Leidos awarded $238.5M for end-user IT support, highlighting a 5-year contract for CMS

Contract Overview

Contract Amount: $238,520,090 ($238.5M)

Contractor: Leidos, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2018-08-31

End Date: 2023-08-31

Contract Duration: 1,826 days

Daily Burn Rate: $130.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: END-USER CENTRIC IT SUPPORT (ECIS)

Place of Performance

Location: WINDSOR MILL, BALTIMORE County, MARYLAND, 21244

State: Maryland Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $238.5 million to LEIDOS, INC. for work described as: END-USER CENTRIC IT SUPPORT (ECIS) Key points: 1. Contract value represents significant investment in IT infrastructure support. 2. Full and open competition suggests a robust bidding process. 3. Fixed-price contract type aims to control costs and manage risk. 4. Contract duration of five years allows for sustained service delivery. 5. Focus on end-user support indicates critical operational needs. 6. Geographic concentration in Maryland may reflect agency presence.

Value Assessment

Rating: good

The contract value of $238.5 million over five years for end-user IT support appears reasonable given the scope and duration. Benchmarking against similar large-scale IT support contracts for federal agencies suggests this pricing is within expected ranges. The firm fixed-price structure provides cost certainty for the government, although it places performance risk on the contractor. Without specific details on service levels and performance metrics, a precise value-for-money assessment is challenging, but the competitive award process lends confidence.

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. The presence of multiple bidders (4 noted) suggests a healthy competitive environment, which typically drives down prices and encourages innovation. The agency sought proposals from a wide range of qualified vendors, ensuring that the selected contractor offered the best value proposition based on technical capabilities and price. This approach is generally favored for maximizing taxpayer return.

Taxpayer Impact: Full and open competition ensures that taxpayers benefit from the most competitive pricing and the best available services, as multiple companies vied for this significant contract.

Public Impact

Beneficiaries include federal employees within the Centers for Medicare and Medicaid Services (CMS) who rely on stable IT systems. Services delivered encompass a broad range of end-user IT support, crucial for agency operations. Geographic impact is primarily concentrated in Maryland, where CMS facilities are located. Workforce implications include the potential for job creation within Leidos and its subcontractors to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if transition to a new provider is complex.
Reliance on a single large contractor for critical IT functions could pose a risk if performance degrades.
Scope creep could lead to cost overruns if not managed tightly, despite fixed-price structure.

Positive Signals

Firm fixed-price contract provides cost predictability for the government.
Long-term contract allows for stable service delivery and relationship building.
Awarded through full and open competition, suggesting strong market response and value.
Contractor (Leidos) has a significant presence and experience in government IT services.

Sector Analysis

The IT services sector, particularly government contracting, is highly competitive. This contract falls under computer systems design services, a segment focused on providing technical expertise to manage and maintain IT infrastructure. The market size for federal IT spending is substantial, with agencies like HHS consistently investing in technology to support their missions. This contract with CMS represents a significant portion of spending within this specific niche, competing with other large IT service providers for similar government contracts.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate specific subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like Leidos suggests that the primary focus was on the prime's capabilities. While large contracts can sometimes include subcontracting opportunities for small businesses, the absence of explicit set-aside information means the direct impact on the small business ecosystem is not immediately clear and may be limited unless subcontracting plans are robust.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officers and program managers within the Centers for Medicare and Medicaid Services (CMS). Performance monitoring, adherence to service level agreements, and financial oversight are standard accountability measures. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General's office for HHS may also conduct audits or investigations if performance or financial concerns arise.

Related Government Programs

End-User IT Support Services
IT Infrastructure Management
Federal Civilian Agency IT Contracts
Health Information Technology Services
Computer Systems Design Services

Risk Flags

Potential for service degradation if contractor performance falters.
Risk of vendor lock-in due to specialized knowledge and integration.
Need for robust oversight to ensure adherence to fixed-price terms and SLAs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $238.5 million to LEIDOS, INC.. END-USER CENTRIC IT SUPPORT (ECIS)

Who is the contractor on this award?

The obligated recipient is LEIDOS, INC..

Which agency awarded this contract?

Awarding agency: Department of Health and Human Services (Centers for Medicare and Medicaid Services).

What is the total obligated amount?

The obligated amount is $238.5 million.

What is the period of performance?

Start: 2018-08-31. End: 2023-08-31.

What is Leidos's track record with similar large-scale IT support contracts for federal agencies?

Leidos has a substantial track record in providing IT services to various federal agencies, including defense and civilian sectors. They frequently win large, complex contracts for IT modernization, cybersecurity, and end-user support. Their experience often involves managing significant budgets and large teams to deliver comprehensive IT solutions. Past performance reviews and contract awards indicate a consistent ability to secure and execute these types of agreements, though specific performance metrics on individual contracts would require deeper analysis. Their history suggests they are a capable provider for extensive IT support needs within the federal government.

How does the awarded price compare to industry benchmarks for similar IT support services?

The awarded value of approximately $47.7 million per year ($238.5M / 5 years) for comprehensive end-user IT support services appears competitive within the federal IT contracting landscape. Benchmarking against similar contracts for agencies of CMS's size and complexity suggests that this rate is within the expected range. Factors influencing this include the scope of services (help desk, hardware/software support, network access), geographic coverage, and required service levels. Firm fixed-price contracts often reflect a balance between contractor risk and government cost control. Without detailed service level agreements (SLAs) and specific deliverables, a precise comparison is difficult, but the full and open competition award implies market validation of the price.

What are the primary risks associated with this contract for the government?

The primary risks for the government on this contract include potential performance issues if Leidos fails to meet service level agreements, leading to disruptions in end-user IT services critical for CMS operations. There's also a risk of vendor lock-in, making it difficult and costly to switch providers at contract end. While the firm fixed-price structure mitigates cost overruns from scope changes, it shifts performance risk to the contractor; if they underperform, the government may face service degradation. Ensuring adequate oversight and robust performance metrics are crucial to managing these risks effectively throughout the contract's life.

How effective is the firm fixed-price (FFP) contract type in managing costs for this type of service?

The firm fixed-price (FFP) contract type is generally effective for managing costs when the scope of work is well-defined and unlikely to change significantly. For end-user IT support, where requirements can be standardized (e.g., help desk response times, hardware replacement cycles), FFP provides cost certainty for the government. It incentivizes the contractor to control their own costs efficiently to maximize profit. However, if unforeseen technical challenges or significant changes in user needs arise, the contractor may struggle to meet obligations without requesting modifications, potentially leading to disputes or a need for contract adjustments. The success of FFP here depends on clear initial requirements and diligent contract management.

What is the historical spending trend for end-user IT support at CMS or HHS?

Historical spending data for end-user IT support at CMS and the broader HHS is essential for context. While this specific contract is for $238.5 million over five years, understanding previous spending levels provides insight into whether this award represents an increase, decrease, or stable investment. Agencies like CMS often have significant and ongoing needs for IT support due to the complexity of healthcare systems and data management. Analyzing prior contract values, durations, and awarded vendors for similar services would reveal trends in IT outsourcing, technology adoption, and budget allocation within the agency, helping to assess if the current award aligns with historical patterns or signifies a strategic shift.

What are the implications of the contract's geographic concentration in Maryland?

The concentration of this contract's performance in Maryland, indicated by 'ST: MD', suggests that the primary end-users and IT infrastructure supported are located within the state, likely where major CMS facilities are situated. This geographic focus can streamline service delivery, reduce travel costs for support personnel, and allow for closer collaboration between the contractor and agency personnel. However, it also means that IT support for CMS personnel or operations outside of Maryland may not be covered under this specific award, potentially requiring separate contracts or arrangements for other locations. This specialization can enhance efficiency but limits broad applicability.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Leidos Holdings, Inc.

Address: 700 N FREDERICK AVE, GAITHERSBURG, MD, 20879

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

Financial Breakdown

Contract Ceiling: $238,520,090

Exercised Options: $238,520,090

Current Obligation: $238,520,090

Actual Outlays: $111,987,882

Subaward Activity

Number of Subawards: 316

Total Subaward Amount: $103,932,505

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: GS00Q09BGD0039

IDV Type: GWAC

Timeline