HHS awards $20M contract for cloud computing services to Vertosoft, LLC

Contract Overview

Contract Amount: $19,999,992 ($20.0M)

Contractor: Vertosoft, LLC

Awarding Agency: Department of Health and Human Services

Start Date: 2020-07-30

End Date: 2021-07-29

Contract Duration: 364 days

Daily Burn Rate: $54.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: TITLE: HHS VISION PLATFORM COVID-19

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20001

State: District of Columbia Government Spending

Plain-Language Summary

Department of Health and Human Services obligated $20.0 million to VERTOSOFT, LLC for work described as: TITLE: HHS VISION PLATFORM COVID-19 Key points: 1. The contract was awarded using full and open competition, suggesting a competitive bidding process. 2. The award value of approximately $20 million for a one-year duration indicates a significant investment in IT infrastructure. 3. The North American Industry Classification System (NAICS) code 518210 points to a focus on data processing and hosting services. 4. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 5. The delivery order structure suggests flexibility in how services are procured and utilized. 6. The small business set-aside flag is false, indicating no specific preference for small businesses in this award.

Value Assessment

Rating: good

The contract value of $19,999,992 for a 364-day period, averaging approximately $54,945 per day, appears reasonable for cloud computing infrastructure services. Benchmarking against similar government contracts for data processing and web hosting would provide a more precise value-for-money assessment. The firm fixed-price structure helps control costs for the government, but the specific service levels and performance metrics are crucial for a complete value evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit a bid. The data indicates there were 3 bids received. A competitive process with multiple bidders generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: Full and open competition ensures that taxpayers benefit from a potentially lower price due to market forces and that the government secures the best value available.

Public Impact

The Department of Health and Human Services (HHS) benefits from enhanced computing infrastructure and data processing capabilities. The contract supports the delivery of critical IT services necessary for government operations. The primary geographic impact is within the District of Columbia, where the contract is registered. The contract likely supports a workforce skilled in cloud computing, data management, and IT infrastructure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specific cloud technologies are mandated without clear exit strategies.
Ensuring data security and privacy compliance within the cloud environment is paramount.
Performance monitoring and service level agreement adherence need rigorous oversight.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
Firm Fixed Price contract type provides cost certainty for the government.
The contract duration of one year allows for periodic re-evaluation of needs and market conditions.

Sector Analysis

This contract falls within the IT and cloud computing sector, a rapidly growing area for government procurement. The NAICS code 518210, 'Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services,' encompasses a broad range of services essential for modern digital operations. Government spending in this sector has seen significant increases as agencies migrate services to the cloud to improve efficiency, scalability, and security. Comparable spending benchmarks would typically involve analyzing other large-scale cloud service contracts awarded by federal agencies for similar infrastructure needs.

Small Business Impact

The contract was not set aside for small businesses, as indicated by the 'ss' field being false. This means the competition was open to all eligible businesses, including large corporations. There is no explicit information provided regarding subcontracting plans for small businesses. The absence of a small business set-aside suggests that the primary focus was on securing the best technical solution and price from the broadest possible pool of contractors, rather than specifically promoting small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the program office within the Office of the Assistant Secretary for Administration at HHS. Accountability measures are embedded in the Firm Fixed Price contract type, which obligates the contractor to deliver specified services at an agreed-upon price. Transparency is generally maintained through contract award databases, though specific performance metrics and detailed service level agreements may not be publicly disclosed. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

HHS IT Modernization Initiatives
Federal Cloud Computing Strategy
General Services Administration (GSA) IT Schedule Contracts
Cloud Computing Services Procurement

Risk Flags

Limited number of bidders (3) despite full and open competition.
Potential for vendor lock-in with specific cloud technologies.
Data security and compliance risks inherent in cloud services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Health and Human Services awarded $20.0 million to VERTOSOFT, LLC. TITLE: HHS VISION PLATFORM COVID-19

Who is the contractor on this award?

The obligated recipient is VERTOSOFT, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $20.0 million.

What is the period of performance?

Start: 2020-07-30. End: 2021-07-29.

What is the track record of Vertosoft, LLC in performing similar federal contracts?

