Commerce Department's $17.4M Data Storage Lease to Datacure Inc. Raises Value Questions

Contract Overview

Contract Amount: $17,397,178 ($17.4M)

Contractor: Datacure, Inc.

Awarding Agency: Department of Commerce

Start Date: 2004-04-01

End Date: 2010-09-09

Contract Duration: 2,352 days

Daily Burn Rate: $7.4K/day

Competition Type: COMPETITIVE DELIVERY ORDER

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: DATA STORAGE TECHNOLOGY (IT HARDWARE LEASE)

Place of Performance

Location: ALEXANDRIA, ALEXANDRIA (CITY) County, VIRGINIA, 22314

State: Virginia Government Spending

Plain-Language Summary

Department of Commerce obligated $17.4 million to DATACURE, INC. for work described as: DATA STORAGE TECHNOLOGY (IT HARDWARE LEASE) Key points: 1. The contract's duration and total value suggest a potentially high cost per year for data storage services. 2. Competition dynamics for this IT hardware lease are unclear, impacting price discovery and taxpayer value. 3. The firm-fixed-price contract type shifts risk to the contractor, but oversight is crucial for performance. 4. This lease falls within the IT hardware sector, a critical but often rapidly depreciating asset category. 5. The contract's significant duration may indicate a need for long-term, stable data storage solutions. 6. Benchmarking against similar IT hardware leases is essential to assess if the price reflects market value.

Value Assessment

Rating: fair

The total award of $17.4 million over approximately 6.5 years (2352 days) averages to roughly $2.68 million per year. Without specific details on the storage capacity or performance metrics, it is difficult to definitively benchmark this against similar contracts. However, the extended duration for IT hardware, which can experience rapid technological advancements and price drops, warrants scrutiny. The firm-fixed-price nature suggests a negotiated rate that should ideally reflect competitive market conditions at the time of award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: unknown

The contract type is listed as 'COMPETITIVE DELIVERY ORDER,' which implies some level of competition. However, the specific details regarding the number of bidders, the solicitation process, and whether it was a full and open competition or a set-aside are not provided in the available data. A competitive process is generally expected to yield better pricing, but the extent of competition directly influences the degree of price discovery.

Taxpayer Impact: If the competition was robust, taxpayers likely benefited from a more favorable price. Limited competition could mean higher costs than necessary.

Public Impact

The U.S. Patent and Trademark Office (USPTO) benefits from the provision of data storage technology, crucial for its operations. This contract supports the USPTO's ability to store and manage vast amounts of intellectual property data. The primary beneficiaries are the government agencies relying on the data storage infrastructure for their mission. Geographic impact is likely concentrated around the USPTO's operational centers, primarily in Virginia. Workforce implications are minimal, as this is a hardware lease rather than a service requiring significant new personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for overpaying for IT hardware due to long contract duration and rapid technological obsolescence.
Lack of detailed competition information makes it difficult to assess if the price reflects true market value.
The specific data storage technology and its performance metrics are not detailed, hindering value assessment.
Firm-fixed-price contracts can sometimes lead to contractor inflexibility if requirements change significantly.

Positive Signals

The contract was awarded through a competitive delivery order, suggesting some level of market vetting.
Firm-fixed-price structure transfers performance risk to the contractor, potentially protecting the government from cost overruns.
The contract duration indicates a potentially stable, long-term solution for the agency's data storage needs.
The award is to Datacure, Inc., suggesting a specific vendor was selected based on perceived capabilities.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically IT hardware leasing. The market for data storage solutions is vast and highly competitive, with prices influenced by technological advancements, capacity, and service level agreements. Benchmarking this lease against other government or commercial IT hardware leases of similar scale and duration would be necessary to ascertain if the $17.4 million award represents a competitive market price. The rapid pace of innovation in storage technology means that long-term leases for hardware can sometimes be less cost-effective than purchasing or adopting newer technologies.

Small Business Impact

The provided data does not indicate whether this contract involved small business set-asides or subcontracting opportunities. As a competitive delivery order, it's possible that small businesses could have participated, either as prime contractors or subcontractors, depending on the specific solicitation requirements. Without further details, the direct impact on the small business ecosystem remains unknown. Analysis of subcontracting plans, if any, would be needed to assess the extent of small business involvement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Commerce and the U.S. Patent and Trademark Office. Accountability measures would be tied to the terms of the firm-fixed-price contract, focusing on delivery and performance against agreed-upon specifications. Transparency is limited by the available data; details on the competitive process and specific performance metrics are not publicly detailed. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

General Services Administration (GSA) IT Schedule Contracts
Cloud Storage Services Contracts
Data Center Infrastructure Procurement
IT Hardware Leasing Programs

Risk Flags

Long contract duration for IT hardware
Lack of detailed competition information
Potential for technology obsolescence
Unclear performance metrics and value for money

Frequently Asked Questions

What is this federal contract paying for?

