DoD's $52.8M IT contract with Digital Management LLC shows fair value despite limited competition
Contract Overview
Contract Amount: $52,768,975 ($52.8M)
Contractor: Digital Management LLC
Awarding Agency: Department of Defense
Start Date: 2011-03-31
End Date: 2018-07-31
Contract Duration: 2,679 days
Daily Burn Rate: $19.7K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 11
Pricing Type: COST PLUS FIXED FEE
Sector: IT
Official Description: COST PLUS FIXED FEE LABOR
Place of Performance
Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20301
Plain-Language Summary
Department of Defense obligated $52.8 million to DIGITAL MANAGEMENT LLC for work described as: COST PLUS FIXED FEE LABOR Key points: 1. Contract value appears reasonable given the duration and scope of IT services. 2. Competition was limited, potentially impacting price discovery and taxpayer value. 3. Risk indicators are moderate, with a focus on performance and delivery. 4. The contract spans a significant period, requiring ongoing performance monitoring. 5. This falls within the IT services sector, a common area for federal spending. 6. No small business set-aside was utilized, but subcontracting opportunities may exist.
Value Assessment
Rating: good
The contract's total value of approximately $52.8 million over its life suggests a moderate annual spend. Benchmarking against similar IT system design contracts is challenging without more specific service details. However, the fixed-fee component provides some cost control for the government. The pricing appears to be within a reasonable range for complex IT services delivered over several years, though a more granular comparison of labor rates and overhead would be needed for a definitive assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' indicating that while initially open, specific sources were later excluded. The number of bids received is not explicitly stated, but the 'limited' competition label suggests fewer than ideal bidders participated. This level of competition may have led to a higher price than if a broader range of vendors had been involved, potentially reducing the government's leverage in price negotiations.
Taxpayer Impact: Limited competition can mean taxpayers may not have received the lowest possible price for these IT services. The government might have had less negotiating power, potentially leading to higher overall costs.
Public Impact
The Department of Defense benefits from enhanced computer systems design and integration. Services delivered likely include system analysis, design, development, and implementation. The contract's impact is primarily within the federal government's IT infrastructure. Workforce implications include IT professionals employed by Digital Management LLC and potentially subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition may have resulted in a higher cost to taxpayers.
- The long duration of the contract increases the risk of scope creep or evolving requirements.
- Lack of specific details on performance metrics makes it difficult to fully assess value.
- The 'after exclusion of sources' clause warrants further investigation into the rationale.
Positive Signals
- Digital Management LLC is a known entity in the IT services sector.
- The contract has a fixed-fee component, offering some cost predictability.
- The duration suggests a long-term need for these critical IT services.
- The contract was awarded by a major agency (DoD), implying a level of due diligence.
Sector Analysis
This contract falls within the broader IT services sector, specifically Computer Systems Design Services. This sector is characterized by high demand from government agencies for support in developing, implementing, and managing complex technological systems. Federal spending in this area is substantial, with numerous large and small firms competing for contracts. Benchmarks for similar contracts would typically consider the complexity of the systems, the labor categories involved, and the duration of the engagement.
Small Business Impact
This contract does not appear to have been awarded as a small business set-aside, nor is there an explicit indication of a small business prime awardee. This suggests that larger, established firms were likely the primary focus of the competition. However, Digital Management LLC may engage small businesses as subcontractors to fulfill specific aspects of the contract, contributing to the broader small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and program managers within the Defense Information Systems Agency (DISA). Accountability measures would be tied to the contract's performance clauses and milestones. Transparency is facilitated through contract databases like FPDS, though detailed performance reports are often internal. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- IT Professional Services
- Computer Systems Design
- Defense Information Technology
- Software Development Services
- IT Consulting
Risk Flags
- Limited competition may impact price.
- Contract duration increases risk of evolving requirements.
- Exclusion of sources requires further justification.
- Performance metrics not detailed.
Tags
it-services, computer-systems-design, department-of-defense, defense-information-systems-agency, cost-plus-fixed-fee, delivery-order, full-and-open-competition-after-exclusion-of-sources, district-of-columbia, large-contract, it-modernization
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $52.8 million to DIGITAL MANAGEMENT LLC. COST PLUS FIXED FEE LABOR
Who is the contractor on this award?
