance, and proper use of funds. Transparency is generally maintained through public contract databases like FPDS.

Related Government Programs

HHS IT Infrastructure Support
CDC Data Management Services
Public Health Data Centers
Federal Data Center Consolidation Initiative

Risk Flags

Potential for cost overruns if market prices increase significantly over the 4-year term.
Risk of contractor underperformance if KPIs are not strictly monitored.
Dependency on a single provider for critical infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $22.8 million to NEW YORK CITY HEALTH AND HOSPITALS CORPORATION. DATA CENTER NYC HH

Who is the contractor on this award?

The obligated recipient is NEW YORK CITY HEALTH AND HOSPITALS CORPORATION.

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 $22.8 million.

What is the period of performance?

Start: 2022-09-29. End: 2026-09-28.

What specific data center services are included under this contract?

The contract details, such as NAICS code 923120 (Administration of Public Health Programs), suggest services supporting public health administration. However, the specific data center services are not explicitly detailed in the provided summary. These could range from colocation, managed hosting, cloud services integration, network connectivity, power and cooling, to physical security and disaster recovery. A deeper dive into the contract's Statement of Work (SOW) would be necessary to ascertain the precise scope of services.

How does the $22.75 million contract value compare to historical spending for similar services by the CDC in New York City?

Without historical data specific to CDC data center services in New York City, a direct comparison is difficult. However, the annual value of approximately $5.69 million ($22.75M / 4 years) can be considered a moderate investment for supporting critical public health data infrastructure in a major metropolitan area. Trends in federal IT spending, including data center modernization and cloud migration, would provide broader context. Agencies often aim to consolidate data centers or move to more efficient cloud solutions, which could influence future spending patterns.

What are the key performance indicators (KPIs) for this contract, and how is performance being measured?

The provided data does not specify the Key Performance Indicators (KPIs) or the performance measurement methodology for this contract. Typically, data center contracts include metrics related to uptime (e.g., 99.999%), response times for incidents, power usage effectiveness (PUE), security compliance, and adherence to service level agreements (SLAs). The contracting officer and program officials would be responsible for monitoring these KPIs and ensuring the contractor meets the performance requirements outlined in the Statement of Work.

What is the track record of the contractor (NEW YORK CITY HEALTH AND HOSPITALS CORPORATION) with federal contracts, particularly with HHS or CDC?

The contractor listed is NEW YORK CITY HEALTH AND HOSPITALS CORPORATION (HHC). While HHC is a major public healthcare provider in NYC, its track record as a direct federal contractor for IT services, especially for agencies like CDC, is not immediately apparent from the provided data. Federal procurement databases would need to be consulted to assess HHC's history with federal contracts, including past performance ratings, any past issues, and experience with similar service requirements.

What are the potential risks associated with a 4-year firm fixed-price contract for data center services?

A primary risk with a 4-year firm fixed-price contract is that the fixed price may not adequately account for unforeseen increases in operational costs (e.g., energy prices, hardware obsolescence) over the contract term, potentially leading to reduced profit margins for the contractor or pressure to cut corners. Conversely, if costs decrease significantly, the government might overpay. Another risk is scope creep; if the agency requires additional services beyond the original scope, managing changes under a fixed-price contract can be complex and may require contract modifications, potentially increasing the overall cost.

How does this contract align with broader federal initiatives like data center consolidation or cloud migration?

This contract's alignment depends on the specific services rendered. If it involves maintaining existing on-premises infrastructure, it might run counter to federal goals of data center consolidation and migration to cloud environments (e.g., the Federal Risk and Authorization Management Program - FedRAMP). However, if the contract supports a transition to a more efficient, consolidated facility or facilitates hybrid cloud integration, it could align with these initiatives. The CDC's strategic IT roadmap would provide clarity on how this contract fits into their modernization efforts.

Industry Classification

NAICS: Public Administration › Administration of Human Resource Programs › Administration of Public Health Programs

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: 75D301-22-R-72244

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 125 WORTH ST RM 514, NEW YORK, NY, 10013

Business Categories: Category Business, Government, Hospital, U.S. Local Government, U.S. National Government, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $25,295,846

Exercised Options: $25,295,846

Current Obligation: $22,752,229

Actual Outlays: $1,830,117

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: YES

Timeline