DoD awards $14.5M IT contract to Science Applications International Corporation for logistics network system

Contract Overview

Contract Amount: $14,519,896 ($14.5M)

Contractor: Science Applications International Corporation

Awarding Agency: Department of Defense

Start Date: 2022-01-17

End Date: 2026-07-16

Contract Duration: 1,641 days

Daily Burn Rate: $8.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: IT

Official Description: LOGISTICS INFORMATION AND OPERATIONS NETWORK SYSTEM III FOLLOW-ON CONTRACT

Place of Performance

Location: RESTON, FAIRFAX County, VIRGINIA, 20190

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $14.5 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION for work described as: LOGISTICS INFORMATION AND OPERATIONS NETWORK SYSTEM III FOLLOW-ON CONTRACT Key points: 1. Contract awarded on a cost-plus-incentive-fee basis, suggesting potential for cost overruns if not managed carefully. 2. The sole-source nature of this award limits competitive pressure, potentially impacting overall value for money. 3. High risk indicator due to lack of competition and cost-plus contract type. 4. This contract supports critical logistics operations for the Air Force, indicating a significant performance requirement. 5. The IT services sector, particularly cloud and data processing, is experiencing substantial federal investment. 6. The contractor, SAIC, has a long history of supporting defense IT requirements.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and cost-plus incentive fee structure. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or represents a fair value. The incentive fee structure aims to control costs, but the baseline cost is not publicly detailed, making a direct comparison to similar contracts difficult. The total value of $14.5 million over its duration suggests a significant investment in IT infrastructure for logistics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of multiple bidders means that price discovery through competition was not utilized, which can lead to higher costs for the government.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding, as the government did not benefit from the price reductions typically seen in a competitive procurement process.

Public Impact

The primary beneficiary is the Department of the Air Force, which will receive enhanced IT support for its logistics information and operations. Services delivered include computing infrastructure, data processing, and web hosting, crucial for modern military logistics. The geographic impact is likely global, supporting Air Force operations worldwide. Workforce implications may include continued employment for SAIC personnel and potential reliance on specialized IT skills within the Air Force.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure and potential cost savings.
Cost-plus incentive fee contract type can lead to cost overruns if not closely monitored.
Lack of transparency in the justification for sole-source award.
Potential for vendor lock-in given the specialized nature of logistics IT systems.

Positive Signals

Contract awarded to a known and experienced IT services provider (SAIC).
Contract aims to improve critical logistics operations, which is vital for national security.
Incentive fee structure is designed to encourage cost efficiency, though its effectiveness depends on oversight.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on computing infrastructure, data processing, and web hosting. This segment of the federal IT market is characterized by high demand, driven by agencies' needs for modernizing legacy systems and adopting cloud-based solutions. The total federal spending on IT services is in the hundreds of billions annually, with significant portions allocated to defense agencies for mission-critical systems like logistics. Comparable spending benchmarks for similar large-scale IT infrastructure contracts can vary widely based on scope and duration.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses detailed in the provided data. The prime contractor, Science Applications International Corporation, is a large business. This means that the direct economic benefit to the small business ecosystem from this specific award is likely minimal, unless SAIC voluntarily engages small businesses as subcontractors for specialized services not covered by their internal capabilities.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the Cost Plus Incentive Fee (CPIF) structure, which links contractor profit to achieving specific cost and performance targets. Transparency regarding the specific performance metrics and cost controls is limited in the public domain. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

DoD Logistics IT Modernization Programs
Air Force Cloud Computing Initiatives
Defense Information Systems Agency (DISA) Services
Federal Civilian IT Infrastructure Contracts

Risk Flags

Sole Source Justification
Cost-Plus Contract Type
Lack of Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.5 million to SCIENCE APPLICATIONS INTERNATIONAL CORPORATION. LOGISTICS INFORMATION AND OPERATIONS NETWORK SYSTEM III FOLLOW-ON CONTRACT

Who is the contractor on this award?