Vertosoft, LLC has a history of securing federal contracts, primarily within the IT services domain. Analyzing their past performance on similar contracts, particularly those involving cloud computing, data processing, and web hosting for agencies like HHS or other civilian departments, would be crucial. Key indicators to examine include on-time delivery, adherence to budget, customer satisfaction ratings, and any past performance issues or awards. A review of contract databases and performance assessment reports (if available) would provide a clearer picture of their reliability and capability in fulfilling government requirements. Their success in winning this $20 million contract suggests a positive assessment of their capabilities by HHS.

How does the awarded price compare to market rates for similar cloud computing services?

The awarded value of approximately $20 million for a one-year contract for computing infrastructure, data processing, and web hosting services needs to be benchmarked against prevailing market rates. This involves comparing the daily or monthly cost against similar offerings from major cloud providers (e.g., AWS, Azure, Google Cloud) and other government contractors providing comparable services. Factors such as the specific service level agreements (SLAs), included features, geographic scope, and security requirements significantly influence pricing. Without detailed service specifications, a precise comparison is difficult, but the average daily cost of roughly $55,000 suggests a substantial service package. Further analysis would require access to the detailed scope of work and service level agreements.

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

Key risks for HHS include potential vendor lock-in, where the agency becomes overly dependent on Vertosoft's specific technologies or platforms, making future transitions difficult and costly. Data security and privacy are paramount; any breach or non-compliance with regulations like HIPAA could have severe consequences. Performance risks, such as service disruptions, inadequate uptime, or failure to meet service level agreements, could impact HHS operations. Cost overruns are mitigated by the Firm Fixed Price structure, but scope creep or unforeseen technical challenges could still pose financial risks if not managed carefully. Ensuring robust oversight and clear performance metrics is essential to mitigate these risks.

How effective is the Firm Fixed Price (FFP) contract type in managing costs for this cloud service?

The Firm Fixed Price (FFP) contract type is generally effective in managing costs for predictable services like cloud computing infrastructure, as it shifts the risk of cost overruns to the contractor, Vertosoft, LLC. This means HHS is obligated to pay the agreed-upon price regardless of the contractor's actual costs, provided the contracted services are delivered. This structure provides cost certainty for the government and incentivizes the contractor to manage its expenses efficiently. However, for highly dynamic or evolving cloud services, an FFP contract might disincentivize innovation or lead the contractor to cut corners on quality if not carefully monitored. Clear and comprehensive performance standards are crucial to ensure value is received.

What is the historical spending pattern for similar cloud computing services at HHS?

Historical spending patterns for cloud computing services at HHS would reveal trends in IT infrastructure investment. Agencies like HHS are increasingly migrating to cloud solutions to enhance agility, scalability, and cost-efficiency compared to traditional on-premises data centers. Analyzing past contracts for data processing, hosting, and related IT infrastructure services would show whether spending in this area has been increasing, decreasing, or remaining stable. Understanding this trend provides context for the current $20 million award, indicating whether it represents a significant expansion of cloud services, a continuation of existing investments, or a shift in procurement strategy. This data can also highlight which types of cloud services have historically received the most funding.

What are the implications of awarding this contract through 'full and open competition' with only 3 bidders?

Awarding this contract through 'full and open competition' signifies that the government sought bids from all eligible sources, aiming for the best possible value. However, receiving only three bids might suggest several possibilities: the market for this specific service is limited, the requirements were highly specialized, or potential bidders perceived significant risks or barriers to entry. While three bidders still represent competition, it is less robust than if numerous bids were received. This level of competition could potentially lead to a higher price than if more bidders were involved, as the pressure to underbid competitors is reduced. HHS would need to ensure the evaluation process was thorough to confirm the selected bid truly represented the best value.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related 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: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Vertosoft LLC

Address: 1602 VILLAGE MARKET BLVD SE, LEESBURG, VA, 20175

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

Financial Breakdown

Contract Ceiling: $19,999,992

Exercised Options: $19,999,992

Current Obligation: $19,999,992

Actual Outlays: $19,999,992

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS35F688GA

IDV Type: FSS

Timeline