DoD's $18.3M software reimbursement contract with Hixardt Technologies shows fair value but limited competition

Contract Overview

Contract Amount: $18,338,597 ($18.3M)

Contractor: Hixardt Technologies, Inc.

Awarding Agency: Department of Defense

Start Date: 2008-07-01

End Date: 2012-08-31

Contract Duration: 1,522 days

Daily Burn Rate: $12.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: SOFTWARE REIMBURSEMENT: BASE YEAR

Place of Performance

Location: EGLIN AFB, OKALOOSA County, FLORIDA, 32542

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $18.3 million to HIXARDT TECHNOLOGIES, INC. for work described as: SOFTWARE REIMBURSEMENT: BASE YEAR Key points: 1. The contract's value appears reasonable given the duration and fixed-price nature. 2. Competition was limited, raising questions about optimal price discovery. 3. The contractor has a history of performing similar IT services for the government. 4. Performance context is within the Air Force's IT support domain. 5. This contract falls under IT services, a significant government spending category. 6. The fixed-price contract type generally shifts risk to the contractor.

Value Assessment

Rating: fair

The contract's total value of approximately $18.3 million over four years suggests an average annual cost of around $4.6 million. This appears to be within a reasonable range for IT software reimbursement services, especially considering it's a firm-fixed-price contract. Benchmarking against similar contracts is challenging without more specific service details, but the overall expenditure does not immediately suggest overpayment. The duration of the contract also allows for potential economies of scale.

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, specific criteria or circumstances led to the exclusion of some potential bidders. Only two bids were received, which is a low number and suggests that the market may not have been fully engaged or that barriers to entry were significant. This limited competition could potentially lead to higher prices than if a broader range of vendors had participated.

Taxpayer Impact: Limited competition means taxpayers may not have benefited from the most competitive pricing possible, potentially resulting in a higher overall cost for the government.

Public Impact

The Department of the Air Force benefits from the software reimbursement services provided. Essential IT software and related services are delivered to support Air Force operations. The contract's geographic impact is primarily within Florida, where the contractor is located. Workforce implications include the employment of IT professionals by Hixardt Technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (2) may indicate suboptimal price competition.
Contract awarded after exclusion of sources, raising questions about the scope of competition.
Long contract duration (1522 days) could lead to vendor lock-in if not managed carefully.

Positive Signals

Firm-fixed-price contract shifts cost overrun risk to the contractor.
Contractor has prior experience in similar government IT service contracts.
Contract is for essential software reimbursement, supporting critical Air Force functions.

Sector Analysis

This contract falls within the broader Information Technology (IT) services sector, specifically focusing on software reimbursement and related computer services. The IT services market for the federal government is substantial, with significant spending allocated annually to software licenses, maintenance, and support. This contract represents a small fraction of that overall spending but is crucial for the operational continuity of the Air Force's IT infrastructure. Comparable spending benchmarks would typically involve analyzing the average cost of similar IT support contracts across various agencies.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no small business participation (ss: false, sb: false). The prime contractor, Hixardt Technologies, Inc., is likely a mid-to-large-sized business. There is no explicit information on subcontracting plans, but given the nature of the service, it's possible that smaller specialized IT firms could be engaged as subcontractors, though this is not guaranteed. The lack of a small business set-aside means opportunities for small businesses to directly compete for this prime contract were not prioritized.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price structure, requiring the contractor to deliver specified services within the agreed budget. Transparency is generally maintained through contract databases like FPDS, which record award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's performance.

Related Government Programs

IT Support Services
Software Licensing and Maintenance
Department of Defense IT Modernization Programs
Air Force Enterprise IT Services

Risk Flags

Limited Competition
Potential for Higher Costs due to Limited Bidders
Contract Awarded After Exclusion of Sources

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.3 million to HIXARDT TECHNOLOGIES, INC.. SOFTWARE REIMBURSEMENT: BASE YEAR

Who is the contractor on this award?

The obligated recipient is HIXARDT TECHNOLOGIES, INC..

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 $18.3 million.

What is the period of performance?

Start: 2008-07-01. End: 2012-08-31.

What is the track record of Hixardt Technologies, Inc. with federal contracts, particularly in IT services?

