Federal Student Aid's virtual data center contract valued at $493M supports student loan servicing

Contract Overview

Contract Amount: $493,250,311 ($493.3M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Education

Start Date: 2015-09-28

End Date: 2026-07-31

Contract Duration: 3,959 days

Daily Burn Rate: $124.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF: FEDERAL STUDENT AID'S VIRTUAL DATA CENTER, PROVIDING CENTRALIZED HOSTING AND MANAGEMENT OF ELECTRONIC DATA AND COMPUTER APPLICATIONS, AND RELATED SERVICES TO SUPPORT FEDERAL STUDENT AID MISSION OF SERVICING STUDENT LOANS.

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of Education obligated $493.3 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: IGF::OT::IGF: FEDERAL STUDENT AID'S VIRTUAL DATA CENTER, PROVIDING CENTRALIZED HOSTING AND MANAGEMENT OF ELECTRONIC DATA AND COMPUTER APPLICATIONS, AND RELATED SERVICES TO SUPPORT FEDERAL STUDENT AID MISSION OF SERVICING STUDENT LOANS. Key points: 1. The contract provides essential IT infrastructure and services for managing student loan data and applications. 2. A firm-fixed-price contract type suggests predictable costs for the government. 3. The contract has been active since 2015, indicating a long-term need for these services. 4. The duration of the contract, nearly 4,000 days, highlights the sustained operational requirements. 5. The award was made through full and open competition, suggesting a robust bidding process. 6. The primary contractor, Peraton Enterprise Solutions LLC, is responsible for delivering these critical IT services.

Value Assessment

Rating: good

The contract's value of approximately $493 million over its lifespan represents a significant investment in IT infrastructure for student loan servicing. Benchmarking this against similar large-scale IT hosting and management contracts is challenging without more specific service details. However, the firm-fixed-price structure is generally favorable for cost control. The long duration suggests a stable, albeit substantial, commitment to the chosen vendor and solution.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of 3 offers (implied by 'no': 3) suggests a competitive environment, which typically leads to better price discovery and potentially more favorable terms for the government. The agency sought a comprehensive solution for virtual data center services, allowing for a broad range of capabilities to be evaluated.

Taxpayer Impact: Full and open competition generally benefits taxpayers by ensuring that the government receives competitive pricing and the best value through a wide selection of qualified bidders.

Public Impact

Federal Student Aid (FSA) benefits directly through the provision of reliable IT infrastructure for its mission. Students and borrowers benefit indirectly from the efficient servicing of federal student loans. The contract supports the operational continuity of critical government functions related to higher education finance. The services delivered are essential for managing and processing vast amounts of electronic data and applications related to student financial aid.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to vendor lock-in and potential challenges in adopting newer technologies.
Reliance on a single virtual data center provider may pose risks in case of outages or security breaches.
The scale of the contract might limit opportunities for smaller, specialized IT service providers.

Positive Signals

The contract's full and open competition suggests a well-vetted selection process.
Firm-fixed-price terms provide cost certainty for the government over the contract period.
The long-term nature of the contract indicates a stable and ongoing need for these essential services.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader IT services industry. The market for cloud hosting, data management, and IT infrastructure support is highly competitive, with numerous large and small providers. Federal agencies increasingly rely on such services to modernize operations and manage vast datasets. Comparable spending benchmarks would depend on the specific scope of services, but large-scale data center operations can range from tens to hundreds of millions of dollars annually.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-scale IT services contract, it is likely that the prime contractor may engage small businesses as subcontractors to fulfill specific requirements or to meet subcontracting goals. However, without specific subcontracting plans or performance data, the direct impact on the small business ecosystem remains unclear. The focus is on a large prime contractor delivering comprehensive services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Education's contracting officers and program managers. The Inspector General's office for the Department of Education would likely have jurisdiction for audits and investigations into potential fraud, waste, or abuse. Transparency is facilitated through contract award databases like FPDS, which provide basic information on contract value, duration, and competition. Specific performance metrics and reporting requirements would be detailed in the contract's statement of work.

Related Government Programs

Federal Student Aid IT Modernization Efforts
Department of Education IT Infrastructure Contracts
Cloud Computing Services for Federal Agencies
Data Center Operations and Management Contracts

Risk Flags

Long-term contract duration may lead to technological obsolescence.
Concentration of critical IT services with a single vendor increases risk.
Potential for vendor lock-in.
Security risks inherent in large-scale data center operations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Education awarded $493.3 million to PERATON ENTERPRISE SOLUTIONS LLC. IGF::OT::IGF: FEDERAL STUDENT AID'S VIRTUAL DATA CENTER, PROVIDING CENTRALIZED HOSTING AND MANAGEMENT OF ELECTRONIC DATA AND COMPUTER APPLICATIONS, AND RELATED SERVICES TO SUPPORT FEDERAL STUDENT AID MISSION OF SERVICING STUDENT LOANS.

Who is the contractor on this award?

The obligated recipient is PERATON ENTERPRISE SOLUTIONS LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $493.3 million.

What is the period of performance?

Start: 2015-09-28. End: 2026-07-31.

What is the specific performance history of Peraton Enterprise Solutions LLC on this contract?

Detailed performance history for Peraton Enterprise Solutions LLC on this specific contract is not publicly available in the provided data. Contract performance is typically assessed through metrics like on-time delivery, quality of service, and adherence to technical specifications, often documented in performance reports or past performance evaluations. Agencies use this information for future source selections and contract modifications. Without access to these internal agency reports or contractor performance assessment reports (CPARs), a precise evaluation of their track record on this virtual data center contract is not possible. However, the contract's continued operation since 2015 suggests a level of satisfactory performance to date.

How does the per-unit cost of this contract compare to similar federal IT infrastructure contracts?

The provided data does not include specific per-unit cost breakdowns (e.g., cost per server, cost per gigabyte of storage, cost per user). The total contract value of $493 million is for comprehensive virtual data center services, encompassing hosting, management, and application support. To compare per-unit costs, one would need to identify comparable contracts with similar service level agreements (SLAs), scope, and scale, and then extract detailed pricing information. Without such granular data, a direct benchmark against similar federal IT infrastructure contracts is not feasible. The firm-fixed-price nature aims for overall cost predictability rather than granular per-unit cost control.

What are the primary risks associated with this long-term IT infrastructure contract?

Key risks associated with this long-term IT infrastructure contract include technological obsolescence, where the contracted solutions may become outdated before the contract's end, requiring costly upgrades or workarounds. Vendor lock-in is another significant risk, making it difficult and expensive to switch providers if performance degrades or better alternatives emerge. Security vulnerabilities are a constant concern for data centers; a breach could have severe consequences for Federal Student Aid's operations and sensitive data. Furthermore, the concentration of critical IT functions with one provider increases the impact of any service disruption. Dependence on a single vendor also reduces leverage for renegotiating terms or demanding service improvements.

How effective has this contract been in supporting Federal Student Aid's mission of servicing student loans?

The effectiveness of this contract in supporting Federal Student Aid's (FSA) mission is primarily indicated by the continuity and stability of its IT operations. The contract provides the foundational virtual data center infrastructure necessary for managing student loan data, processing applications, and delivering services to borrowers. Its long duration (since 2015) suggests it has reliably met FSA's core IT needs. However, 'effectiveness' also implies efficiency, scalability, and adaptability. Without specific performance metrics related to system uptime, data processing speed, security incident response times, or the ability to scale resources dynamically, a definitive judgment on its effectiveness beyond operational continuity is difficult. The contract's value and longevity point to its essential role.

What are the historical spending patterns for virtual data center services at the Department of Education?

Historical spending patterns for virtual data center services at the Department of Education, beyond this specific $493 million contract, are not detailed in the provided data. This contract represents a significant, long-term investment in centralized IT infrastructure. To understand broader spending patterns, one would need to analyze historical contract data for the Department of Education across various IT service categories, including cloud hosting, data management, and application support, over multiple fiscal years. This would reveal trends in IT modernization, shifts towards cloud adoption, and the overall budget allocated to IT infrastructure. This single contract provides a snapshot of a major component of their IT spending.

What is the potential impact of this contract on the broader federal IT services market?

This contract, valued at $493 million and awarded through full and open competition, signifies a substantial commitment by the Department of Education to a specific IT infrastructure solution. Its scale and duration suggest it represents a significant portion of the federal market for virtual data center services. The award to Peraton Enterprise Solutions LLC indicates their capability in handling large, complex government IT contracts. Such large awards can influence market dynamics by validating specific technological approaches (virtual data centers) and demonstrating the feasibility of long-term engagements. It also sets a benchmark for pricing and service expectations for similar future procurements, potentially impacting how other agencies structure their IT infrastructure contracts and how vendors position themselves in the federal market.

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 › 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: Veritas Capital Fund Management, L.L.C.

Address: 15050 CONFERENCE CENTER DR, CHANTILLY, VA, 20151

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $596,862,152

Exercised Options: $553,753,161

Current Obligation: $493,250,311

Actual Outlays: $100,372,332

Subaward Activity

Number of Subawards: 319

Total Subaward Amount: $94,992,271

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSN316201200026W

IDV Type: GWAC

Timeline