HUD awards $6.5M for cloud migration support, aiming to modernize infrastructure

Contract Overview

Contract Amount: $6,526,400 ($6.5M)

Contractor: Design Data Systems Inc

Awarding Agency: Department of Housing and Urban Development

Start Date: 2024-09-29

End Date: 2026-09-28

Contract Duration: 729 days

Daily Burn Rate: $9.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: THIS AWARD WIL BE USED TO ACQUIRE SUPPORT SERVICES TO ASSIST WITH THE STRATEGY, PLANNING, IMPLEMENTATION, AND OVERSIGHT OF MODERNIZING AND TRANSITIONING THE HUD INFRASTRUCTURE TO THE CLOUD PROVIDERS.

Place of Performance

Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20879

State: Maryland Government Spending

Plain-Language Summary

Department of Housing and Urban Development obligated $6.5 million to DESIGN DATA SYSTEMS INC for work described as: THIS AWARD WIL BE USED TO ACQUIRE SUPPORT SERVICES TO ASSIST WITH THE STRATEGY, PLANNING, IMPLEMENTATION, AND OVERSIGHT OF MODERNIZING AND TRANSITIONING THE HUD INFRASTRUCTURE TO THE CLOUD PROVIDERS. Key points: 1. Focus on strategic planning and implementation for cloud transition. 2. Contract duration of approximately two years suggests a phased modernization approach. 3. The award is a definitive contract, indicating a commitment to a specific service provider. 4. Fixed-price contract type aims to control costs for the cloud migration project. 5. The service category points to specialized IT support beyond standard infrastructure management. 6. This award is part of a broader government-wide effort to adopt cloud technologies.

Value Assessment

Rating: good

The contract value of $6.5 million for two years of cloud migration support appears reasonable given the complexity of modernizing federal IT infrastructure. Benchmarking against similar large-scale cloud transition projects within government agencies suggests that this level of investment is within expected ranges. The firm fixed-price structure provides cost certainty for the Department of Housing and Urban Development (HUD), mitigating the risk of cost overruns often associated with IT modernization efforts. While specific performance metrics are not detailed here, the focus on strategy, planning, and implementation indicates a comprehensive approach to achieving the desired outcomes.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. While the specific justification for the sole-source award is not provided in the data, such awards are typically made when a particular contractor possesses unique capabilities, proprietary technology, or when urgency dictates a direct award. The lack of competition means that price discovery through a competitive bidding process was bypassed, potentially leading to higher costs than if multiple vendors had vied for the contract. This approach requires careful justification to ensure taxpayer value.

Taxpayer Impact: Sole-source awards limit the opportunity for taxpayers to benefit from competitive pricing that could arise from multiple bids. This means the government may not achieve the lowest possible cost for these critical cloud migration services.

Public Impact

The primary beneficiary is the Department of Housing and Urban Development (HUD), which will receive enhanced IT infrastructure and services. The services delivered will support the modernization and transition of HUD's IT infrastructure to cloud platforms. The geographic impact is primarily within HUD's operational centers, though cloud services can enable broader accessibility. The contract is expected to support IT professionals involved in strategy, planning, and implementation of cloud technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and limited innovation.
Sole-source awards can reduce transparency and accountability compared to competed contracts.
The specific technical expertise required might limit the pool of qualified contractors, necessitating a sole-source approach, but this needs clear justification.

Positive Signals

The firm fixed-price contract type provides cost predictability for the government.
The award supports a critical modernization effort, aiming to improve IT efficiency and security.
The contract duration allows for a structured and comprehensive approach to cloud migration.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on cloud computing services and IT consulting. The market for cloud migration and management services is substantial and growing, driven by digital transformation initiatives across all industries, including government. Federal agencies are increasingly moving towards cloud solutions to enhance scalability, security, and cost-efficiency. Comparable spending benchmarks for large-scale cloud migration projects within federal agencies can range from millions to tens of millions of dollars, depending on the scope and complexity of the agency's infrastructure.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'ss': false. Furthermore, the data suggests no specific subcontracting goals for small businesses were mandated for this award. This means that opportunities for small businesses to participate in this cloud migration project, either as prime contractors or subcontractors, may be limited. The absence of set-aside provisions could reduce the direct economic benefit to the small business ecosystem in this specific contract.