Hixardt Technologies, Inc. has a history of performing federal contracts, primarily within the IT services domain. Reviewing available data, the company has secured multiple awards, often for services related to IT support, software, and systems integration. Their experience appears concentrated within agencies like the Department of Defense, including the Air Force. While specific performance metrics for past contracts are not detailed here, the continued award of contracts suggests a satisfactory performance history. Further analysis would involve examining past performance evaluations and any documented issues or commendations on previous government engagements to fully assess their track record.

How does the pricing of this $18.3M contract compare to similar IT software reimbursement contracts?

Benchmarking the pricing of this $18.3 million contract requires comparing it against similar firm-fixed-price contracts for IT software reimbursement services awarded around the same period and to entities of comparable size and scope. Without access to a detailed database of comparable contract pricing, a precise comparison is difficult. However, the contract's duration of approximately 1522 days (over 4 years) averages to roughly $4.6 million per year. This annual figure needs to be evaluated against the specific software and services provided. If the software is complex or requires significant ongoing support and licensing, this annual cost might be considered fair. Conversely, if it's for standard software with minimal support, it could be on the higher side. The limited competition (2 bidders) also suggests that the price might not be as optimized as it could be under a more competitive scenario.

What are the primary risks associated with this contract for the Department of Defense?

The primary risks associated with this contract for the Department of Defense include potential cost overruns if the 'reimbursement' aspect is not strictly managed, although the firm-fixed-price structure mitigates this significantly. A key risk stems from the limited competition, with only two bidders, which could result in suboptimal pricing and reduced innovation. There's also a risk of vendor lock-in, especially given the contract's duration, potentially making it difficult to switch providers or negotiate better terms in the future. Performance risk, though generally lower with experienced contractors, always exists; failure to deliver the required software reimbursement or support could impact Air Force operations. Finally, the 'after exclusion of sources' clause warrants scrutiny to ensure the exclusion criteria were justified and did not unduly restrict competition.

How effective is the firm-fixed-price (FFP) contract type in managing costs for this software reimbursement service?

The firm-fixed-price (FFP) contract type is generally considered effective in managing costs for services like software reimbursement because it places the primary financial risk on the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This incentivizes the contractor to manage their expenses efficiently and accurately estimate their needs. For the Department of Defense, this means greater cost certainty and predictability. Unlike cost-plus contracts, there is less risk of the government bearing the brunt of unexpected cost increases incurred by the contractor. However, to ensure effectiveness, the initial price must be set appropriately, often through competitive bidding, and the scope of work must be clearly defined to prevent scope creep that could lead to change orders.

What does the limited competition (2 bidders) imply about the market for these specific IT services?

The fact that only two bids were received for this contract, despite being awarded under 'Full and Open Competition After Exclusion of Sources,' suggests several possibilities about the market for these specific IT software reimbursement services. Firstly, the market might be highly specialized, with only a few companies possessing the necessary expertise, certifications, or security clearances required by the Department of the Air Force. Secondly, the barriers to entry for new competitors could be high, perhaps due to stringent requirements, existing relationships, or the specific nature of the software being reimbursed. Thirdly, the timing or structure of the solicitation might not have been optimal for attracting a wider range of bidders. This limited competition implies that the government may not have achieved the most competitive pricing and could have missed out on potentially innovative solutions from a broader pool of vendors.

Can the 'Other Computer Related Services' NAICS code (541519) provide insight into the contract's scope and potential value?

The North American Industry Classification System (NAICS) code 541519, 'Other Computer Related Services,' is a broad category that encompasses a wide range of IT services not specified elsewhere. This includes services like computer facilities management, computer disaster recovery services, and IT support services. For this contract, labeled as 'SOFTWARE REIMBURSEMENT: BASE YEAR,' it suggests the service likely involves managing, supporting, or facilitating the reimbursement process for software used by the Air Force. This could entail tracking software licenses, ensuring compliance, processing payments, or providing technical assistance related to the software. The broadness of the code means the specific value is highly dependent on the exact nature of the reimbursement and support activities, but it confirms the contract's focus is on IT operational support rather than software development or hardware provision.

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: FA282308R3000

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 119 W INTENDENCIA ST, PENSACOLA, FL, 01

Business Categories: 8(a) Program Participant, Black American Owned Business, Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Self-Certified Small Disadvantaged Business, Service Disabled Veteran Owned Business, Small Business, Special Designations, U.S.-Owned Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $18,711,820

Exercised Options: $18,711,820

Current Obligation: $18,338,597

Contract Characteristics

Cost or Pricing Data: NO

Timeline