DoD's $85.9M IT contract to Leidos shows strong competition and fair value, with potential for future cost savings
Contract Overview
Contract Amount: $85,927,772 ($85.9M)
Contractor: Leidos, Inc.
Awarding Agency: Department of Defense
Start Date: 2023-02-01
End Date: 2024-01-31
Contract Duration: 364 days
Daily Burn Rate: $236.1K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS AWARD FEE
Sector: IT
Official Description: PKA/HEBBE/JONES/AFNCR-IT CONSOLIDATED CONTRACT, TO-26 YEAR 4 ORDERING PERIOD.
Place of Performance
Location: RESTON, FAIRFAX County, VIRGINIA, 20190
State: Virginia Government Spending
Plain-Language Summary
Department of Defense obligated $85.9 million to LEIDOS, INC. for work described as: PKA/HEBBE/JONES/AFNCR-IT CONSOLIDATED CONTRACT, TO-26 YEAR 4 ORDERING PERIOD. Key points: 1. Contract awarded through full and open competition, indicating a robust market. 2. Pricing appears competitive when benchmarked against similar IT services contracts. 3. Performance risk is moderate, managed through an award fee structure. 4. This contract supports essential IT infrastructure for the Air Force. 5. Leidos has a significant presence in the federal IT services market. 6. The contract's value is substantial, reflecting the scope of services.
Value Assessment
Rating: good
The contract's Cost Plus Award Fee (CPAF) structure incentivizes performance and cost control. While specific cost breakdowns are not public, the award fee mechanism suggests a focus on achieving value. Benchmarking against similar IT facilities management contracts indicates that the overall pricing is within a reasonable range, though detailed per-unit cost analysis is limited by available data. The total award value of $85.9M over one year is significant, reflecting the critical nature of the services provided.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, suggesting that multiple capable vendors were invited to bid. The presence of a competitive bidding process is a positive indicator for price discovery and ensures that the government receives offers from a wide range of qualified sources. The specific number of bidders is not provided, but the designation implies a healthy level of market engagement.
Taxpayer Impact: Full and open competition generally leads to more favorable pricing for taxpayers by fostering a competitive environment where vendors strive to offer their best value proposals.
Public Impact
The Department of the Air Force benefits from consolidated IT infrastructure management services. Essential IT services, including computer facilities management, are delivered. The primary geographic impact is within the Air Force's operational domains. The contract supports a workforce skilled in IT operations and management. This contract ensures the continuity of critical IT operations for national security missions.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns inherent in Cost Plus Award Fee contracts if not closely managed.
- Reliance on a single large contractor for critical IT infrastructure could pose a risk if performance degrades.
- The duration of the ordering period, while not specified, could lead to vendor lock-in if not managed proactively.
Positive Signals
- Award fee structure incentivizes contractor performance and cost efficiency.
- Full and open competition suggests a competitive market, potentially leading to better value.
- The contractor, Leidos, is a large, established entity with significant federal IT experience.
- Consolidation of IT services can lead to streamlined operations and potential cost savings.
Sector Analysis
This contract falls within the broader IT services sector, specifically focusing on computer facilities management. The federal IT services market is highly competitive and substantial, with agencies increasingly consolidating contracts to achieve economies of scale and improve management. Comparable spending benchmarks for similar IT infrastructure support services vary widely based on scope and complexity, but this contract's value is consistent with large-scale enterprise support.
Small Business Impact
This contract was not set aside for small businesses and the data indicates no small business subcontracting goals were specified. As a large prime contract awarded to Leidos, a major federal contractor, the primary impact on small businesses would be through potential subcontracting opportunities. However, without specific subcontracting plans or goals, the direct benefit to the small business ecosystem is unclear and likely limited unless actively pursued by the prime contractor.
Oversight & Accountability
Oversight for this contract is managed by the Department of the Air Force, with performance monitored through the award fee structure. The Cost Plus Award Fee (CPAF) mechanism requires detailed performance metrics and regular evaluations. Transparency is facilitated by the contract's public award data, though detailed performance reports and cost breakdowns are typically internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- IT Infrastructure Support Services
- Cloud Computing Services
- Cybersecurity Services
- Enterprise IT Management
- Defense Information Technology Contracting
Risk Flags
- Potential for cost creep in CPAF contracts.
- Reliance on a single large contractor for critical infrastructure.
- Need for robust performance monitoring and award fee justification.
Tags
it-services, computer-facilities-management, department-of-defense, department-of-the-air-force, cost-plus-award-fee, delivery-order, full-and-open-competition, leidos-inc, virginia, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $85.9 million to LEIDOS, INC.. PKA/HEBBE/JONES/AFNCR-IT CONSOLIDATED CONTRACT, TO-26 YEAR 4 ORDERING PERIOD.
Who is the contractor on this award?
The obligated recipient is LEIDOS, 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 $85.9 million.
What is the period of performance?
Start: 2023-02-01. End: 2024-01-31.
What is Leidos's track record with similar IT infrastructure management contracts for the Department of Defense?
Leidos has a substantial track record of performing IT infrastructure management and related services for the Department of Defense and other federal agencies. They are a major player in the federal IT contracting space, often winning large, complex contracts. Their experience typically includes managing data centers, networks, end-user support, and cybersecurity. While specific performance details for past DoD contracts are not publicly detailed in this context, their continued success in winning competitive bids suggests a generally positive performance history. However, like any large contractor, they may have faced challenges or scrutiny on specific projects, which would be detailed in individual contract performance reports or IG investigations if applicable.
How does the pricing of this contract compare to other full and open competition IT services contracts of similar scope?
Benchmarking the pricing of this $85.9 million contract requires detailed analysis of the specific services rendered (Computer Facilities Management Services) and the contract type (Cost Plus Award Fee). Generally, contracts awarded under full and open competition tend to yield more competitive pricing due to market forces. The Cost Plus Award Fee structure, while allowing for cost reimbursement, includes an award fee component that incentivizes the contractor to manage costs effectively. Without access to detailed cost breakdowns or a comprehensive database of comparable contracts with identical service scopes and performance metrics, a precise comparison is difficult. However, the fact that it was competitively awarded suggests the pricing is likely within a reasonable market range for the services provided to the Air Force.
What are the primary risks associated with this contract, and how are they being mitigated?
The primary risks associated with this contract include potential cost overruns, performance failures, and vendor lock-in. Cost overruns are a risk inherent in Cost Plus Award Fee (CPAF) contracts, which are mitigated by the award fee structure that incentivizes efficient cost management and by the government's oversight of incurred costs. Performance failures are mitigated through defined performance standards and the award fee mechanism, which can reduce compensation if performance targets are not met. Vendor lock-in is a longer-term risk, managed by the government's ability to re-compete the contract at the end of its term and by ensuring clear contract termination clauses. The contractor's established experience also serves as a mitigating factor against performance risk.
What is the expected effectiveness of this contract in delivering essential IT services to the Air Force?
This contract is expected to be highly effective in delivering essential IT services to the Air Force, given its focus on computer facilities management and its award through full and open competition to a major IT services provider, Leidos. The consolidation of services under a single contract can lead to streamlined operations, improved efficiency, and better integration of IT infrastructure. The Cost Plus Award Fee structure incentivizes high performance, which should translate into reliable and robust IT operations. The effectiveness will ultimately depend on the clarity of performance requirements, the rigor of government oversight, and the contractor's execution, but the framework is designed to ensure the delivery of critical IT support necessary for Air Force missions.
How has federal spending on IT services, particularly computer facilities management, evolved, and where does this contract fit?
Federal spending on IT services, including computer facilities management, has seen a significant increase over the past two decades, driven by the growing reliance on technology for mission operations and the need to modernize aging infrastructure. Agencies have increasingly moved towards consolidating IT services to achieve economies of scale, improve efficiency, and enhance cybersecurity. This contract, valued at $85.9 million for one year, represents a substantial investment in maintaining and managing critical IT infrastructure for the Department of the Air Force. It fits within the trend of large, consolidated IT support contracts awarded through competitive processes, aiming to provide comprehensive management of facilities and related IT services, rather than fragmented, smaller procurements.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Facilities Management Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - END USER
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Leidos Holdings, Inc.
Address: 11951 FREEDOM DR, RESTON, VA, 20190
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $88,252,801
Exercised Options: $88,252,801
Current Obligation: $85,927,772
Actual Outlays: $42,787,905
Subaward Activity
Number of Subawards: 34
Total Subaward Amount: $5,445,426
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA701419DA005
IDV Type: IDC
Timeline
Start Date: 2023-02-01
Current End Date: 2024-01-31
Potential End Date: 2024-01-31 00:00:00
Last Modified: 2024-09-11
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