DoD's $70M IT services contract to Peraton Enterprise Solutions awarded without competition, raising value concerns

Contract Overview

Contract Amount: $69,973,568 ($70.0M)

Contractor: Peraton Enterprise Solutions LLC

Awarding Agency: Department of Defense

Start Date: 2014-06-30

End Date: 2018-09-30

Contract Duration: 1,553 days

Daily Burn Rate: $45.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: IGF::OT::IGF OTHER ADP AND TELECOMMUNICATIONS SVS

Place of Performance

Location: HERNDON, FAIRFAX County, VIRGINIA, 20171

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $70.0 million to PERATON ENTERPRISE SOLUTIONS LLC for work described as: IGF::OT::IGF OTHER ADP AND TELECOMMUNICATIONS SVS Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of over four years suggests a long-term reliance on the contractor. 3. The 'Other Computer Related Services' NAICS code is broad, making direct cost comparisons difficult. 4. Fixed-price contract type offers some cost certainty but may not reflect true market value without competition. 5. The contract's value is substantial, warranting scrutiny of performance and pricing. 6. Lack of competition is a key risk indicator for potential overpayment.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money on this $70 million contract. The fixed-price nature provides some cost control, but the absence of competing offers means the government could not leverage market forces to secure the best possible pricing. Comparing this to similar IT services contracts, especially those awarded competitively, would likely reveal a premium paid due to the sole-source nature. The broad NAICS code (541519) further complicates direct cost analysis, but the lack of competition is the primary driver of value concerns.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not solicit offers from multiple potential contractors. This approach bypasses the standard competitive procurement process, which typically involves a solicitation, proposal evaluation, and selection of the best value offer. Without competition, there is no direct comparison of pricing or technical approaches from different vendors, which can hinder price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid more than necessary due to the absence of competitive pressure. The government missed an opportunity to negotiate a lower price or secure better terms through a competitive process.

Public Impact

The Department of the Navy benefits from IT services, likely supporting critical defense operations. Services provided fall under 'Other Computer Related Services,' which could encompass a wide range of IT support, maintenance, and consulting. The contract's geographic impact is likely concentrated within the Department of the Navy's operational areas, primarily in Virginia. Workforce implications are tied to Peraton Enterprise Solutions' employees fulfilling the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to inflated costs for taxpayers.
Broad service category makes it difficult to assess if specific needs were met efficiently.
Long contract duration (over 4 years) without re-competition reduces opportunities for cost savings or service improvements.
Lack of transparency in the justification for sole-source award.
Potential for vendor lock-in due to the absence of competitive alternatives.

Positive Signals

Fixed-price contract type provides some budget certainty for the government.
Contract awarded to an established entity, Peraton Enterprise Solutions, suggesting some level of capability.
The contract duration indicates a sustained need for these IT services within the Navy.

Sector Analysis

The Information Technology (IT) services sector is a vast and critical component of federal spending. This contract falls under 'Other Computer Related Services,' a broad category encompassing a wide array of IT support functions. The federal government is a major consumer of IT services, with spending often driven by modernization efforts, cybersecurity needs, and operational support. Benchmarking this contract's value is challenging without competitive data, but IT services represent billions in annual federal expenditure, with significant variations in pricing based on service type, complexity, and competition.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses indicated in the provided data. The sole-source nature of the award further limits opportunities for small businesses to participate, as they would typically need to be identified as a subcontractor to the prime awardee. This contract does not appear to actively contribute to the small business ecosystem through set-asides or mandated subcontracting.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve contract officers, program managers within the Department of the Navy, and potentially the agency's Inspector General. Accountability measures would be tied to performance metrics and adherence to the contract terms. Transparency is limited due to the sole-source award, as the justification and negotiation process are not publicly detailed. The Inspector General could investigate allegations of waste, fraud, or abuse if warranted.