Department of Commerce awarded $17.4 million to DATACURE, INC.. DATA STORAGE TECHNOLOGY (IT HARDWARE LEASE)

Who is the contractor on this award?

The obligated recipient is DATACURE, INC..

Which agency awarded this contract?

Awarding agency: Department of Commerce (U.S. Patent and Trademark Office).

What is the total obligated amount?

The obligated amount is $17.4 million.

What is the period of performance?

Start: 2004-04-01. End: 2010-09-09.

What was the specific type and capacity of data storage technology leased, and how does it compare to current market offerings?

The provided data identifies the contract as 'DATA STORAGE TECHNOLOGY (IT HARDWARE LEASE)' but lacks specifics on the exact technology (e.g., SAN, NAS, cloud-based storage appliances) or its capacity (e.g., terabytes, petabytes). Without this information, a direct comparison to current market offerings is impossible. However, given the contract's award date (2004) and end date (2010), the technology leased would be representative of that era. The rapid evolution of storage technology means that hardware from that period is likely significantly outperformed and potentially less cost-effective than contemporary solutions in terms of capacity, speed, and energy efficiency. A detailed analysis would require the original solicitation documents to understand the specified requirements and the vendor's proposed solution.

How did the pricing of this $17.4 million lease compare to other similar IT hardware leases awarded by the government during the same period?

Benchmarking this $17.4 million lease against similar contracts requires access to a broader dataset of IT hardware leases awarded between 2004 and 2010, specifically focusing on storage solutions. Key comparison points would include contract duration, storage capacity, performance specifications (e.g., IOPS, throughput, latency), and the level of competition. The average annual cost of approximately $2.68 million for this lease needs to be contextualized by the scale and capabilities of the leased system. Without specific comparable data, it's challenging to definitively state whether the pricing was favorable. However, the extended duration for hardware acquisition warrants a closer look at whether leasing was the most economical approach compared to purchasing or utilizing newer, potentially more cost-effective technologies available at the time or shortly after.

What were the specific performance metrics and service level agreements (SLAs) associated with this data storage lease?

The provided data does not include details on the specific performance metrics or Service Level Agreements (SLAs) for this data storage lease. These would typically encompass aspects such as data access speed (throughput and IOPS), uptime guarantees, data redundancy, disaster recovery capabilities, and maintenance response times. The firm-fixed-price nature of the contract suggests that Datacure, Inc. was obligated to meet certain performance standards. Understanding these SLAs is crucial for evaluating the true value delivered by the lease, as higher performance and reliability often come at a premium. Without this information, it's difficult to assess if the government received adequate service commensurate with the $17.4 million expenditure.

What was the rationale for choosing a lease agreement over purchasing data storage hardware, especially for a 6.5-year term?

The rationale for choosing a lease agreement over purchasing data storage hardware for a 6.5-year term could stem from several factors. Leasing might have offered advantages in terms of predictable monthly costs, avoiding large upfront capital expenditures, and potentially including maintenance and upgrades within the lease payment. It could also provide flexibility to upgrade technology more frequently than might be feasible with a direct purchase, although the 6.5-year duration is quite long for IT hardware leasing, which often sees shorter terms due to rapid obsolescence. Agencies might also lease if they anticipate changes in requirements or budget constraints that make ownership less desirable. However, over the long term, purchasing often proves more cost-effective for durable assets like IT hardware, suggesting that a thorough cost-benefit analysis comparing leasing versus purchasing should have been conducted.

How did the contractor, Datacure, Inc., perform under this contract, and were there any issues or disputes?

The provided data does not contain information regarding the performance of Datacure, Inc. under this specific contract, nor does it mention any issues or disputes. Contractor performance is typically evaluated through contract close-out reports, performance assessments, or payment histories. Without access to these records, it is impossible to assess whether Datacure, Inc. met the contractual obligations, delivered the required data storage technology, and adhered to the agreed-upon service levels. Any history of disputes, contract modifications, or termination for default would also be relevant indicators of performance quality and risk.

Industry Classification

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

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

Competition & Pricing

Extent Competed: COMPETITIVE DELIVERY ORDER

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 3730 ACOSTA RD, FAIRFAX, VA, 11

Business Categories: Category Business, Small Business, Woman Owned Business

Financial Breakdown

Contract Ceiling: $17,397,178

Exercised Options: $17,397,178

Current Obligation: $17,397,178

Parent Contract

Parent Award PIID: GS35F0393M

IDV Type: FSS

Timeline