The obligated recipient is DIGITAL MANAGEMENT LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Information Systems Agency).
What is the total obligated amount?
The obligated amount is $52.8 million.
What is the period of performance?
Start: 2011-03-31. End: 2018-07-31.
What was the specific rationale for excluding sources in this 'Full and Open Competition After Exclusion of Sources' award?
The specific rationale for excluding sources in a 'Full and Open Competition After Exclusion of Sources' award is not detailed in the provided data. This contract type typically implies that the initial solicitation was open, but certain potential offerors were deemed ineligible or were not considered for reasons such as past performance, technical capabilities, or specific security requirements. Agencies may use this method when they have a clear understanding of the market and believe only a subset of potential contractors can meet the stringent requirements. Without further documentation from the agency, the precise reasons for exclusion remain speculative but are crucial for understanding the competitive landscape and potential impact on pricing.
How does the $52.8 million cost compare to similar IT system design contracts awarded by the DoD or other agencies?
Comparing the $52.8 million cost requires context regarding the contract's duration (2679 days, approx. 7.3 years) and the specific services rendered under NAICS code 541512 (Computer Systems Design Services). The average annual cost is roughly $7.2 million. This figure appears moderate for a long-term, complex IT systems design contract within a large agency like the DoD. However, a true benchmark would necessitate analyzing contracts with similar scope, complexity, labor mix, and performance periods. Contracts for enterprise resource planning (ERP) systems, cybersecurity infrastructure, or large-scale software development could be comparable, but variations in specific deliverables and market conditions mean direct comparisons are difficult without granular data on labor rates, overhead, and profit margins.
What are the primary performance risks associated with this contract, and how are they mitigated?
Primary performance risks for this IT system design contract likely include schedule delays, cost overruns (especially if the fixed fee doesn't adequately cover unforeseen complexities), technical performance failures, and scope creep. Mitigation strategies typically involve robust contract management by the government, including detailed performance work statements, regular progress reviews, milestone tracking, and clear communication channels. The Cost Plus Fixed Fee (CPFF) structure itself aims to mitigate cost risk for the government by capping the fee, while incentivizing the contractor to manage costs efficiently to maximize their profit. However, CPFF can sometimes lead to less incentive for cost control compared to fixed-price contracts if not managed tightly.
What is the historical spending pattern for Computer Systems Design Services (NAICS 541512) by the Defense Information Systems Agency (DISA)?
Historical spending data for DISA on NAICS 541512 (Computer Systems Design Services) would reveal trends in their reliance on external contractors for IT system design. Analyzing this data over several fiscal years would indicate whether spending in this category is increasing, decreasing, or remaining stable. It would also highlight major contract vehicles and awardees within this service area. Such analysis helps understand DISA's strategic sourcing for IT capabilities and provides context for the $52.8 million awarded to Digital Management LLC, showing if it represents a typical investment or an outlier. Without specific historical spending figures, it's difficult to provide precise patterns, but generally, agencies like DISA have consistent, significant needs for these services.
What is Digital Management LLC's track record with similar large-scale IT contracts for the Department of Defense?
Digital Management LLC (DMI) has a significant track record of performing IT services for the Department of Defense and other federal agencies. Their portfolio often includes system modernization, cloud migration, cybersecurity, and enterprise IT solutions. Assessing their performance on contracts similar in scale and scope to this $52.8 million award would involve reviewing past performance evaluations, contract completion success rates, and any documented issues or accolades. DMI's ability to secure and execute contracts of this magnitude suggests a demonstrated capability in managing complex IT projects, meeting performance requirements, and navigating the federal procurement landscape. Specific details on past performance metrics would be found in government databases like the Contractor Performance Assessment Reporting System (CPARS).
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services
Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 11
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 6550 ROCK SPRING DR FLR 7, BETHESDA, MD, 20817
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Minority Owned Business, Not Designated a Small Business, Special Designations, Subchapter S Corporation, Indian (Subcontinent) American Owned Business, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $57,643,931
Exercised Options: $52,947,715
Current Obligation: $52,768,975
Subaward Activity
Number of Subawards: 1
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: GS06F0617Z
IDV Type: GWAC
Timeline
Start Date: 2011-03-31
Current End Date: 2018-07-31
Potential End Date: 2018-09-30 00:00:00
Last Modified: 2024-02-14
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