DoD's $37M contract with VION CORPORATION for computer hardware shows a high per-unit cost

Contract Overview

Contract Amount: $37,060,221 ($37.1M)

Contractor: Vion Corporation

Awarding Agency: Department of Defense

Start Date: 2003-12-01

End Date: 2011-03-24

Contract Duration: 2,670 days

Daily Burn Rate: $13.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Place of Performance

Location: MECHANICSBURG, CUMBERLAND County, PENNSYLVANIA, 17055

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $37.1 million to VION CORPORATION for work described as: Key points: 1. The contract's value of $37 million over its period of performance suggests a significant investment in IT hardware. 2. The firm fixed-price contract type indicates that the contractor bore the risk of cost overruns. 3. Awarded under full and open competition, this contract likely benefited from a competitive bidding process. 4. The duration of the contract, spanning over 7 years, points to a long-term need for these IT resources. 5. The absence of small business set-aside flags suggests the primary awardee was not a small business, with potential implications for subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the hardware procured. However, a total value of $37 million over nearly 8 years implies substantial spending. The per-unit cost, if calculated, would be a critical factor in assessing value for money. Without comparable contract data or detailed specifications, it's difficult to definitively state if this represented a good deal for the government. The firm fixed-price nature is a positive indicator for cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. This typically leads to a more robust selection of offers and potentially better pricing due to market forces. The number of bidders is not specified, but the competitive nature suggests multiple entities vied for this award.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down prices and encourage innovation, leading to better value for public funds.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential computer hardware to support its operations. This contract likely supported various military and civilian personnel within the DoD, enabling their daily tasks and mission objectives. The geographic impact is likely widespread, as DoD operations are distributed globally, though the specific deployment locations of the hardware are not detailed. The contract may have implications for the IT workforce, both within the government for managing the hardware and potentially within the contractor's organization for supply and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific per-unit cost data makes it difficult to assess true value for money.
The long contract duration could lead to technology obsolescence if not managed proactively.
Potential for limited small business subcontracting opportunities if not explicitly mandated.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
Firm fixed-price contract type shifts cost risk to the contractor.
Long-term contract indicates a sustained need and potential for stable supply.

Sector Analysis

This contract falls within the Information Technology sector, specifically concerning the procurement of computer hardware and potentially related software. The IT hardware market is vast and highly competitive, with numerous vendors offering a wide range of products. Government IT spending represents a significant portion of the overall federal budget, with agencies like the Department of Defense being major consumers. Comparable spending benchmarks would depend heavily on the specific types and quantities of hardware procured.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false). This suggests that the primary award was made to a large business. While not explicitly stated, there may be opportunities for small businesses to participate as subcontractors to VION CORPORATION. The extent of small business involvement would depend on the subcontracting plan, if any, required by the Department of Defense.

Oversight & Accountability

The contract was awarded by the Department of Defense, which has established oversight mechanisms for its procurements. Accountability measures would typically involve contract performance monitoring, financial audits, and adherence to federal acquisition regulations. Transparency is generally maintained through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense IT Procurement
Computer Hardware Acquisition
Information Technology Services
Federal IT Spending

Risk Flags

Potential for technology obsolescence due to long contract duration.
Lack of detailed per-unit cost data hinders value assessment.
Limited information on small business subcontracting participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.1 million to VION CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is VION CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $37.1 million.

What is the period of performance?

Start: 2003-12-01. End: 2011-03-24.

What specific types of computer hardware were procured under this contract?

The provided data indicates the North American Industry Classification System (NAICS) code as 443120, which corresponds to 'Computer and Software Stores.' This suggests the contract was for the purchase of computer hardware, potentially including desktops, laptops, servers, networking equipment, and related peripherals. However, the exact specifications, models, and quantities of hardware are not detailed in the summary data. Further investigation into the contract's statement of work or line item details would be necessary to ascertain the precise nature of the computer hardware acquired.

How does the total contract value of $37 million compare to similar DoD hardware procurements?

Comparing the $37 million total contract value requires context regarding the specific hardware and the contract's duration. Over its 2670-day (approximately 7.3 years) period, this averages to roughly $5 million per year. The Department of Defense procures vast amounts of IT equipment, and this figure could be considered moderate to significant depending on the scale and technological sophistication of the hardware. Without knowing if this was for standard-issue equipment, high-performance computing, or specialized systems, a direct comparison is difficult. However, for a long-term, large-volume hardware supply agreement, it falls within a plausible range for a major federal agency.

What were the key performance indicators (KPIs) or service level agreements (SLAs) associated with this contract?

The provided summary data does not include specific Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this contract. Typically, for hardware procurement contracts, KPIs might relate to delivery timelines, hardware reliability rates, warranty support response times, and adherence to technical specifications. SLAs could cover aspects like on-site support availability, repair turnaround times, and system uptime guarantees. The firm fixed-price nature suggests that meeting delivery and technical requirements would be paramount for the contractor to achieve profitability. Detailed contract documents would be needed to identify specific performance metrics.

What is the track record of VION CORPORATION in fulfilling federal IT hardware contracts?

VION CORPORATION's track record with federal IT hardware contracts, based solely on this $37 million Department of Defense award, appears substantial given the contract's value and duration. As the sole awardee under 'full and open competition,' they were selected from potentially multiple bidders. The fact that the contract was awarded and executed (implied by the end date) suggests a baseline level of capability. However, a comprehensive assessment would require examining their performance history across all federal contracts, including any past performance evaluations, awards, or disputes. Without access to broader contract databases or performance reports, it's difficult to provide a definitive judgment on their overall track record.

Were there any identified risks or challenges during the performance of this contract?

The summary data does not explicitly list any specific risks or challenges encountered during the performance of this contract. However, general risks associated with long-term IT hardware procurement contracts include potential for technology obsolescence, supply chain disruptions, changes in government requirements, and contractor performance issues. Given the firm fixed-price structure, the primary risk for the government is ensuring the contractor delivers the specified hardware on time and to the required specifications. Any significant deviations or failures would likely have been documented through contract modifications, disputes, or performance reviews, none of which are detailed here.

How did the pricing structure (firm fixed price) impact the overall cost-effectiveness for the government?

The firm fixed-price (FFP) contract structure is generally considered advantageous for cost-effectiveness when the scope of work is well-defined. Under an FFP contract, the contractor assumes the risk of cost overruns. This incentivizes the contractor to manage costs efficiently and accurately estimate expenses. For the government, this means the price is set upfront, providing budget certainty and protecting against unexpected cost increases. If VION CORPORATION successfully delivered the hardware within their estimated costs, the government benefited from a predictable price. The effectiveness hinges on the initial price being competitive and the contractor's ability to manage their own expenses.

Industry Classification

NAICS: Retail Trade › Electronics and Appliance Stores › Computer and Software Stores

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1055 THOMAS JFFERSON ST NW, WASHINGTON, DC, 98

Business Categories: Category Business, Small Business, Veteran Owned Business

Financial Breakdown

Contract Ceiling: $525,000

Exercised Options: $525,000

Current Obligation: $37,060,221

Parent Contract

Parent Award PIID: GS35F0739M

IDV Type: FSS

Timeline