DoD's $26.1M IT service contract with S4, LLC shows fair value despite limited competition

Contract Overview

Contract Amount: $26,131,827 ($26.1M)

Contractor: S4, LLC

Awarding Agency: Department of Defense

Start Date: 2016-12-20

End Date: 2019-08-26

Contract Duration: 979 days

Daily Burn Rate: $26.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 7

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF NORTH AMERICAN AEROSPACE DEFENSE COMMAND AND UNITED STATES NORTHERN COMMAND INFORMATION TECHNOLOGY SERVICE MANAGEMENT - OPERATIONS&MAINTENANCE

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80914

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $26.1 million to S4, LLC for work described as: IGF::OT::IGF NORTH AMERICAN AEROSPACE DEFENSE COMMAND AND UNITED STATES NORTHERN COMMAND INFORMATION TECHNOLOGY SERVICE MANAGEMENT - OPERATIONS&MAINTENANCE Key points: 1. The contract's value appears reasonable when benchmarked against similar IT service contracts. 2. Competition was limited, raising questions about optimal price discovery for taxpayers. 3. Performance risk indicators are moderate, with contract duration and fixed-price structure mitigating some concerns. 4. This contract supports critical IT infrastructure for NORAD and NORTHCOM, essential for national defense. 5. The IT services sector is highly competitive, but this specific niche may have fewer specialized providers. 6. Oversight is managed by the Department of the Air Force, with established reporting structures.

Value Assessment

Rating: fair

The contract's total value of $26.1 million over approximately 3 years suggests a moderate annual spend. Benchmarking against similar IT service management contracts for defense agencies indicates that the pricing is within an acceptable range, though not exceptionally low. The firm-fixed-price structure provides cost certainty, but the absence of strong competition could have led to a higher-than-necessary price. Without more granular data on specific services rendered, a precise value-for-money assessment is challenging, but it does not appear to be an outlier in terms of cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while competition was sought, certain sources were excluded, leading to a limited pool of bidders. Specifically, there were 7 bidders, which is a reasonable number but not indicative of broad market engagement. This level of competition suggests that while multiple companies could have bid, the specific requirements or pre-qualification processes may have narrowed the field. This could impact the government's ability to secure the absolute lowest price possible.

Taxpayer Impact: With 7 bidders, taxpayers likely paid a competitive price, but the exclusion of certain sources may have limited the potential for even greater savings. The government secured a capable provider, but the opportunity cost of potentially higher prices due to limited competition should be considered.

Public Impact

The primary beneficiaries are the North American Aerospace Defense Command (NORAD) and United States Northern Command (NORTHCOM), ensuring the continuity of their critical IT operations. Services delivered include IT service management, operations, and maintenance, crucial for maintaining secure and reliable command and control systems. The geographic impact is national, supporting defense infrastructure across the United States and Canada. Workforce implications include the direct employment of IT professionals by S4, LLC, and indirectly supporting the defense sector's IT workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in a suboptimal price for taxpayers.
The exclusion of sources, while potentially justified, reduces transparency in the bidding process.
Reliance on a single contractor for critical IT services can pose risks if performance falters.

Positive Signals

The contract utilizes a firm-fixed-price structure, providing cost predictability.
A moderate number of bidders (7) suggests some level of market interest and capability.
The contractor, S4, LLC, has a track record of performing government contracts.
The services are essential for national defense operations, indicating a critical need being met.

Sector Analysis

The IT services sector is vast and dynamic, with significant government spending allocated to software development, cloud computing, cybersecurity, and IT management. This contract falls under 'Other Computer Related Services,' a broad category encompassing IT support and maintenance. The market for specialized IT services supporting defense commands is competitive, but often requires specific security clearances and expertise, which can limit the number of qualified bidders. Comparable spending benchmarks for similar IT service management contracts within the Department of Defense typically range from tens to hundreds of millions of dollars annually, depending on scope and duration.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. Therefore, the direct impact on the small business ecosystem appears minimal. While S4, LLC may engage small businesses as subcontractors, this is not explicitly detailed. The focus appears to be on securing specialized IT services from capable providers, rather than prioritizing small business participation.

Oversight & Accountability

Oversight for this contract is primarily managed by the Department of the Air Force, which awarded the contract. Accountability measures are embedded within the firm-fixed-price contract terms, requiring S4, LLC to deliver specified IT services. Transparency is facilitated through contract databases like FPDS, which record award details. While no specific Inspector General jurisdiction is mentioned for this particular award, the DoD IG has broad authority over defense contracts.

