DoD's $13.3M FFP Recurring Services Contract with Peraton Faces Scrutiny for Value and Competition
Contract Overview
Contract Amount: $13,285,773 ($13.3M)
Contractor: Peraton Enterprise Solutions LLC
Awarding Agency: Department of Defense
Start Date: 2006-10-01
End Date: 2007-09-30
Contract Duration: 364 days
Daily Burn Rate: $36.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: IT
Official Description: FFP MONTHLY RECURRING SERVICES. O&M
Place of Performance
Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20522
Plain-Language Summary
Department of Defense obligated $13.3 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: FFP MONTHLY RECURRING SERVICES. O&M Key points: 1. The contract's $13.3M total value for 364 days of service warrants a close look at its recurring nature. 2. Competition was full and open, but the specific pricing strategy and its impact on value are unclear. 3. Potential risks include the fixed-price nature for recurring services and the lack of detailed performance metrics. 4. The Wired Telecommunications Carriers sector is highly competitive, suggesting potential for better pricing.
Value Assessment
Rating: fair
The contract's total award of $13.3M for 364 days of recurring services averages approximately $36,500 per day. Without specific service details or benchmarks for similar recurring telecommunications services, assessing the value is challenging.
Cost Per Unit: $36,500/day (estimated)
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is positive for price discovery. However, the firm fixed-price structure for recurring services might limit flexibility and potentially lead to overpayment if service needs change.
Taxpayer Impact: Taxpayer funds are utilized for recurring telecommunications services. While competition was employed, the effectiveness of the pricing model in securing optimal value requires further examination.
Public Impact
Citizens expect efficient use of taxpayer dollars in government contracts. Transparency in contract pricing and service delivery is crucial for public trust. The recurring nature of the service raises questions about long-term cost-effectiveness and potential for vendor lock-in.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of detailed service scope for recurring costs.
- Potential for price inflexibility with FFP.
- Limited insight into performance metrics.
Positive Signals
- Awarded under full and open competition.
- Contract duration aligns with annual budget cycles.
Sector Analysis
The contract falls under Wired Telecommunications Carriers, a sector characterized by rapid technological advancements and significant competition. Benchmarking against similar recurring managed network services contracts is essential to ensure competitive pricing.
Small Business Impact
There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. Further analysis could explore opportunities for small business participation in future telecommunications procurements.
Oversight & Accountability
Oversight of this contract should focus on ensuring the recurring services meet defined performance standards and that the firm fixed price remains justified throughout the contract period. Regular reviews of service delivery and cost alignment are recommended.
Related Government Programs
- Wired Telecommunications Carriers
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Lack of detailed service scope.
- Potential for price escalation or stagnation.
- Limited visibility into performance metrics.
- No clear indication of small business participation.
Tags
wired-telecommunications-carriers, department-of-defense, dc, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $13.3 million to PERATON ENTERPRISE SOLUTIONS LLC. FFP MONTHLY RECURRING SERVICES. O&M
Who is the contractor on this award?
The obligated recipient is PERATON ENTERPRISE SOLUTIONS 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 $13.3 million.
What is the period of performance?
Start: 2006-10-01. End: 2007-09-30.
How does the daily recurring cost of $36,500 compare to industry benchmarks for similar wired telecommunications services?
Without specific details on the services provided (e.g., bandwidth, equipment, maintenance levels), a precise benchmark is difficult. However, for context, large enterprise managed network services can range significantly, but a daily rate of $36,500 suggests a substantial service offering. A thorough market analysis comparing Service Level Agreements (SLAs) and associated costs for comparable government or commercial contracts is needed.
What are the primary risks associated with a Firm Fixed Price (FFP) contract for recurring operational and maintenance (O&M) services?
The main risk with FFP for recurring O&M is inflexibility. If the government's needs change or technology evolves, the fixed price may become disadvantageous, leading to either overpayment for unused services or underpayment if the vendor absorbs unexpected costs. It can also disincentivize the vendor from proactively identifying cost-saving efficiencies.
How effective is the 'full and open competition' method in ensuring value for money in recurring IT service contracts?
Full and open competition is generally effective in driving down prices by allowing all responsible sources to compete. However, for recurring services, the initial competition might secure a good price, but ongoing oversight is crucial to ensure the price remains competitive throughout the contract's life. Without clear performance metrics and potential for re-competition, value can erode over time.
Industry Classification
NAICS: Information › Wired and Wireless Telecommunications (except Satellite) › Wired Telecommunications Carriers
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Contractor Details
Parent Company: HP, Inc. (UEI: 009122532)
Address: 13600 EDS DR, HERNDON, VA, 11
Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $13,285,773
Exercised Options: $13,285,773
Current Obligation: $13,285,773
Parent Contract
Parent Award PIID: GS00T03AHD0008
IDV Type: IDC
Timeline
Start Date: 2006-10-01
Current End Date: 2007-09-30
Potential End Date: 2007-09-30 00:00:00
Last Modified: 2011-09-07
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