The obligated recipient is SCIENCE APPLICATIONS INTERNATIONAL CORPORATION.

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 $14.5 million.

What is the period of performance?

Start: 2022-01-17. End: 2026-07-16.

What is the historical spending pattern of the Department of the Air Force on logistics IT systems?

The Department of the Air Force, like other branches of the DoD, has consistently invested heavily in IT systems to support its vast logistical operations. Historical spending patterns reveal a trend towards modernization, moving from legacy systems to more integrated, data-driven platforms. This includes significant outlays for network infrastructure, data processing, software development, and cybersecurity. While specific figures for logistics IT fluctuate annually based on strategic priorities and budget allocations, the overall trend indicates sustained and often increasing investment to maintain operational readiness and efficiency in a complex global environment. The "LOGISTICS INFORMATION AND OPERATIONS NETWORK SYSTEM III FOLLOW-ON CONTRACT" suggests a lineage of prior investments in this specific capability area, implying a long-term commitment and evolving requirements.

How does the Cost Plus Incentive Fee (CPIF) structure typically perform in managing IT contract costs?

The Cost Plus Incentive Fee (CPIF) contract type is designed to incentivize the contractor to control costs and achieve performance targets by adjusting the fee based on performance against pre-defined criteria. In theory, it offers a balance between flexibility for the government and cost control. However, its effectiveness is highly dependent on the clarity and measurability of the target cost, the incentive sharing ratio, and the government's ability to accurately monitor performance and costs. In practice, CPIF contracts can sometimes lead to cost overruns if the initial target cost is set too high or if performance metrics are not rigorously defined and enforced. The government's oversight capability is crucial to ensure that the incentive structure truly drives efficiency rather than simply rewarding the contractor for meeting baseline requirements.

What are the potential risks associated with a sole-source IT contract of this magnitude?

Sole-source IT contracts, especially those of significant value like this $14.5 million award, carry several inherent risks. The primary risk is the lack of price competition, which can lead to the government paying a premium compared to what might be achieved in an open market. This can result in suboptimal value for taxpayer money. Another risk is vendor lock-in, where the government becomes heavily reliant on a single provider, making it difficult and costly to switch vendors in the future, even if performance or pricing becomes unsatisfactory. Furthermore, without the competitive pressure to innovate, the contractor may have less incentive to proactively improve services or adopt cutting-edge technologies. Finally, the justification for a sole-source award must be robust to ensure it is truly necessary and not a result of poor planning or market research.

What is Science Applications International Corporation's track record with large DoD IT contracts?

Science Applications International Corporation (SAIC) has a substantial and long-standing track record of performing large-scale IT and technical services contracts for the Department of Defense (DoD) and other federal agencies. They are a major player in the government contracting space, with extensive experience in areas such as cloud computing, cybersecurity, enterprise IT, data analytics, and mission systems. SAIC has historically secured numerous multi-year, high-value contracts with various branches of the military, including the Air Force. Their performance on these contracts is generally viewed as competent, though like any large contractor, they have experienced both successes and challenges. Their ability to consistently win and execute complex IT programs underscores their significant presence and capabilities within the defense IT sector.

How does this contract align with broader trends in federal IT procurement?

This contract aligns with several key trends in federal IT procurement. Firstly, the increasing reliance on specialized IT services for mission-critical functions, such as logistics, reflects the government's ongoing digital transformation efforts. Secondly, the focus on areas like data processing and cloud infrastructure is consistent with the government-wide push to modernize IT systems, improve efficiency, and enhance data security and accessibility. Thirdly, while this specific award is sole-source, the broader federal IT landscape sees a mix of competitive and non-competitive awards, with a growing emphasis on agile methodologies and performance-based contracting. The substantial investment in IT by defense agencies like the Air Force is a persistent trend, driven by national security imperatives and the need to maintain technological superiority.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 12010 SUNSET HILLS RD, 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: $26,029,131

Exercised Options: $15,601,562

Current Obligation: $14,519,896

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $1,408,316

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline