Energy Department's $458.7M IT support contract awarded to Energy Enterprise Solutions, LLC, ran for over 6 years

Contract Overview

Contract Amount: $458,749,592 ($458.7M)

Contractor: Energy Enterprise Solutions, LLC

Awarding Agency: Department of Energy

Start Date: 2006-02-01

End Date: 2012-06-30

Contract Duration: 2,341 days

Daily Burn Rate: $196.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: IT

Official Description: TASK ORDER FOR OPERATIONS SUPPORT INFORMATION TECHNOLOGY SUPPORT SERVICES, ON T&M BASIS.

Place of Performance

Location: GERMANTOWN, MONTGOMERY County, MARYLAND, 20874, UNITED STATES OF AMERICA

State: Maryland Government Spending

Plain-Language Summary

Department of Energy obligated $458.7 million to ENERGY ENTERPRISE SOLUTIONS, LLC for work described as: TASK ORDER FOR OPERATIONS SUPPORT INFORMATION TECHNOLOGY SUPPORT SERVICES, ON T&M BASIS. Key points: 1. Contract awarded on a Time and Materials basis, which can lead to cost overruns if not managed carefully. 2. The contract was not competitively procured, raising questions about potential price inefficiencies. 3. The duration of over 6 years suggests a long-term need for these IT support services. 4. The contract was awarded to a single entity, limiting opportunities for broader market engagement. 5. The North American Industry Classification System (NAICS) code 541519 indicates a broad range of IT support services. 6. The contract was awarded to a large business, with no indication of small business set-aside provisions. 7. The contract was awarded to a single awardee, suggesting a sole-source or limited competition scenario.

Value Assessment

Rating: questionable

Benchmarking the value of this Time and Materials (T&M) contract is challenging without detailed cost breakdowns and performance metrics. T&M contracts inherently carry a higher risk of cost escalation compared to fixed-price contracts, as the contractor is reimbursed for actual labor hours and materials. The total value of over $458 million over six years averages to approximately $76 million annually. Without comparable T&M contracts for similar IT support services within the Department of Energy or across government, it's difficult to definitively assess if the pricing was competitive. The lack of competition further complicates value assessment, as there was no market pressure to drive down costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was explicitly marked as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source award. This means that the Department of Energy did not solicit bids from multiple vendors. Sole-source awards are typically justified when only one vendor possesses the necessary capabilities, security clearances, or proprietary knowledge to perform the required services. However, this approach bypasses the competitive process, which is designed to ensure the government receives the best possible price and value.

Taxpayer Impact: The lack of competition means taxpayers may have paid a premium, as there was no market pressure to ensure the lowest possible price. This also limits transparency into the government's procurement practices.

Public Impact

The primary beneficiaries of this contract are the IT infrastructure and operations within the Department of Energy, ensuring continued functionality of critical systems. The services delivered include essential IT support, likely encompassing network management, system maintenance, help desk support, and potentially software development or integration. The geographic impact is primarily within the Department of Energy's facilities and operational areas, wherever its IT infrastructure is located. The contract supported the workforce employed by Energy Enterprise Solutions, LLC, providing jobs in the IT services sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials (T&M) contract type increases risk of cost overruns due to lack of fixed pricing.
Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Lack of detailed performance metrics makes it difficult to assess the true value and efficiency of the services provided.
Long contract duration (over 6 years) without clear performance reviews could indicate a lack of agility in adapting to evolving IT needs.
The contract was awarded to a large business, potentially limiting opportunities for small businesses to participate in this significant IT support effort.

Positive Signals

The contract provided essential IT support services, ensuring the continuity of operations for the Department of Energy.
The long duration suggests a stable and reliable partnership, potentially indicating consistent service delivery.
The award to a single, established vendor could imply a high level of trust and proven capability in meeting the Department's IT needs.
The contract likely supported a significant number of IT professionals, contributing to employment in the sector.

Sector Analysis

This contract falls within the Information Technology (IT) services sector, specifically focusing on IT support. The IT services market is vast and highly competitive, with numerous companies offering a wide range of solutions from basic maintenance to complex system integration. Government spending on IT services is a significant portion of overall federal expenditures, driven by the need to modernize infrastructure, enhance cybersecurity, and support agency operations. Comparable spending benchmarks for large-scale IT support contracts can vary widely based on scope, duration, and service level agreements, but contracts in the tens to hundreds of millions of dollars are common for major federal agencies.

Small Business Impact

The data indicates this contract was awarded to a large business ('st': 'MD' likely refers to Maryland, a state with a large presence of federal contractors, and 'sb': false suggests no small business set-aside. This means opportunities for small businesses to directly participate as prime contractors were likely nonexistent. However, it is possible that Energy Enterprise Solutions, LLC, subcontracted portions of the work to small businesses, which is a common practice to meet federal subcontracting goals. Without specific subcontracting plans or reports, the direct impact on the small business ecosystem remains unclear, but the lack of a set-aside means direct prime contracting opportunities were missed.

Oversight & Accountability

Oversight for this contract would have been primarily the responsibility of the contracting officer and the program managers within the Department of Energy. The Time and Materials (T&M) nature of the contract necessitates rigorous oversight to ensure that labor hours and material costs are reasonable and allocable to the contract's objectives. Transparency is limited by the sole-source award and the lack of publicly available detailed performance reports. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected or identified during the contract's lifecycle.

Related Government Programs

Department of Energy IT Modernization Initiatives
Federal Civilian Agency IT Services Contracts
IT Support Services for Government Operations
Energy Sector Technology Services
Large-Scale IT Service Delivery Contracts

Risk Flags

Sole-source award bypasses competitive bidding.
Time and Materials contract type carries inherent cost overrun risk.
Lack of publicly available performance metrics hinders value assessment.
Long contract duration without clear performance review data.
No indication of small business participation as prime contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Energy awarded $458.7 million to ENERGY ENTERPRISE SOLUTIONS, LLC. TASK ORDER FOR OPERATIONS SUPPORT INFORMATION TECHNOLOGY SUPPORT SERVICES, ON T&M BASIS.

Who is the contractor on this award?

The obligated recipient is ENERGY ENTERPRISE SOLUTIONS, LLC.

Which agency awarded this contract?

Awarding agency: Department of Energy (Department of Energy).

What is the total obligated amount?

The obligated amount is $458.7 million.

What is the period of performance?

Start: 2006-02-01. End: 2012-06-30.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of meeting the agency's needs. This could be due to proprietary technology, unique expertise, critical security requirements, or a lack of competition in the market for the specific services required. Without further documentation from the Department of Energy, the precise rationale remains unknown. This lack of competition is a key area for scrutiny, as it bypasses the standard process designed to ensure best value for the government.

How did the Time and Materials (T&M) pricing structure impact the final cost compared to a fixed-price contract?

Time and Materials (T&M) contracts reimburse the contractor for the actual cost of labor hours and materials used, plus a fixed fee or hourly rate. This structure inherently carries a higher risk of cost escalation for the government compared to fixed-price contracts, as there is less incentive for the contractor to control costs. The final cost is directly tied to the effort expended. Without detailed breakdowns of labor categories, hours billed, and material costs, it's impossible to quantify the exact impact. However, the significant total value of over $458 million suggests that effective cost control and oversight by the Department of Energy were crucial to manage potential overruns inherent in T&M agreements.

What were the key performance indicators (KPIs) and how was performance measured for this contract?

The provided data does not specify the key performance indicators (KPIs) or the methods used to measure performance for this contract. For IT support services, typical KPIs might include system uptime, response times for help desk tickets, resolution rates, project completion timelines, and adherence to security protocols. The effectiveness of oversight and the ultimate value derived from the contract are heavily dependent on the establishment and monitoring of robust performance metrics. The absence of this information makes it difficult to assess the contractor's performance and the overall success of the IT support provided.

Were there any contract modifications or change orders issued during the contract's lifecycle, and what was their impact?

The provided data does not contain information regarding contract modifications or change orders. During a contract's lifecycle, especially one spanning over six years, modifications are common to adjust scope, pricing, or timelines based on evolving requirements or unforeseen circumstances. Analyzing these modifications would provide insight into how the contract adapted to the Department of Energy's changing needs and whether these changes resulted in significant cost increases or shifts in the service delivery. Without this data, a complete picture of the contract's evolution and its financial trajectory is unavailable.

What is the track record of Energy Enterprise Solutions, LLC with federal contracts, particularly in IT support?

Energy Enterprise Solutions, LLC has been awarded federal contracts, including this significant IT support task order from the Department of Energy. The fact that they were awarded a contract of this magnitude, even on a sole-source basis, suggests they possess capabilities deemed necessary by the agency. However, a comprehensive assessment of their track record would require examining their performance on other federal contracts, including any past performance evaluations, awards, or disputes. The duration and value of this specific contract indicate a substantial engagement with the federal government, likely involving a significant team and complex service delivery.

How does the annual spending on this contract compare to other similar IT support contracts within the Department of Energy or other federal agencies?

The average annual spending on this contract was approximately $76 million ($458.7 million / 6.3 years). This figure places it as a substantial IT support contract. Comparing it to other federal agencies requires access to broader government spending databases. Within the Department of Energy, it likely represents a significant portion of their IT support budget. However, without specific benchmarks for comparable IT support services (e.g., network management, cybersecurity, help desk) across agencies, it's difficult to definitively state if this spending was high, low, or average. The sole-source nature and T&M basis also complicate direct comparisons with competitively bid, fixed-price contracts.

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 › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: DE-RP01-04IM00054

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 656 QUINCE ORCHARD STE 500, GAITHERSBURG, MD, 20878

Business Categories: Black American Owned Business, Category Business, Minority Owned Business, Small Business

Financial Breakdown

Contract Ceiling: $477,105,585

Exercised Options: $477,105,585

Current Obligation: $458,749,592

Parent Contract

Parent Award PIID: DEAM0106IM00054

IDV Type: IDC

Timeline