Related Government Programs

IT Professional Services
ADP and Telecommunications Services
Information Technology Services
Defense IT Spending
Navy IT Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Broad service category
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.0 million to PERATON ENTERPRISE SOLUTIONS LLC. IGF::OT::IGF OTHER ADP AND TELECOMMUNICATIONS SVS

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 Navy).

What is the total obligated amount?

The obligated amount is $70.0 million.

What is the period of performance?

Start: 2014-06-30. End: 2018-09-30.

What specific IT services were provided under this contract?

The contract falls under NAICS code 541519, 'Other Computer Related Services.' This is a broad category that can include a wide range of services such as IT consulting, systems integration, custom software development, IT support and maintenance, and data processing services. Without more detailed contract line item numbers (CLINs) or a statement of work, the precise nature of the services delivered remains unspecified. However, given the award to Peraton Enterprise Solutions, a large IT services provider, it likely encompasses significant IT infrastructure support, network management, or related technical services for the Department of the Navy.

How does the $70 million value compare to similar IT services contracts awarded by the Department of the Navy?

Direct comparison of the $70 million value is challenging without knowing the specific services rendered and the contract duration. However, federal IT spending is substantial, and contracts of this magnitude are not uncommon, particularly for large agencies like the Department of the Navy. The key concern here is not the absolute dollar amount, but the fact that it was awarded sole-source. Competitively procured IT services contracts of similar scope and duration might yield lower prices due to market competition. Therefore, while $70 million is within the range of large federal IT contracts, its value proposition is questionable due to the lack of competitive bidding.

What are the primary risks associated with a sole-source IT services contract of this size?

The primary risk associated with a sole-source IT services contract of this size is the potential for overpayment due to the absence of competitive pressure. Without competing bids, the government loses leverage to negotiate the best possible price and terms. Other risks include a lack of innovation from the incumbent contractor, potential complacency, and vendor lock-in, where the government becomes overly reliant on a single provider, making future transitions difficult and costly. There's also a risk that the contractor may not be held to the highest standards of performance or efficiency, as there are no immediate alternatives to switch to.

What is Peraton Enterprise Solutions' track record with federal IT contracts?

Peraton Enterprise Solutions is a significant government contractor with a substantial portfolio of IT and technology services contracts across various federal agencies. They have a history of winning large, complex contracts, often in areas such as defense, intelligence, and civilian agency IT modernization. While their track record generally indicates capability in delivering large-scale IT solutions, the specific performance metrics and value delivered on individual contracts, especially sole-source awards, would require deeper analysis of past performance reviews and contract close-out data.

What was the justification for awarding this contract without competition?

The provided data indicates the contract was 'NOT COMPETED.' Federal regulations (e.g., FAR Part 6) allow for sole-source awards under specific circumstances, such as when only one responsible source can satisfy the agency's needs, or in cases of urgent and compelling need. Without the specific justification document (often a Justification and Approval - J&A), it's impossible to determine the exact reason. Common justifications include unique capabilities, proprietary technology, or situations where competition is not feasible or cost-effective. However, these justifications are subject to scrutiny to ensure they are valid and not merely administrative convenience.

How does the contract's duration (over 4 years) impact its overall value and risk?

A contract duration of over four years (1553 days) for IT services signifies a long-term commitment. For the government, this provides stability and continuity of essential services, reducing the administrative burden of frequent re-procurement. However, it also extends the period during which the government is exposed to the risks of a sole-source award, such as potentially paying a premium price without competitive adjustments. Longer durations can also lead to technology obsolescence if not managed carefully, and may reduce the incentive for the contractor to innovate or offer cost efficiencies, as they have a guaranteed revenue stream for an extended period.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Peraton Solutions Inc.

Address: 13600 EDS DR, HERNDON, VA, 20171

Business Categories: Category Business, Limited Liability Corporation, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $69,973,568

Exercised Options: $69,973,568

Current Obligation: $69,973,568

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0003910D0010

IDV Type: IDC

Timeline