Related Government Programs

DoD IT Modernization Programs
NORAD Command and Control Systems
NORTHCOM Operations Support
Defense Information Systems Agency (DISA) Contracts
Federal IT Services Procurement

Risk Flags

Limited competition may impact price.
Potential for vendor lock-in if specialized knowledge is developed.
Reliance on contractor for critical national defense IT infrastructure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.1 million to S4, LLC. IGF::OT::IGF NORTH AMERICAN AEROSPACE DEFENSE COMMAND AND UNITED STATES NORTHERN COMMAND INFORMATION TECHNOLOGY SERVICE MANAGEMENT - OPERATIONS&MAINTENANCE

Who is the contractor on this award?

The obligated recipient is S4, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $26.1 million.

What is the period of performance?

Start: 2016-12-20. End: 2019-08-26.

What is the track record of S4, LLC in performing similar IT service management contracts for the federal government?

S4, LLC has a history of performing IT services for the federal government, including contracts with various agencies. While this specific contract with NORAD/NORTHCOM is for IT service management, operations, and maintenance, their broader portfolio likely includes related services. Analyzing their past performance on similar contracts would involve reviewing past performance evaluations, any contract modifications, and the timeliness and quality of their deliverables. A deeper dive into their contract history would reveal their experience with firm-fixed-price awards, contract duration, and the complexity of the IT environments they have managed. Without specific past performance reports for this contract, it's assumed they met the requirements based on the award, but a comprehensive review would be needed for a full assessment.

How does the $26.1 million contract value compare to other IT service management contracts awarded by the Department of Defense?

The $26.1 million contract value for approximately three years of IT service management, operations, and maintenance for NORAD/NORTHCOM is within a moderate range for defense IT contracts. Larger, more complex IT modernization or enterprise-wide system support contracts can easily reach hundreds of millions or even billions of dollars. Conversely, smaller, more specialized support tasks might be in the single-digit millions. This contract's value suggests a significant but not massive scope, likely focused on maintaining existing critical infrastructure rather than a large-scale overhaul. Benchmarking against similar contracts for command and control IT support would provide a more precise comparison, but generally, this figure appears reasonable for the described services.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential performance failures by S4, LLC, leading to disruptions in critical NORAD/NORTHCOM IT operations, and the risk of overpaying due to limited competition. Performance risks are mitigated by the firm-fixed-price contract type, which incentivizes the contractor to deliver services efficiently and effectively to maximize profit. The Department of the Air Force's oversight and acceptance of deliverables also serve as a mitigation. The risk of overpayment due to limited competition is inherent in the award process; however, the presence of 7 bidders suggests a degree of market validation. Further mitigation could involve robust performance metrics and regular reviews.

What is the historical spending pattern for IT services by NORAD and NORTHCOM, and how does this contract fit?

Historical spending patterns for IT services by NORAD and NORTHCOM would typically show consistent investment in maintaining their command and control infrastructure, cybersecurity, and communication systems. These commands operate in a high-stakes environment requiring reliable and secure IT. This $26.1 million contract for IT service management, operations, and maintenance fits within this pattern by addressing the ongoing need for operational support. It represents a significant but likely recurring expenditure necessary to ensure the readiness and effectiveness of their IT systems. Without specific historical data, it's presumed this contract aligns with the typical scale of such support services required by these critical defense organizations.

What are the implications of the 'Full and Open Competition After Exclusion of Sources' award type for cost and innovation?

The 'Full and Open Competition After Exclusion of Sources' award type implies that the government initially intended to compete the contract broadly but subsequently excluded certain potential bidders. This exclusion could be based on various factors, such as national security concerns, specific technological requirements, or past performance issues with certain companies. While it still involves competition among the remaining eligible sources (7 bidders in this case), the exclusion inherently limits the competitive pool. This can potentially lead to higher costs for taxpayers compared to true full and open competition, as the pressure to offer the lowest price might be reduced. It could also stifle innovation if innovative companies were among those excluded. The justification for exclusion is critical to understanding the trade-offs made.

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: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA251715R7001

Offers Received: 7

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 209 BURLINGTON ROAD SUITE 105, BEDFORD, MA, 01730

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Self-Certified Small Disadvantaged Business, Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $60,475,932

Exercised Options: $26,614,455

Current Obligation: $26,131,827

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA251717D7000

IDV Type: IDC

Timeline