Oversight & Accountability

Oversight for this contract will likely be managed by the contracting officers and program managers within the Department of Housing and Urban Development (HUD). As a definitive contract, it implies a structured agreement with defined deliverables and payment schedules, facilitating oversight. Transparency is enhanced through contract databases, but the specific details of the sole-source justification and performance monitoring would require direct access to agency records. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Federal Cloud Computing Strategy
IT Modernization Initiatives
Digital Government Services
Agency IT Infrastructure Modernization

Risk Flags

Sole-source award lacks competitive pricing.
Potential for cost overruns if not managed tightly.
Dependence on a single contractor for critical infrastructure transition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Housing and Urban Development awarded $6.5 million to DESIGN DATA SYSTEMS INC. THIS AWARD WIL BE USED TO ACQUIRE SUPPORT SERVICES TO ASSIST WITH THE STRATEGY, PLANNING, IMPLEMENTATION, AND OVERSIGHT OF MODERNIZING AND TRANSITIONING THE HUD INFRASTRUCTURE TO THE CLOUD PROVIDERS.

Who is the contractor on this award?

The obligated recipient is DESIGN DATA SYSTEMS INC.

Which agency awarded this contract?

Awarding agency: Department of Housing and Urban Development (Department of Housing and Urban Development).

What is the total obligated amount?

The obligated amount is $6.5 million.

What is the period of performance?

Start: 2024-09-29. End: 2026-09-28.

What is the specific justification for awarding this contract on a sole-source basis to Design Data Systems Inc.?

The provided data indicates the contract was awarded on a sole-source basis ('ct': 'NOT AVAILABLE FOR COMPETITION'). While the specific justification is not detailed, common reasons for sole-source awards in federal contracting include the unique capabilities of a contractor, proprietary technology, urgent and compelling needs where competition is not feasible, or when only one responsible source exists. For this specific contract, Design Data Systems Inc. may possess specialized expertise in HUD's legacy systems or unique methodologies for cloud migration that are not readily available from other vendors. A thorough review of the Justification for Other Than Full and Open Competition (JOFOC) document, if available, would provide the precise rationale.

How does the $6.5 million contract value compare to similar cloud migration projects in federal agencies?

The $6.5 million contract value for approximately two years of cloud migration support services is within a reasonable range for federal IT modernization projects of this nature. Large-scale cloud transitions for agencies can vary significantly in cost, often ranging from several million to tens of millions of dollars, depending on the size and complexity of the existing infrastructure, the scope of services required (e.g., strategy, planning, implementation, migration, ongoing management), and the chosen cloud service model (IaaS, PaaS, SaaS). Given that this award focuses on strategy, planning, and implementation, the value appears proportionate to the critical foundational work required for a successful cloud transition. Benchmarking against similar definitive contracts for IT consulting and cloud services awarded by agencies like GSA or other cabinet-level departments would provide more precise comparisons.

What are the potential risks associated with a sole-source award for cloud migration services?

Sole-source awards, while sometimes necessary, carry inherent risks. The primary risk is the potential for inflated pricing due to the absence of competitive pressure, meaning taxpayers may not receive the best possible value. Another risk is a reduced incentive for the contractor to innovate or provide exceptional service, as there is no immediate threat of losing the contract to a competitor. Furthermore, a sole-source award can limit the government's access to a broader range of technical solutions and expertise that might be offered by multiple vendors. This can also raise concerns about transparency and accountability, as the justification for bypassing full and open competition needs to be robust and well-documented to ensure fairness and prevent potential conflicts of interest.

What is the expected impact of this contract on HUD's IT infrastructure and operational efficiency?

This contract is expected to significantly impact HUD's IT infrastructure by facilitating its modernization and transition to cloud providers. The primary goal is to move away from potentially outdated, on-premises systems towards more scalable, secure, and flexible cloud-based solutions. This transition should lead to improved operational efficiency through enhanced system performance, better data accessibility, and potentially reduced maintenance costs associated with legacy hardware. Cloud adoption can also improve disaster recovery capabilities and enable faster deployment of new applications and services, ultimately supporting HUD's mission more effectively. The success of this impact hinges on the effective execution of the strategy, planning, and implementation phases covered by this contract.

What is the historical spending pattern for similar IT support services at HUD?

Analyzing historical spending patterns for similar IT support services at HUD would require access to detailed procurement data beyond the scope of this single award. However, federal agencies like HUD consistently invest in IT modernization and support services. Spending on IT infrastructure, cloud services, cybersecurity, and related consulting has been a significant and growing area of federal expenditure over the past decade. Agencies often issue multiple contracts for various IT needs, including strategic planning, system integration, software development, and managed services. Understanding HUD's specific historical IT budget allocations and the types of contracts previously awarded for similar services would provide context for the $6.5 million investment in cloud migration support.

Industry Classification

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

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

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 86615424R00006

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 610 PROFESSIONAL DR, GAITHERSBURG, MD, 20879

Business Categories: 8(a) Program Participant, Alaskan Native Corporation Owned Firm, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Native American Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,353,640

Exercised Options: $6,526,400

Current Obligation: $6,526,400

Actual Outlays: $4,312,213

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline