Leidos awarded $150M for IT support services to CMS, highlighting a need for robust end-user assistance

Contract Overview

Contract Amount: $150,050,147 ($150.1M)

Contractor: Leidos, Inc.

Awarding Agency: Department of Health and Human Services

Start Date: 2023-06-15

End Date: 2026-08-31

Contract Duration: 1,173 days

Daily Burn Rate: $127.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 7

Pricing Type: FIXED PRICE AWARD FEE

Sector: IT

Official Description: END - USER CENTRIC IT SUPPORT 2.0 (ECIS 2.0)

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $150.1 million to LEIDOS, INC. for work described as: END - USER CENTRIC IT SUPPORT 2.0 (ECIS 2.0) Key points: 1. Contract value of $150M over approximately 3.25 years suggests significant investment in IT support infrastructure. 2. Full and open competition indicates a healthy market for these services, potentially driving competitive pricing. 3. Fixed Price Award Fee contract type incentivizes performance while managing cost risks. 4. The award to Leidos, a large established contractor, suggests a focus on reliability and proven capability. 5. This contract addresses critical end-user IT support needs within the Centers for Medicare and Medicaid Services. 6. The duration of the contract allows for sustained service delivery and potential for long-term improvements. 7. The North American Industry Classification System (NAICS) code 541512 points to a focus on computer systems design. 8. The contract's value is substantial, reflecting the complexity and scale of IT support required by CMS.

Value Assessment

Rating: good

The contract value of $150M over 1173 days (approx. 3.25 years) translates to an average annual value of roughly $46M. Benchmarking against similar large-scale IT support contracts for federal agencies, this figure appears within a reasonable range, considering the critical nature of CMS operations. The Fixed Price Award Fee structure allows for cost control while providing incentives for high performance, suggesting a balanced approach to value for money. Without specific per-unit cost data, a precise value-for-money assessment is challenging, but the competitive nature of the award provides a positive signal.

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 7 bidders suggests a competitive marketplace for these specialized IT support services. A higher number of bidders generally leads to better price discovery and potentially lower costs for the government. The agency's decision to pursue full and open competition implies confidence in the market's ability to meet their requirements effectively and affordably.

Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers, as it likely drove down prices and ensured the government received competitive offers for essential IT support services.

Public Impact

Beneficiaries include federal employees and contractors within CMS who rely on stable and responsive IT support. Services delivered encompass a wide range of end-user IT support, including help desk, hardware/software maintenance, and potentially network support. Geographic impact is primarily focused on CMS locations, likely concentrated in areas with significant agency presence. Workforce implications may include the direct employment of IT support personnel by Leidos and potential subcontracting opportunities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if transition planning is not robust.
Reliance on a single large contractor could limit future flexibility.
Performance metrics and award fee structure need careful monitoring to ensure optimal service delivery.

Positive Signals

Full and open competition suggests a healthy market and competitive pricing.
Fixed Price Award Fee structure incentivizes performance and cost control.
Leidos's established track record in government contracting provides a degree of confidence in execution.
The contract duration allows for sustained support and potential for process improvements.

Sector Analysis

The IT services sector, particularly within government contracting, is highly competitive and diverse. This contract falls under computer systems design services, a segment focused on providing expertise in designing and implementing IT solutions. The market size for federal IT services is substantial, with agencies like HHS consistently investing in maintaining and upgrading their technological infrastructure. This award to Leidos fits within the broader trend of agencies outsourcing complex IT support functions to specialized contractors to ensure operational efficiency and access to expertise.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false). While Leidos is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on Leidos's strategy and the specific requirements outlined in the contract. Agencies are encouraged to promote small business participation, and oversight of subcontracting plans is crucial for ensuring equitable opportunities within the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Centers for Medicare and Medicaid Services (CMS) contracting officers and program managers. Performance will be monitored against the terms of the Fixed Price Award Fee contract, with regular reviews and evaluations. Transparency is generally maintained through contract award databases and public reporting mechanisms. The Department of Health and Human Services (HHS) Office of Inspector General (OIG) may also conduct audits or investigations if concerns regarding waste, fraud, or abuse arise.

Related Government Programs

End User Services
IT Help Desk Services
Computer Systems Design
Federal IT Support Contracts
CMS IT Modernization Efforts
Health Information Technology Services

Risk Flags

Potential for performance issues if contractor fails to meet evolving technological demands.
Risk of cost increases if award fee criteria are not strictly managed.
Dependency on a single large contractor could limit future flexibility.
Cybersecurity risks inherent in handling sensitive government data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $150.1 million to LEIDOS, INC.. END - USER CENTRIC IT SUPPORT 2.0 (ECIS 2.0)

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 $150.1 million.

What is the period of performance?

Start: 2023-06-15. End: 2026-08-31.

What is Leidos's track record with similar federal IT support contracts, particularly within HHS or CMS?

Leidos, Inc. has a significant and extensive track record of performing IT support and systems integration services for various federal agencies, including the Department of Health and Human Services (HHS) and its sub-agencies like CMS. They have historically been awarded numerous large-scale contracts for enterprise IT services, help desk support, cybersecurity, and infrastructure management. For instance, Leidos has held previous contracts related to end-user support and IT modernization within CMS, demonstrating familiarity with the agency's unique operational environment and requirements. Their performance on these prior contracts, often assessed through contract performance metrics and past performance evaluations, generally indicates a capacity to manage complex IT operations. However, as with any large contractor, specific performance on individual contracts can vary, and a detailed review of past performance ratings and any documented issues would provide a more granular understanding of their capabilities and reliability for this specific ECIS 2.0 contract.

How does the $150M contract value compare to historical spending on similar end-user IT support services at CMS?

The $150 million contract value for the End-User Centric IT Support 2.0 (ECIS 2.0) contract awarded to Leidos represents a substantial investment in IT support services for the Centers for Medicare and Medicaid Services (CMS). To benchmark this against historical spending, one would need to analyze prior CMS contracts for similar services, such as help desk operations, desktop support, and IT asset management. Given CMS's critical role in managing vast healthcare data and programs, its IT infrastructure demands are immense, necessitating significant and ongoing funding for support. If previous contracts for comparable end-user support functions were in the range of $30-$50 million annually, then a $150 million award over approximately 3.25 years aligns with this scale, suggesting a consistent or potentially growing need for these services. Fluctuations in spending could be attributed to evolving technological requirements, increased user bases, or shifts in IT strategy, such as modernization initiatives.

What are the primary risks associated with a large, multi-year IT support contract like ECIS 2.0?

Several primary risks are associated with a large, multi-year IT support contract like ECIS 2.0. One significant risk is vendor lock-in, where the government becomes heavily reliant on the incumbent contractor's systems, processes, and personnel, making future transitions difficult and potentially costly. Performance degradation over time is another risk; initial high performance might wane as the contract matures, especially if contract management and oversight are not rigorous. Technological obsolescence is also a concern; the IT landscape evolves rapidly, and the contractor must be agile enough to adapt to new technologies and user needs, which may not always align with the contract's scope or pricing. Furthermore, cost overruns, particularly with award-fee structures if not carefully managed, can occur. Finally, security vulnerabilities and data breaches are inherent risks in any IT support contract, especially one handling sensitive government data, requiring robust cybersecurity measures and constant vigilance.

How does the Fixed Price Award Fee (FP-AF) contract type influence contractor behavior and government cost control?

The Fixed Price Award Fee (FP-AF) contract type aims to balance cost control with performance incentives. In an FP-AF structure, the contractor is paid a fixed price for performing the basic scope of work. Additionally, they have the opportunity to earn an award fee based on the government's subjective evaluation of their performance against pre-defined criteria and objectives. This incentivizes the contractor (Leidos, in this case) to go beyond minimum requirements and strive for exceptional service delivery to maximize their potential earnings. For the government, the fixed-price component provides a baseline cost certainty, while the award fee mechanism allows for rewarding superior performance without pre-committing funds for it. However, it requires robust government oversight and a well-defined, objective evaluation process to ensure the award fees are justified and that the contractor's efforts are aligned with government priorities. Misaligned evaluation criteria or subjective assessments can lead to disputes or suboptimal outcomes.

What is the potential impact of this contract on the IT support services market, particularly for competitors?

The award of a $150 million contract for End-User Centric IT Support 2.0 (ECIS 2.0) to Leidos has several implications for the IT support services market. Firstly, it signifies a major win for Leidos, reinforcing their position as a key player in the federal IT services sector, particularly within HHS. For competitors, it means a significant opportunity was missed, potentially impacting their revenue streams and market share within this specific niche. The fact that it was a full and open competition with 7 bidders indicates a robust market, suggesting that other capable firms exist. This award might spur competitors to refine their offerings, pricing strategies, and past performance narratives to better position themselves for future, similar opportunities. It also highlights the types of services and capabilities that federal agencies like CMS prioritize, influencing the strategic direction of other companies aiming to secure government contracts in the IT support domain.

Are there specific performance metrics or Key Performance Indicators (KPIs) associated with this contract that are publicly available?

Specific performance metrics or Key Performance Indicators (KPIs) associated with the ECIS 2.0 contract are not typically detailed in publicly accessible award notices. While the contract type is Fixed Price Award Fee (FP-AF), which inherently relies on performance evaluation to determine the award fee, the exact metrics are usually outlined in the contract's Performance Work Statement (PWS) or Statement of Objectives (SOO). These documents, which define the required services and the standards for acceptable performance, are generally considered sensitive or proprietary and are not released publicly. However, common KPIs for end-user IT support contracts include metrics like average response time for help desk tickets, first-call resolution rates, system uptime percentages, user satisfaction scores, and turnaround times for hardware/software provisioning or repair. The government's evaluation of Leidos's performance against these (unspecified) metrics will determine the extent of the award fee earned.

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 › IT AND TELECOM - END USER

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 7

Pricing Type: FIXED PRICE AWARD FEE (M)

Evaluated Preference: NONE

Contractor Details

Address: 1750 PRESIDENTS ST FL 4, RESTON, VA, 20190

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

Financial Breakdown

Contract Ceiling: $247,620,000

Exercised Options: $150,050,147

Current Obligation: $150,050,147

Actual Outlays: $117,194,942

Subaward Activity

Number of Subawards: 94

Total Subaward Amount: $30,404,558

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: 47QTCK18D0008

IDV Type: GWAC

Timeline